APAC PU Market Report (2016 )€¦ · China’s PO market continues to move up with fluctuations in 2016. PO prices in E-China market swing at RMB 10,600-10,700/ton in late December,

APAC PU Market Report

(2016 )

PUdaily, January 2017

I China Economy & PU Raw Materials

Market

2 Source from PUdaily

China GDP growth in 2016 is near 6.7%, basically reaches the goal set by government. However, the downward pressure remains and the economy is expected to keep fatigue in the next few years. The major engine of economy growth will still be real estate, infrastructure and investment. Meanwhile, export may be a key factor to economy growth due to the devaluation of RMB.

Regarding PU industry, most raw materials experiences price hike in 2016 thusly PU Index keeps edging up this year. The index reaches peak in “golden September and silver October” and falls back after the busy season passes.


Economy & PUdaily Index

600

800

1,000

1,200

1,400

Jan Feb Mar Apr May Jun Jul Aug Aug Sep Oct Nov Dec

2016 PUdaily PU Composite Index

PU index

China’s PO market continues to move up with fluctuations in 2016. PO prices in E-China market swing at RMB 10,600-10,700/ton in late December, increased by RMB 3,000/ton when compared to the lowest price in Jan. At the beginning of 2016, China’s PO market slumps down sharply and PO price is even quoted below cost price because of the weak demands from downstream industries in slack season and the endless falling of crude oil price. Moreover, the heavy haze crushes PO plants’ deliveries, which increases manufacturers’ inventory pressure and makes the market get worse. However, that bad situation is changed in late March and the market price boosts to the highest point supported by favorable factors like the rising of cost prices, the maintenance in Xinyue and Jishen facilities, and the holding of PO conference. After March, the market sees frequent price fluctuations during April to June with various advantages and disadvantages flowing in the market. In June and July, the market price also moves with limited stability but climbs high due to the limited inventory and a series of maintenance plans from plants.

From early September, propylene oxide market moves up sharply on account of exuberant and warm terminal demand, as well as environmental inspections on all the chlorohydrin propylene oxide plants from Shandong Environmental Protection Office and safety check from State Administration of Work Safety. The growth of propylene oxide prices are around RMB 4,200/ton from Sep. 1 to Oct. 8. Nevertheless, propylene oxide market edge down and trading activities are limited after National Day because most small and medium scale sponge factories shut down their plants due to high price of TDI, leading to less buying interest. In November, propylene oxide market keeps stable and firm and then boosted by the smog problem in north China.

4

1. Propylene Oxide

Source from PUdaily

6,000

8,000

10,000

12,000

14,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

RMB/

ton

2015-2016 Propylene Oxide Price Trend

2015 2016

Polyether polyols prices run with frequently fluctuations in 2016 and are offered averagely at RMB 11,000/ton in December, up by RMB 2,000/ton compared with RMB 9,000/ton at the beginning of this year. In Early Jan., polyols market goes down dramatically on the back of propylene oxide price decrement and weakening terminal demand. Most downstream sponge manufacturers maintain low operating ratios because of Spring Festival. Then polyols market moves upward sharply from the end of Jan. to March on account of increasing new orders from downstream users to get replenishment. Polyols market trend keeps in line with propylene oxide market in Q2 and there are limited orders heard in June amid the slack season and market atmosphere is sluggish until August.

From early September, polyether polyols market moves up sharply on account of exuberant and warm terminal demand, as well as environmental inspections on all the chlorohydrin propylene oxide plants from Shandong Environmental Protection Office and safety check from State Administration of Work Safety. The growth of flexible slabstock polyols prices are around RMB 5,250/ton from Sep. 1 to Oct. 8. Nevertheless, polyols market edge down and trading activities are limited after National Day because most small and medium scale sponge factories shut down their plants due to high price of TDI, leading to less buying interest of polyether polyols. And domestic polyols market rebounds on account of transportation problems affected by smog haze problem now.

Polyols supply in China will continue going up in line with startup of Wanhua, Jishen and CNOOC and shell’s new plants. Nevertheless, terminal demand may keep tepid in the future amid China Economy New Normal and overcapacity which may become key words in China polyols market.

5

2. Polyether Polyols

Source from PUdaily

7,000

9,000

11,000

13,000

15,000


RMB/

ton

2015-2016 Flexible Slabstock Polyols Price Trend

2015 2016

China TDI market experiences booms and busts for many times in 2016. Domestic TDI prices move up significantly in succession with MCNS declaring plant failure in Omuta in late March and shutdown permanently in Kashima in late April as well as Covestro Germany announcing force majeure in early October respectively. China TDI price peaks at RMB 55000/ton in mid-October, up by 400% compared with the beginning of 2016.

As for demand, domestic TDI demand sustains uptrend slightly in 2016. Many small foam factories have to suspend production due to raw material price soaring while big-scale foam factories keep developing on account of advantages such as raw material cost, sales price and etc.

Going forward, as for supply, China TDI capacity will not change in 2017 because there is no new plant bringing into production. As for demand, TDI downstream sectors including sponge and coating industries are likely to maintain slow growth 2017 due to slow macro-economy development of China, and TDI demand is thusly estimated to increase slightly in 2017.

6

3. TDI

Source from PUdaily

0

10,000

20,000

30,000

40,000

50,000

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

2015 2016

RMB/

ton

2015-2016 China TDI Price Trend (East China)

In the beginning of 2016, the market keeps weak running and the price declines to near RMB 9,000/ton. As the market price has already reached to the production cost, manufacturers decide to pull up the market price by controlling supply and raise list prices. The market turns to upwards due to the traditional downstream busy season from March and price reaches to RMB 12,000/ton. From May to July, market runs quietly after busy season finished and price slightly falls back.

7

4. Polymeric MDI

Source from PUdaily

Comes to August, overall supply has turned tight due to multiple facility issues. Along with the” golden September and silver October”, price begins to hike swiftly. On September 20th, Wanhua Yantai facility was shut down for annual maintenance. However, a fatal blast occurs on the first day of the maintenance. In fear of the future supply shortage, spot holders increase quotations and price soars to RMB 20,000/ton in September.

9,000

11,000

13,000

15,000

17,000

19,000

21,000


2015-2016 China Polymeric MDI Price Trend

2015 2016

RMB/

ton

China pure MDI market experiences the similar trend as China polymeric MDI market. During January and February, the market maintains flattish with limited fluctuations. After March, due to manufacturers support and recovering downstream demand, price begins to hike. However after entering June, price starts to decline on weakening demand. By the end of June, China pure MDI average market price is at RMB 16,513/ton, up by around RMB 2,000/ton compared to January.

In H2 of the year, the market keeps quiet running at first. However, in August, due to the reduced operation rate of manufacturers’ facilities, the supply becomes tight in the market. Along with the “golden September and sliver October” season, price keeps hiking and reaches RMB 20,000/ton. In November and December, the upward trend slows as downstream busy season has passed.

8

5. Pure MDI

Source from PUdaily

14,000

16,000

18,000

20,000

22,000

24,000

26,000


RMB/

ton

2015-2016 China Pure MDI Price Trend

2015 2016

The year of 2016 is the watershed for HDI market, with substantial effect of feedstock supply, competition pattern and downstream industries.

HDI hardener prices was softening first and rebound in the second half of 2016. Prices slip in March with intensified competition for big clients. And then, the market begins to pick up since the end of March bolstered by peak season and bullish sentiment among spot traders. The market kept stable until the end of September when HDI price obtains another timing of price hike in line with bullish chemical raw material market in China, with an overall increase of 5%-10%.

9

6. HDI

Source from PUdaily

Some market participants comment that market has saturated in the background of consistent improving supplies in China. As a matter of fact, HDI capacity has almost doubled to 82kt/year in 2016 from 45kt/year in 2012. Furthermore, supply volumes will continue to increase in the next few years along with the expanding capacity of HDI hardener from Covestro and Wanhua in the next few years. Demand from coating industry is barely satisfactory with higher growth speed to be expected. In 2016, Auto refinishing market performs well with stable growth; industrial anti-corrosion coating and wood coating market picks up again in 2016 after a long-term sluggish demand. Coating industry is still expecting a higher growth rate in 2017.

RMB/

ton

38,000

40,000

42,000

44,000

46,000

48,000

50,000


2015 2016

2015-2016 China HDI Hardener Price Trend

IPDI market is in prosperity in the year of 2016, as water-based coating industry is booming, especially in PUD, surface treatment, OEM coating sectors.

10

7. IPDI

Source from PUdaily

Now there are only 4 IPDI manufacturers globally-Covestro, Evonik, Vencorex and Wanhua Chemical. Covestro and Evonik are the two largest suppliers in China. RMB price is 64,500-66,500/ton for Wanhua sources while price of Covestro and Evonik 69,000-74,000/ton, much higher than Wanhua, according to PUdaily pricing data. The average CIF price of imports is USD 7980/ton, rising 6.5% compared with the year of 2015.

7,300

7,500

7,700

7,900

8,100

8,300

63,000

65,000

67,000

69,000

71,000

73,000


RMB CIF

2016 China IPDI RMB & USD Price Trend

USD/ton RM

B/to

n

In 2016, domestic adipic acid (AA for short) market prices rally sharply, especially in the end of November, with the bullish benzene prices, AA list prices are largely driven up and AA prices go up largely. The market price starts at RMB 5,400/ton at the beginning of this year and ends at RMB 11,500/ton in mid-December, posting an increase of RMB 6,100/ton during the period, up by 113%.

In recent years, adipic acid capacity has surpassed downstream demand in the growth rate and domestic suppliers face the fierce market competition because of overcapacity, therefore, AA producers in China have suffered deficits during the period. According to PUdaily, the newly added AA facilities with a capacity of 150 kt/year at Henan Shenma and a capacity of 140 kt/year at Shandong Hongda have raised China’s total AA capacity to 2,130 kt/year, with more spot supply in 2016.

However, the long-lasting poor and negative margins have forced AA producers into difficulties and driven them to make up mind in price lift in 2016. Added with the explosive growth in AA export and bullish benzene prices, AA suppliers gain great confidence and AA Price increases sharply when compared to that of last year. The AA market is in a cyclical uptrend and AA suppliers get back to better profits.

Looking at market outlook in 2017, supply volumes will continue to increase in 2017 along with the expanding capacity of 140 kt/year at Taiyuan Chemical and a capacity of 160 kt/year at Chongqing Huafeng, and competition between AA suppliers will become more intense. As for export, confronted with the oversupply in domestic market, AA producers will continue to making efforts to find their buyers in overseas market. It is predicted that the AA export volume will continue to be on the rise in 2017.

11

8. Adipic Acid

Source from PUdaily

5,000

7,000

9,000

11,000

13,000


RMB/

ton

2015-2016 Adipic Acid Price Trend (East China)

2015 2016

In the first half of 2016, domestic BDO market remains sluggish on the confluence of oversupply and demand weakness. The BDO price falls down slightly in the first quarter and then stops downtrend and turns stable in the second quarter supported by the centralized maintenance at domestic BDO facilities. In the second half of 2016, the BDO price starts to rebound and the price swings between RMB 7,200-8,100/ton in 2016. At the end of 2016, BDO is offered at around RMB 10,500-11,500/ton in east China on bank draft, up by around RMB 2,650-3,400/ton or 37.93% compared with the same period in 2015. According to PUdaily, the newly added BDO facility with a capacity of 100 kt/year at Xinjiang MKMO has raised China’s total BDO capacity to 2,079 kt/year in 2016 and the overall operating at BDO plants are estimated at around 40-60% loads.

Looking at market outlook in 2017, BDO facilities at Shanxi Ronghe, Xinjiang Guotai and Hancheng Heimao will be put into productions and the total BDO capacity will continue to increase in 2017. As for demand, PTMEG and TPU market performs well with stable growth in recent years, which will lead to increasing demand for BDO. As for export, confronted with the oversupply in the domestic market, BDO producers such as Xinjiang Markor will continue to making efforts to find their buyers in overseas market. It is predicted that the BDO export volume will continue to be on the rise in 2017.

12

9. BDO

Source from PUdaily

7,000

8,000

9,000

10,000

11,000


RMB/

ton

2015-2016 BDO Price Trend (East China)

2015 2016

According to PUdaily, the newly added PTMEG facilities with capacity of 46 kt/year at Xinjiang TunHe and 50 kt/year at Xinjiang MKMO have lifted China’s total PTMEG capacity to 675 kt/year in 2016. Domestic PTMEG market keeps falling down dragged by overcapacity and fierce competitions among PTMEG suppliers from January to July and then stops downtrend and turns stable in the middle of August supported by the unexpected facility shutdown at MCC Advanced Polymers (Ningbo) and safety accident at Sinopec Great. At the end of August, the PTMEG price starts to rebound resulted from the supply shortage, good demand in spandex and TPU industry as well as the good performance of BDO.

Looking at market outlook in 2017, as for demand, spandex and TPU market performs well with stable growth in recent years, which will lead to increasing demand for PTMEG. As for export, confronted with the oversupply in the domestic market, PTMEG producers will continue to making efforts to find their buyers in overseas market. It is predicted that the PTMEG export volume will continue to be on the rise in 2017.

13

10. PTMEG

Source from PUdaily

12,000

14,000

16,000

18,000

20,000

22,000


RMB/

ton

2015-2016 PTMEG 1800 Price Trend (East China)

2015 2016

II PU Raw Materials Im & Export


China propylene oxide imports were 16,903 tons in November, increasing by 3.63% year on year and decreasing by 19.95% from October. Top imports came from Thailand and the followers were USA and Saudi Arabia with each quantity at 6,823 tons, 5,857 tons and 2,200 tons.

15

1. Propylene Oxide

Source from PUdaily

Note: Data in December is estimated

32 30

34

24

17 18

29

8

22

14 16 17

46

32

25 28 28

20

27

20 21 21 17

26


2015-2016 China Propylene Oxide Import Trend (KT)

2015 2016

China polyether polyols imports were 42,685 tons in November, decreasing by 24.55% month on month and up by 0.53% year on year; whilst exports were 32,614 tons, increasing by 5.42% month on month and up by 0.78% compared with the same period in 2015. Top ten exporters totally export 16,561 tons in November, making up for around 50.78% of total quantity.

16

2. Polyether Polyols

Source from PUdaily


35

41

35 42 43

38 36 34

42

57

43 39 38 40

59

49

59 53

45 42

35 31 33

44


2016 China Polyehter Polyols Im & Export Trend (KT)

Import Export

China TDI exports in 2016 were 130,000 tons, up by 146.13% significantly year on year. Covestro Shanghai, Cangzhou Dahua and BASF Shanghai are the three leading exporters, accounting for 60.23%, 11.69% and 11.54% respectively. And the three main export destinations are Belgium (14,193 tons), India (10,144 tons）and Taiwan (9,689 tons), making up 10.92%, 7.77% and 7.45% of the total exports respectively.

17

3. TDI

Source from PUdaily


China TDI imports in 2016 under the HS code of 29291010 were 30,000 tons, down by 4.98% year on year. South China is the main import destination, occupying 72.7% of the total imports. The leading origins were South Korea and Japan, taking up 60.45% and 32.62% respectively.

0.2 0.1 0.2 0.2 0.1 0.1 0.1 0.1 0.2 0.3

0.8

0.5 0.3

0.3

0.8 1.0

1.9

1.5

1.9

2.4

1.2

0.9

0.5 0.4


2016 China TDI Im & Export Volume (MT)

2015 2016

In 2016, China polymeric import is still shrinking. Due to the excess capacity problem and the depressing downstream demand, import volume of polymeric MDI to China is estimated to keep negative growth in future. In 2016, China polymeric MDI imports were near 211 kt, decreasing by 21% YOY. Meanwhile, China polymeric MDI imports were 266.2 kt in 2015.

China polymeric MDI export still keeps increase in 2016. On account of the slowing increase of downstream market in recent years, domestic suppliers especially Wanhua Chemical, have put more effort on foreign market. In 2016, China polymeric MDI exports were near 434 kt, increasing by 13% YOY. Meanwhile, China polymeric MDI exports were 382 kt in 2015.

18

4. Polymeric MDI

Source from PUdaily


19

12

26 22

20 20

13 13 19

15 18 17

24 23

43 37

43

35

48

39 34 34

37 36


2016 China Polymeric MDI Im & Export Trend (KT)

Import Export

As growth stalls in downstream, China pure MDI also experiences import shrink and export growth in 2016. Peak for China pure MDI export is from Mar. to Aug as downstream sectors are in busy season for production, both domestic and foreign market. Meanwhile, import volume is decreasing every month as numbers of end buyers choose to use domestic materials this year.

In 2016, China pure MDI imports were near 76 kt, decreasing by 29% YOY. Meanwhile, China polymeric MDI imports were 107.4 kt in 2015.

In 2016, China pure MDI exports were near 78 kt, increasing by 26% YOY. Meanwhile, China polymeric MDI exports were 62.1 kt in 2015.

19

5. Pure MDI

Source from PUdaily


7 8

9

8 8

6 6 6

6

4

3 4 4 4

7 7

8

6

9 8

7 6 6 7


2016 China Pure MDI im&export Comparison (KT)

Import Export

HDI monomer imports 17,000 tons and exports 5,400 tons in the year of 2016, posts a trade deficit of 11,600 tons. And more than 80% imports are for HDI hardener production from Japan and Germany. There are only two HDI monomer exporters in China—Covestro in Shanghai and Wanhua in Ningbo, Zhejiang Province. Covestro’ HDI monomer mostly exports to Netherland, Japan and India, while Wanhua’s major oversea market focuses on Asia countries like Japan and Korea.

20

6. HDI Hardener

Source from PUdaily

HDI hardener exports robust to over 20 thousand tons in the year of 2016, largely on account of more capacity release of domestic market. Furthermore, SE and south Asia’s strong demand of HDI hardener also gives an edge of exporting, supported by the expanding coating market there. It is expected that the exports will keep strong in 2017.


1,778

911

2,284

2,022 2,130

1,825

2,421 2,356

2,092

1,822

2,159 1,990

627 762 741 740 867 850

1,177 952 900 888

1,251 1,205


China's HDI hardener Exports in 2015 and 2016 (Tons)

2016 2015

With demand for high performance coatings growing in Asia, IPDI manufacturers have been significantly expanding production of IPDI since 2015. Vencorex expands its capacity to 25 kt/year in the second half of 2015. Wanhua inaugurates its first IPDI plant with initial capacity of 15 kt/year in this April. Covestro has also decided to increase its PUD capacity in Dormagen, Germany in 2017 and in Shanghai, China in 2019, respectively.

21

7. IPDI

Source from PUdaily


China imports over 8,000 tons of IPDI in the year of 2016 which remains almost the same compared with previous year. And the average CIF price of imports is USD 7,980/ton, rising 6.5% year on year. It is expected that the demand in China will keep stable growth along with the growth of water-based coating industry, while imports and price may go down gradually in the future with increasing supplements from Chinese local supplier.

838

220

1,106

748

906

764

427

1,079

330

493 576

680


China's IPDI Imports in 2016 (Tons)

Imports

China’s adipic acid (AA for short) exports grow vigorously in 2016. It is predicted that the AA export volume will reach to 251 kt, up by about 62.64% year on year. The top three customs export quantity are Qingdao Customs, Ji’nan Customs and Chongqing Customs. It is obvious that the export of these three customs is higher than any other customs in China, because Shandong and Chongqing are the top two AA production bases in China.

22

8. Adipic Acid

Source from PUdaily

The main customs exporting AA is still Qingdao in 2016. While the export of Tianjin Customs reaches a new high because of the export of Tangshan Zhonghao. The top three suppliers are Haili, Huafeng and Hongye, up significantly compared to last year. In 2016, the quantity of AA exported from China to Singapore takes the first place.

1.2 1.0 1.0

1.5 1.6 1.5 1.3

1.5 1.4 1.5 1.4 1.8

2.3 2.2 2.5

2.6 2.4

2.6 2.6

2.0 2.2

1.8 2.1 2.0


2015-2016 China AA Exports Trend (MT)

2015 2016


In 2016, China BDO export will reach 11,483 tons, up by significantly 467.28% compared to 2024 tons of the same period of last year. In recent years, domestic BDO plants spared no effort to export their products, but the export of BDO still kept at low level. In China, the top two plants in exporting BDO are Xinjiang Markor and Changlian Chemicals (Panjin).

23

9. BDO

Source from PUdaily

The top three customs exporting BDO are Qingdao Customs, Dalian Customs and Huangpu Customs. In 2016, the export of BDO to South Korea ranks the first, followed by India and Germany.


145 39 72 197 176 81 209

811

136 32 78 48 65 32 239

804

135 122

564

1,638

567

3,164

2,153 2,000


2015-2016 China BDO Exports Trend (Tons)

2015 2016

From the view of overall market, domestic PTMEG market import keeps decreasing on the confluence of oversupply in the domestic market. In 2016, China PTMEG import will reach to 52,418 tons, down by 33.63% compared with 78,983 tons of the same period of last year. The imported PTMEG in China mainly comes from Taiwan, South Korea, Japan, America, Germany and other regions. Among these regions, Taiwan has been the biggest source, down slightly compared to previous years.

24

10. PTMEG

Source from PUdaily

In 2016, China PTMEG export shows apparent increase. China PTMEG export will reach to 11,965 tons, up by 34.40% compared to 4,695 tons of the same period of last year. In 2016, the export of PTMEG to Vietnam ranks the first, followed by Thailand and South Korea.


4,206 4,294

3,680 3,846

4,500

3,480

4,525 4,094

4,499 4,211

5,484 5,600

446 735 1,009

498

1,157 1,101 1,250

1,914 1,503 1,378

475 500


2015-2016 China PTMEG Imports and Exports Trend (Ton)

Import Export

III China PU Terminal Market


China building material and furniture market runs better in 2016 than 2015, with BHI index up by 5.2% year on year. As for upholstered furniture industry, it grows slowly in 2016.There is still a vast potential for consumption in China upholstered furniture industry as it is still in development stage. And real estate market in first-tier cities booms in 2016, boosting demand in upholstered furniture. Nevertheless, many upholstered furniture companies still have to face the problems like fewer orders along with lower profit margin and higher production cost in the situation of tepid macro-economic environment in China, which greatly drags down the development of the industry. The whole upholstered furniture market will maintain the slow growth in the short term.

26

1. Upholstered Furniture

Source from PUdaily

Sources: The Ministry of Commerce circulation Industry Development Division; China Building Materials Circulation Association (CBMCA)

70

80

90

100

110

120


2015 2016

National Building Materials Home Boom index (BHI) Trend in 2015 & 2016

China automotive industry rebounds gradually on account of policy ’Purchase Tax by Half’ since Oct. 2015. China government announces that the purchase tax can be reduced by half if customers buy car lower than 1.6 liter from Oct. 2015 to Dec. 2016. As one of the most important downstream industries of polyurethane flexible foam, there are around 275 thousand tones flexible foam consumed by automotive industry in 2015. PUdaily expects that the growth of this consumption trend will maintain at 9% in 2016 due to strong running automotive market.

27

2. Automobile

Source from PUdaily


229

163

228 208 196 185

152 157 189

219

255 245

161

252 217 207 205 196 199

253 259

301

0

50

100

150

200

250

300

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov

2015-2016 China Automobile Output (MT)

2015 2016

The output and sale of vehicle in 2016 move up supported by the policy of ’Purchase Tax by Half’ and ‘Used Vehicle Migration Limit’. According to statistical analysis from China Association of Automotive Manufacturers (CAAM), China automobile output from January to November in 2016 were 25,077,000 units, including 21,743,300 passenger cars and 3,283,600 commercial cars.

In 2016, China household refrigerator output totals 92.7 million units, up by 2.43% YOY.

In 2016, China household freezers output totals 21.3 million units, down by 1.84% YOY.

28

3. Household Appliance

Source from PUdaily

Note: Data of both graph in December is estimated

In 2016, the outputs of refrigerator slightly recover while the outputs of freezer fall down. It is expected that the industry will keep fatigue due to the weak economy in the next few years.

12.6

8.1 9.5 9.6 9.5

7.8 7.2 6.9 6.3 6.6 6.5

11.8

8.7 8.7 8.6 9.0 7.9 7.5 8.0 7.4 7.7 7.2

Jan-Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2015-2016 China Refrigerator Outputs Comparison (MT)

2015 2016

3.0

2.0 2.1 1.9 1.9

1.6 1.6 1.8 1.8

1.8 2.2

3.2

2.1 1.9

1.7 1.8 1.7 1.6 1.8 1.8 2.0

1.8

Jan-Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2015-2016 China Freezers Outputs Comparison (MT)

2015 2016

In October 2016, the output of light leather is around 58.21 million square meters in China, down 7.30% compared to the same period in 2015. Domestic output of light leather from January to October add up to 565.39 million square meters, up by 0.61% on a year on year basis. In October 2016, the output of leather garment is around 7.28 million pieces in China, up 14.50% compared to the same period in 2015. The total outputs of leather garment from January to October reached around 73.30 million pieces, down by 0.05% on a year on year basis.

29

4. Leather

Source from PUdaily

5. Textile The gross profit of China’s textile industries,

above a designated scale, has reached RMB 190.48 billion from Jan. to November in 2016, up by 4.4% year on year. The main business income is RMB 3,689.98 billion, up by 4.2% year on year. Besides, the gross profit of textiles and apparels during the same time has reached RMB 118.49 billion, up by 3.6% year on year while the main business income is RMB 2119.46 billion, up by 4.9% year on year.

6. Footwear

The total outputs of leather boots from January to November reach around 4.1 billion pairs, increasing by 0.96% compared with 2015. In November 2016, the output of leather boots is around 0.4 billion pairs in China, up 0.49% compared to the same period in 2015.

7. Adhesives & Sealant

China’s consumption of adhesives and sealant was over 7 million tons in 2015. Volume in 2016 increases modestly with an 8% rate of growth compared with the year of 2015, headed by water-based and reactive adhesive in China. It is forecasts that the growth trend will continue in 2017.

PU adhesive growth is about 10% in the year of 2016, faster than the overall adhesive industry. Adhesive industry is moving to more environmental friendly products. And Water-based adhesive is still the fastest growing segment with a growth rate of over 12%; In the Auto OEM segment PU adhesive grows steadily; Growth from industrial PU adhesive stagnates; Shoe adhesive is shrinking, impacted by industrial transferring to SEA countries. New energy, Electronic appliance, aeronautic and aerospace engineering will be the new engine of growth.

The output of coating enterprises above designated size is 16.8 million tons from Jan. to Nov. in 2016, an increase of 7.2% year-on-year. The need for arch coatings has a tendency to rise further in the near future, thanks to the recovery of China’s real estate, but industrial coating is suffering from tepid demand since China is still in the process of reducing the excessive industrial capacity. And the growth for China’s Auto coating is stable with a growth rate of 8%-10%.

30

8. Coating

Source from PUdaily

The output of the top 10 provinces is 13.7 million tons, accounting for 80% of all volume in China. Guangdong, Jiangsu, Shanghai occupy the top three slots with output of 3.0, 2.1 and 1.8 million tons, respectively. Sichuan province records the biggest increase of 20% year-on-year in 2016 as coating giants like Akzonobel, Dow increases investment and expands their capacities here.

Guangdong 18%

Jiangsu 13%

Shanghai 11%

Sichuan 8%

Hunan 7%

Shandong 6%

Henan 5%

Zhejiang 5%

Fujian 4%

Anhui 3%

Others 20%

China Coating Output from Jan. to Nov. in 2016

IV Southeast Asia & India PU Market


In 2016, there are continuous TDI plant failure reported across the globe, leading to tight supply and price surges throughout this year. TDI USD prices begin to rise since the middle of March after MCNS Omuta plant encounters cool equipment breakdown, besides, it skyrockets to USD 4,500-5,000/ton CIF SE Asia and India in October 2016, up by USD 3,000/ton compared with the beginning of 2016, increasing by about 200%.

In the aspect of demand, tight supply contributes to rising TDI prices although the downstream demand remain weak amid slowdown of global economy. After the dollar price of TDI reaches the peak at USD 4,500-5,000/tons in late October, some downstream foam factories have to suspend production due to rising cost, which leads to reduced demand.

It is expected that TDI market in 2017 will suffer heavy pressure mainly owing to limited demand growth but some big TDI plants may gradually start production in 2017. Germany BASF 300kt/year TDI plant after a year of debugging is likely to restart next year and Sadara’s 200kt/year TDI facility is expected to start at the second half of 2017.

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1. Southeast Asia & India TDI

Source from PUdaily

1,200

2,200

3,200

4,200

5,200


2016 SE Asia & India TDI Price Trend

SE Asia India

Note: covered countries in Southeast Asia include Thailand, Indonesia, Vietnam, Malaysia and Singapore

USD

/ton

2. Southeast Asia & India MDI

After continuous price increase from April to June, Southeast Asia and India polymeric MDI market begins to fall in July mainly because of sluggish seasonal demand and ample supply, leading to the lowest level from the end of August in the second half of the year. Afterwards the market trend turns around and prices buck up, pushed by soaring prices in China amidst a series of incidents at global MDI manufacturers that result in reducing availability. Although suppliers try to continuously increase prices in November and December, limited market acceptances make the market prices to fluctuate in a small range. According to PUdaily’s data, Southeast Asia and India polymeric MDI prices are reported at USD 1,850-1,950/ton (CIF) and USD 1,800-1,900/ton (CIF) on Dec. 30 respectively.

Looking ahead to 2017, PUdaily analyst deems that polymeric MDI prices in Southeast Asia and India will remain at high level in the first half of the year. During the end of this year, tight supply still exists in China market, so is the supply from Japan and South Korea. Moreover, that price gap between Southeast Asia & India and China is constantly enlarging with prices continuously rising in China will probably help reduce suppliers and traders’ supply allocation to ASEAN and India to a certain extent. In addition, the new manufacturing plant in the Middle East is expected to operate in the first half of next year and anticipation of increasing supply is expected to hammer this regional market and erode market fundamentals.

33


Source from PUdaily

900

1,100

1,300

1,500

1,700

1,900

2,100


USD

/ton

2016 Southeast Asia & India Polymeric MDI Price Trend

CIF SE Asia CIF India

The flexible foam and polyether polyols market in Southeast Asia and India show a slow downtrend from January to August, 2016, especially the downtrend speeding up after the Muslim Eid-al Fitr holiday. China products have a large market share in Southeast Asia, and thus it plays an important role in changing the market situation. In September, due to China boom season, the export prices of polyether polyols in China sharply increase and peak at above USD 2,000/ton FOB in the late September, downstream sponge factories of the Southeast Asia and traders have to turn to Dow, Shell and South Korea suppliers who also adjust up quotations because of rising demand for above sources. However, as its counterpart TDI’s price reaches too high a level, it cracks down buyers purchasing interest so the market prices slide down as a result of this..

In the aspect of demand, the demand for polyether polyols in Southeast Asia is relatively weak in 2016, affected by the recession of global economy. In downstream industries, car industry keeps a mild increase of about 3.3%; in furniture industry, the major Southeast Asia countries except Vietnam market, keep a small increase or decline to different extent. India's car market performs well but the main furniture industry also falls down slightly.

Southeast Asia and India polyether polyols market in 2017 performs weakly and due to pessimistic international economic environment, it is expected that polyether polyols market demand will continue to be weak. What’s more, Dow and Saudi Aramco joint venture, Sadara’s new polyether polyols device has been put into trial production from early January of 2017. The increasing source in future will hit the market confidence and the rise in late 2016 is expected to be digested.


3. Southeast Asia & India Polyols


1,200

1,300

1,400

1,500

1,600

1,700


2016 SE Asia & India Polyether Polyols Price Trend

SE Asia India

USD

/ton

4. Southeast Asia & India PO According to official statistics, by November,

Thailand totally exports 119,000 tons propylene oxide, mainly exporting to China, Australia and Taiwan. PUdaily predicts that Thailand’s total exports of propylene oxide reach 130,000 tons, falling 26.2% compared with 2015. The exports to Australia drop 22.6% from last year and to China fall 20.7% compared with 2015.

The decrease is mainly attributable to continually growing local demand. Additionally, Singapore totally exports 104,000 tons propylene oxide during the period of January to September and PUdaily forecasts its total exports will reach 136,000 tons this year, registering a year-on-year growth of 10.6%.

Total capacity of propylene oxide in Southeast Asia is 815 kt /year, including Dow Chemical’s 390 kt/year in Thailand, Shell’s 175 kt/year and Ellba’s 250 kt/year in Singapore (now wholly-owned by Shell).

According to PUdaily’s analysis, India imports about 23,000 tons propylene oxide in 2016, mainly from Saudi Arabia, Singapore and South Korea. The propylene oxide imported from Saudi Arabia and South Korea is mainly used by local Manali Petrochemical to produce polyether polyols with capacity of 75 kt/year while propylene oxide from Singapore is mainly supplied to BASF’s polyols in India. Besides, local producer, Manali Petrochemical, runs a 36 kt/year propylene oxide plant in Chennai.


5. Automobile According to the automobile association of ASEAN,

the major countries have produced more than 2.57 million cars from January to October 2016, up 3.3% compared with last year.

Indonesia: reviving in 2016. The total output reaches 1.08 million cars from January to November, 2016, up by 5.6% over the previous year while the sales exceed 970 thousand units.

Vietnam: good performance. Vietnam from January to November, 2016 sells about 270 thousand new cars, up by 25.8% compared with last year, mainly because Vietnam in January 2016 increases CBU special consumption tax and domestic sale of assembled cars get higher.

Thailand: continuous fall. Domestic sales of new car from January to November, 2016 fall by 2.3% compared with last year to 680 thousand cars. Since January 2016, due to the carryout of new commodity tax and the effect of global economic downturn, car’s sales in Thailand from the beginning of 2016 keep going down, especially passenger car sales.

Malaysia: sustained drop. The total sales of car from January to November, 2016 decrease by 13.7% over the same period last year to nearly 520 thousand cars and the cumulative production falls by 12.6% to nearly 500 thousand cars. Malaysia’s car industry falls continuously this year, mainly because GST introduced in March 2015 pushes consumption in advance, which leads to sharp decrease compared with last year.

India: continuous growth. In the fiscal year of 2016 (April-November), the output of India’s new car including passenger cars, commercial vehicles and motorcycles nearly reaches 17.8 million on an accumulative basis with a year-on-year growth of 10.63% among the growth rate of 9.84% from passenger car. Indian government announces "demonetization" on November 8, 2016, which swamps domestic consumption and the cars market changes from increase to decrease since this month. The sale in November is about 290 thousand cars, down 0.6%.

Vietnam is the largest furniture export country of Southeast Asia and the world's fourth largest exporter of furniture. Vietnam from January to November 2016 totally exports furniture (except the wooden furniture) up to about USD 1.26 billion, up by 130% compared with last year. More and more China furniture factory begins to migrate to Vietnam, which leads to the situation that a third of the foreign investment enterprises come from China. At the same time, abundant raw material resources, cheap labor, policy and funds support furniture enterprises to upgrade technology and less competitive furniture exports from China let Vietnam furniture industry enter the "golden age".

The total export of Malaysia from January to October, 2016 falls by 8.6% year-on-year to 75.7 billion ringgit, among the exports volume timber and related product reduces by 240 million ringgit, decreasing by 11.4% year on year. Thailand from January to November, 2016 totally exports furniture about USD 1.06 billion, edged up by 3.6% year-on-year, and mainly exports to United States, Japan, Britain, Australia and Germany, accounting for about 62% of its total exports.

The production index of India’s furniture industry from January to October, 2016 is 168.9, down 2.7% compared with 2015 and the Index of Manufacturing is 186.1, fall 1% compared with 2015. The civilian furniture is the largest part of the furniture industry, accounting for 65% of the total market sales, compared with 20% of office furniture and 15% of rests.

6. Furniture


Thailand, Indonesia and Vietnam are home to household appliance production in Southeast Asia.

According to market sources, Thailand’s refrigerator production grows largely compared with last year, pulled by development in big city and growing real estate market surrounding Bangkok. Besides, refrigerator is one of the most important household appliances due to year-round high temperature in Thailand. In the future, the main factor driving the refrigerator consumption still is the real estate market. The main refrigerator producers in Thailand include LG, Hitachi, Panasonic and Electrolux, many products of which are exported to neighboring countries including Malaysia and Singapore, apart from meeting local demand.

Indonesia's refrigerator production keeps steady growth this year, thanks to the concentrated expansion and launching new products at leading sellers and producers in 2015. Moreover, the refrigerator enterprises heavily promote household appliance products through the various media channels and constantly improve the after-sales service, which promotes local sales to a great extent. In 2015, Toshiba, Panasonic and Sharp launch new products in the local market, especially Samsung and LG put forward that its products are guaranteed for 10 years. At present, Sharp and Panasonic are the leading manufacturers in Indonesia and the growth of future market mainly generates from currently low penetration rate and the real estate market’s development.

Vietnam’s refrigerator market maintains rapid growth in 2016 with highlight coming from inverter refrigeration appliances. After a long-term promotion and discount, more and more consumers chose inverters. Haier continues to hold leading position in Vietnam market, whose market share is expected to exceed 30% followed by Panasonic and Sharp. In the future, the local government's preferential policies, low penetration rate in the country and refrigerator manufacturers’ vigorous promotion and publicity are the main impetus for promoting local production and sales.

The Philippines market mainly relies on imports to meet local demand. Concepcion Industries Inc that holds the market share of more than 20% is reported to be the largest supplier of refrigerator at present. In the future, the refrigerator market will keep rapid growth with increasing purchasing power and expanding consumer group.

India refrigerators sales reach 1.32 million with a year-on-year growth of 13% in 2016 and the rural market is the main growth area. What’s more, the sales at the monsoon period are heard to increase from 2015. The biggest refrigerator supplier of India is LG which has more than 20% of market share, followed by Samsung with a market share of over 20%, too, and other producers are Haier and Whirlpool.

37

7. Refrigerator

Source from PUdaily


2016 China & Southeast Asia

Polyurethane Market Yearly Report

2016 China TDI Yearly Report 2016 China MDI Yearly Report 2016 China HDI Yearly Report 2016 China IPDI Yearly Report 2016 China OTDA Yearly Report

2016 China Adipic Acid Yearly Report

2016 China TDI-100 Yearly Report

2016 China Propylene Oxide Yearly Report 2016 China Polyether Polyols Yearly Report 2016 China Polyester Polyols Yearly Report

2016 China Rigid PU Systems Yearly Report

2016 China BDO-PTMEG-Spandex Industrial Chain Yearly Report

Yearly Report Service, Lotus Tan TEL ：86-21-61250986 E-mail ： [email protected]

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