Economic Outlook- What It
Means to the Chemical Industry
Mikiya Yamada
Managing Director
Barclays Capital Japan Limited
1
3rd China International Acetic Acid – Vinyl Acetate Forum
"Economic Outlook - What It Means to the Chemical Industry"
- The shape of economic recovery from a chemical ind ustry perspective, comparing before and after 2008
- Global energy snapshot, natural gas advantages, an d what these mean to us
- “Soft commodity” price hikes and synthetic fiber si tuation
- Acetyls in electronics appliances – it’s road ahead
EQUITY RESEARCH | Chemicals
Mikiya Yamada+81 3 4530 2911
[email protected], Tokyo
April 2011
Barclays Capital does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.
Investors should consider this report as only a single factor in making their investment decision.
This research report has been prepared in whole or in part by research analysts based outside the US who are not registered/qualified as research analysts with FINRA.
PLEASE SEE ANALYST(S) CERTIFICATION(S) AND IMPORTANT DISCLOSURES BEGINNING ON PAGE 39.
Acetic Acid & VAM Demand vs. World GDP Growth
Source: IMF, Haver, The Chemical Daily, Barclays Capital estimatesNote: Acetic acid production volumes in 2009 and 2010 are based on Barclays Capital estimates
-2.0%
0.0%
2.0%
4.0%
6.0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
0
2,500
5,000
7,500
10,000
Acetic Acid World Demand (RHS) Vinyl Acetate Monomer World Demand (RHS) World Real GDP Growth Rate (LHS)
Demand (Thousand Tonnes)Real GDP Growth Rate (%)
2
3rd China International Acetic Acid – Vinyl Acetate Forum
Acetic Acid & VAM Demand YoY Change vs. GDP Growth
Source: IMF, Haver, The Chemical Daily, Barclays Capital estimatesNote: Acetic acid production volumes in 2009 and 2010 are based on Barclays Capital estimates
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-9%
-6%
-3%
0%
3%
6%
9%
12%
15%
Acetic Acid World Demand YoY Change (RHS) Vinyl Acetate Monomer World Demand YoY Change (RHS)
World Real GDP Growth Rate (LHS)
Demand YoY Change (%)Real GDP Growth Rate (%)
South
America
2.0%
Western
Europe
17.5%
China25.6%
Eastern
Europe &
Russia
2.3%Middle East
& Af rica
1.2%
North
America
22.0%
South &
Southeast
Asia
9.8%
Northeast
Asia
19.6%
VinylAcetate
30%
PTA20%
AceticAnhydride
19%
EthylAcetate
10%
ButylAcetate
5%
Others16%
Acetic Acid: VAM and PTA are the keys
Demand by Usage (11.2mn tonnes)(1) Demand by Region (9.16mn tonnes)(2) Capacity by Region (12.9mn tonnes)(2)
• New capacity additions currently scheduled are mostly Chinese MeOH
based capacities whose cost advantages may be at risk thanks to coal /
MeOH price hikes.
• Natural gas based MeOH becomes the industry choice as feedstock.
• Demand expected to grow steadily thanks to PTA (polyester / PET) and
VAM (paint, adhesives and coating / electronic appliances) growth.
• China and North Americas play key roles – healthy demand growth
should improve operating rates.
Top Acetic Acid Producers (2009)Owner Capacity (mn Tonnes)
Celanese 2.40BP 1.08Jiangsu Sopo 0.60Millennium 0.60Shanghai Wujing 0.48Sterling 0.48Yankuang Cathay 0.48Others 5.76Total 12.00
South
America
0.4%
Western
Europe
11.7%
Eastern
Europe &
Russia3.8%
Middle East
& Af rica
1.8%
China
31.6%
Northeast
Asia
14.9%
South &
Southeast
Asia12.5%
North
America
23.2%
Source: Prepared by Barclays Capital based on CMAI and The Chemical DailyNote1: 2009 Statistics, Note 2 2008 Statistics
3
3rd China International Acetic Acid – Vinyl Acetate Forum
Poly v iny lAlcohol
EVACopoly mers
Other/Unspecif ied
Poly v iny lAcetate
Middle &
South
America
3%
Japan
11%
Eastern Asia
29%
Middle East
& Af rica
2%
South &
SoutheastAsia
6%
Eastern
Europe3%
Western
Europe
22%
North
America
24%
Vinyl Acetate Monomer (VAM): Highly concentrated ma rket
Demand by Usage (4.3mn tonnes)(1) Demand by Region (5.05mn tonnes)(2) Capacity by Region (6.75mn tonnes)(1)
• VAM market is highly concentrated with Celanese holding 27% share,
top five producers combined holding 53% share.
• Operating rate bottomed in 2009.
• VAM primary end uses are emulsions for paints, textiles and adhesives,
with largest demand and highest growth both in Asia, thanks to
economic growth and fixed asset formation.
Top Vinyl Acetate Monomer Producers (2009)Owner Capacity (mn Tonnes)
Celanese 1.82Dairen Chemical 0.68Millennium 0.41Dow Chemical 0.34DuPont 0.34Ineos 0.27Shanghai Wujing 0.20Sichuan Vinylon 0.20Wacker Chemie 0.20Nippon Synthetic Chemical 0.20Others 2.16
Total 6.75
Source: Prepared by Barclays Capital based on CMAI, SRI Consulting and The Chemical DailyNote1: 2009 Statistics, Note 2 2007 Statistics
North
America
26.8%
West
Europe
17.3%
CIS & Baltic
States
2.2%
Indian Sub-
continent
0.6%Middle East
0.5%
Northeast
Asia
49.3%
Southeast
Asia
3.3%
Purified Terephthalic Acid (PTA): PET a.k.a Asia Driv en
Demand by Usage (34.5mn tonnes) Demand by Region (34.5mn tonnes)(1) Capacity by Region (45.9mn tonnes)(1)
• PTA is one of the major applications for acetic acid.
• PTA demand heavily depends on polyester fiber situation.
• Asia, especially China, drives PTA demand and its growth, thanks to
its position as the centre of global synthetic fiber production, especially
polyester for apparel textile.
Top PTA Producers (2009)
Owner Capacity (mn Tonnes)
BP 7.22Mitsubishi Chemical 3.01Invista 2.48Formosa Chemicals & Fibre Corporation 2.80Reliance 2.00Samsung Petrochemical 1.80Xianglu Petrochemicals 1.50Yisheng Dahua Petrochemicals 1.50Mitsui Chemicals 1.30Eastman 1.03Others 28.66
Total 53.30
Source: Prepared by Barclays Capital based on METI, The Heavy & Chemical Industries News AgencyNote1: 2008 Statistics
Most of PTA goes toPET / Polyesters
China43.7%
Oceania0.1%
Africa0.3%
WesternEurope(incl.
Turkey)6.1%
MiddleEast (excl.
Turkey)3.1%
CIS &EasternEurope0.9%
NorthAmerica
8.0%
Middle andSouth
America4.4%
Asia excl.China33.3%
China26.9%
Asia excl.China47.8%
Middle andSouth
America4.7%
NorthAmerica10.3%
CIS &EasternEurope0.5%
MiddleEast (excl.
Turkey)2.4%
WesternEurope(incl.
Turkey)7.3%
4
3rd China International Acetic Acid – Vinyl Acetate Forum
Acetic Acid Production Somehow Correlated with IIP
Source: Haver, The Chemical Daily, Barclays Capital estimatesNote: Acetic acid production volumes in 2009 and 2010 are based on Barclays Capital estimates
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
-10%
-5%
0%
5%
10%
15%
Acetic Acid World Production YoY Change (RHS) IIP YoY Change (LHS)
Demand YoY Change (%)IIP YoY Change (%)
China Industrial Production Also Corrected in the R ecession
Source: Haver, Barclays Capital EstimatesNote: Numbers in 2011 and 2012 are based on Barclays Capital Estimates
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
1991 1995 1999 2003 2007 2011
United States Germany Japan Australia Brazil China World
IIP YoY Change (%, Quarterly)
5
3rd China International Acetic Acid – Vinyl Acetate Forum
While Long-term Interest Rate Has Stabilized …
Source: Haver, Barclays CapitalNote: Long-term interest rate is based on 10-year national treasury’s yield. Final data point is as of January 2011.
0
2
4
6
8
10
12
14
16
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
US Japan UK Germany France Spain
(%)
… Short-term Interest Rate Has Plunged and Remains L ow
Source: Haver, Barclays CapitalNote: Short-term interest rate is based on 3-month national treasury’s yield or uncollateralized call rate. Final data point is as of January 2011.
0
2
4
6
8
10
12
14
16
18
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
US Japan UK Germany France Spain
(%)
6
3rd China International Acetic Acid – Vinyl Acetate Forum
Acetyls Related Asian Market: Start Recoveries afte r 2H08FY
Source: Bloomberg, DataStream, Barclays Capital Note: Final Data Point is as of 3rd March, 2011
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jun-1996 Jun-1998 Jun-2000 Jun-2002 Jun-2004 Jun-2006 Jun-2008 Jun-2010
Acetic Acid, C&F Southeast AsiaVAM, CFR Southeast AsiaC2, CFR Far East AsiaMethanol,Far East CFR Taiwan
(USD /metric tonne)
Acetic Acid Spot Price
Source: Bloomberg, Barclays Capital Note: Final Data Point is as of 3rd March, 2011
0
200
400
600
800
1,000
1,200
Jun-1996 Jun-1998 Jun-2000 Jun-2002 Jun-2004 Jun-2006 Jun-2008 Jun-2010
C&F Far East AsiaC&F Southeast AsiaFOB Northwest EuropeFOB US Gulf
(USD /metric tonne)
7
3rd China International Acetic Acid – Vinyl Acetate Forum
Vinyl Acetate Monomer Spot Price
Source: Bloomberg, Barclays Capital Note: Final Data Point is as of 3rd March, 2011
0
200
400
600
800
1,000
1,200
1,400
1,600
Jun-96 Jun-98 Jun-00 Jun-02 Jun-04 Jun-06 Jun-08 Jun-10
CFR Far East AsiaCFR Southeast AsiaFOB Northwest EuropeFOB US Gulf
(USD /metric tonne)
Vulnerable Euro / Unstable Rates
Source: Datastream, Haver, Barclays CapitalNote: Exchange rates for Euro before February 1999 are calculated with historical Deutsche Mark’s exchange rate and DEM/EUR conversion factor 1.95583.
80
100
120
140
160
180
200
Jan-
90
Jan-
92
Jan-
94
Jan-
96
Jan-
98
Jan-
00
Jan-
02
Jan-
04
Jan-
06
Jan-
08
Jan-
10
0.6
0.8
1
1.2
1.4
1.6
1.8
USDJPY (LHS) EURJPY (LHS) EURUSD (RHS)
(USDJPY, EURJPY) (EURUSD)
8
3rd China International Acetic Acid – Vinyl Acetate Forum
While RMB Appreciates … Not Back to the Early ’90s Y et
Source: Datastream, Haver, Barclays CapitalNote: Exchange rates for Euro before February 1999 are calculated with historical Deutsche Mark’s exchange rate and DEM/EUR conversion factor 1.95583.
80
100
120
140
160
180
200
Jan-
90
Jan-
92
Jan-
94
Jan-
96
Jan-
98
Jan-
00
Jan-
02
Jan-
04
Jan-
06
Jan-
08
Jan-
10
4
5
6
7
8
9
10
USDJPY (LHS) EURJPY (LHS) USDRMB (RHS)
(USDJPY, EURJPY) (USDRMB)
China to Remain Firm while Others Face Tougher Time s
Source: IMF, Haver, Barclays Capital EstimatesNote: GDP Numbers in 2010 and 2011 are based on Barclays Capital Estimates.
-10%
-5%
0%
5%
10%
15%
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
United States(LHS) Germany(LHS) Japan(LHS) Australia(LHS)
Brazil(LHS) China(LHS) World (LHS)
Real GDP Growth Rate(%)
9
3rd China International Acetic Acid – Vinyl Acetate Forum
Synthetic Fiber Global Production Volume
Source: Japan Chemical Fibers Association, Barclays Capital
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
2002 2003 2004 2005 2006 2007 2008 2009
China Asia except China Rest of World
(Thousand Tonnes / Year)
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
1960
1970
1975
1980
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
(1,000 Metric Tonnes)
Nylon Acrylic Polyester Others Synthetic Fibres Cellulose
Global Production of Synthetic Fibers
0
1,000
2,000
3,000
4,000
5,000
6,000
2002 2003 2004 2005 2006 2007 2008 2009
China Asia except China Rest of World
(Thousand Tonnes / Year)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2002 2003 2004 2005 2006 2007 2008 2009
China Asia except China Rest of World
(Thousand Tonnes / Year)
Polyester
Acrylic Nylons
Housing Start Plunge Not Pulling Acetyls Down
Source: Datastream, Barclays Capital.Note: Final data point is January 2011.
0
50
100
150
200
Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10
0
600
1,200
1,800
2,400
Number of housing starts (LHS)US Acetic Acid Demand(RHS)US VAM Demand(RHS)
(1,000 units) (1,000 tonnes)
10
3rd China International Acetic Acid – Vinyl Acetate Forum
Acetic Acid: One of the Major Methanol (MeOH) Applica tions
Source: CMAI, Barclays Capital、2009 data
Methanol41,340
(Thousand Metric Tons)
Formaldehyde13,300
Acetic Acid4,245
MMA(Methyl
Methacrylate)880
MTBE/TAME5,485
UreaFormaldehyde
Resins6,120
PhenolFormaldehyde
Resins1,615
MDI(Methyl
diphenyldiisocyanate)
535
1,4 Butanediol665
Pentaerythritol430
MelamineResins
800
Polyacetals(Engineering
Thermo-plastics )
1,275
Particle Board
MDF (MediumDens ity
Fiberboard)
DecorativePlywoods
OSB (OrientedStrand Board)
ConstructionPlywoods
Automotive
Electronics
Appliances
Extrusion
Laminates
SurfaceCoating
-Appliances
Alkyd Res ins(Paints)
PowderCoating Resins
SyntheticLubes &Additives
Tetrahydrofuran(Urethane
Elas tomers)
GBL(Gamma
Butyrolactone)
PBT(Polybutylene
Terephthalate)
Polyurethanes
Flexible Foams
Rigid Foams
Elastomers
Others1,860
Paraformaldehyde(Foundry Resins)
Chelating Agents
TMP(Trimethylolpropane)
NPG(Neopentyl glycol)
Rubber(Polyisoprene)
Pyridines
Pesticides
DME(Dimethyl
Ether)2,780
Gasoline/Fuel5,490
DMT(Dimethyl
Terephtalate)765
Solvents1,500
Others6,895
Vinyl Acetate1,570
AceticAnhydride
510
Acetate Esters635
PTA1,145
Other385
PolyvinylAcetate
PolyvinylAlcohol
EVACopolymer
Paints
Cellulose Acetate-Textiles &-Clothing
Pharmaceuticals
Detergents
Ethyl AcetateButyl Acetate
Propyl Acetate
PET Bottles
Polyesters
PolyethyleneTerephthalate
Polyester Film
Polyes ter Fiber-Carpet-Apparel
MCAVinegarTextiles
Acetate Salts
PMMA400
MBS Resins140
Methacrylate/Acrylate
CoPolymers190
Other150
AcrylicPlastics &
Sheets
MoldingPowder &
Resins
SurfaceCoatings
ImpactModifiers
Magnetic Films- Computer &Video disks
GasolineAdditive/
Oxygenate5,100
High PurityIsobutylene
385
RubberTires
LPGBlendstock
2,420
Aerosols360
Biodiesel1,590
Used asMethanol
3,900
GasolineBlending
Direct Fuel
Fuel Cells
PET(Polyethylene
Terephthalate)765
WindshieldWasher Fulid
Fragrances
Solvents
Disinfectuants
BleachedPaper
Polyesters
PolyethyleneTerephthalate
Polyester Film
Polyester Fiber-Carpet-Apparel
Methyl Acetate
Methyl Chloride
Methylene Chloride
Methyl Amines
Glycol Methyl Ether
Methyl Acrylate
Methanol-to-Olefins
Natural GasProcessing
WastewaterTreatment
Aerosols
CleaningChemicals
Consistent MeOH Demand Growth
Source: The Chemical Daily, Barclays Capital
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Asia North America West Europe Others
(mn tonne)
11
3rd China International Acetic Acid – Vinyl Acetate Forum
Relative Price ::::Crude Oil vs. Thermal Coal
Source: CMAI, Haver, Barclays Capital. Note: Final data point is end of January 2011. Coal price is “Australian Thermal Coal, 12000- Btu/Pound, Less Than 1% Sulfur, 14% Ash, Fob Newcastle/Port Kembla”.
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
Feb-79 Aug-81 Feb-84 Aug-86 Feb-89 Aug-91 Feb-94 Aug-96 Feb-99 Aug-01 Feb-04 Aug-06 Feb-09
(X)
0
50
100
150
200
(US$)Oil/Coal ratio (LHS) parity=0.23(LHS)
WTI Crude Price(US$/barrel) (RHS) Australia Thermal Coal(US$/tonne) (RHS)
Relative Price ::::Thermal Coal vs. Natural Gas
Source: CMAI, Haver, Barclays Capital. Note: Final data point is end of January 2011. Coal price is “Australian Thermal Coal, 12000- Btu/Pound, Less Than 1% Sulfur, 14% Ash, Fob Newcastle/Port Kembla”.
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Jan-90 Jul-92 Jan-95 Jul-97 Jan-00 Jul-02 Jan-05 Jul-07 Jan-10
(X)
0
50
100
150
200
(US $)Coal/Gas ratio (LHS) parity=26.5(LHS)Australia Thermal Coal (US$/tonne)(RHS) US Natural Gas (US$/10 Million BTU)(RHS)
12
3rd China International Acetic Acid – Vinyl Acetate Forum
Relative Prices: Crude Oil vs. Natural Gas
Source: CMAI, Haver, Barclays Capital. Note: Final data point is end of January 2011.
0
5
10
15
20
25
30
Jan-90 Jul-92 Jan-95 Jul-97 Jan-00 Jul-02 Jan-05 Jul-07 Jan-10
(X)
-10
10
30
50
70
90
110
130
150Oil/Gas ratio (LHS) parity=6(LHS)WTI Crude Price(US$/barrel) (RHS) US Natural Gas (US$/10 Million BTU)(RHS)
(US$)
Ethylene Cost Curve: Gas Advantages
Source: Company reports and Barclays Capital estimates
50
250
450
650
850
1,050
1,250
1,450
1,650
1,850
0 20 40 60 80 100 120 140 160 180
Cumulative Global Ethylene Capacity, Million Metric Tonnes
Eth
ylene
Cash
Cos
ts, $
/MT
Crude Oil Price Assumptions:1998 = $13/brl2008 = $97/brl2009 = $45/brl2010E = $79/brl2013E = $83/brl
2013E
1998
2008
2009
M East
W EuropeNE Asia
N AmericaSE Asia
M East
NE AsiaW Europe
N AmericaSE Asia
2010E
N Am
SE AsiaS America
W EuropeNE Asia
13
3rd China International Acetic Acid – Vinyl Acetate Forum
Relative Price ::::MeOH Still Cheaper than Gasoline
Source: Datastream, Petroleum Association of Japan, Barclays CapitalNote: Final data point is end of January 2011.
0.0
0.2
0.4
0.6
0.8
1.0
1.2
Mar-97 Mar-99 Mar-01 Mar-03 Mar-05 Mar-07 Mar-09
0
200
400
600
800
1,000
1,200Methanol / Gasoline Ratio (LHS)Parity = 0.5 (LHS)Northeast Asia Methanol Price (Taiwanese CFR Price, RHS)Northeast Asia Gasoline Price (Japanese CIF Price, RHS)
(USD/tonne)(X)
Regional MeOH Prices: EU & NAM Premium over Asia
Source: Datastream, Barclays CapitalNote: final data point is March, 2011
-200
-100
0
100
200
300
400
Jan-1990 Jan-1993 Jan-1996 Jan-1999 Jan-2002 Jan-2005 Jan-2008 Jan-2011
North America Europe
(USD/tonne)
14
3rd China International Acetic Acid – Vinyl Acetate Forum
Synthetic Fibre Prices Mostly on the Rise
Source: DataStream, Barclays Capital Note: Final data point is February, 2011.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Jan-1995 Jan-1998 Jan-2001 Jan-2004 Jan-2007 Jan-2010
Nylon FY Poly Sf Acrylics Sf
(USD/tonne)
PTA/EG/Cotton/Polyester Staple
0
50
100
150
200
250
Jan-1995 Jan-1998 Jan-2001 Jan-2004 Jan-2007 Jan-2010
0
20
40
60
80
100
EG Poly Sf PTA Cotton (RHS)
(USC/kg) (USC/kg)
Source: DataStream, Barclays Capital Note: EG, Polyester ,PTA = Asian prices, Cotton = Memphis market price, Final data point is February, 2011.
15
3rd China International Acetic Acid – Vinyl Acetate Forum
AN/Wool/Acrylic Staple
Source: DataStream, Barclays Capital Note: Wool=Australia Market, AN=Asia Market Final data point is February, 2011.
0
5
10
15
20
25
Jan-1995 Jan-1998 Jan-2001 Jan-2004 Jan-2007 Jan-2010
0
800
1,600
2,400
3,200
4,000
Wool AN (RHS) Acrylics Sf (RHS)
(USD/kg) (USD/tonne)
Japan’s Case: Economic Growth Fuels Acetic Acid Dem and
Source: INDB, Haver, Barclays Capital EstimatesNote1: GDP Numbers in 2011 and 2012 are based on Barclays Capital Estimates. Note2: Japanese GDP before 1980 and after 1980 are based on SNA68 and SNA93 respectively.
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
0
100
200
300
400
500
600
700
800
Japanese Acetic Acid Production (99% Equivalent, RHS) Japanese Vinyl Acetate Production (RHS)
Japanese Real GDP Growth Rate (LHS)
Production (Thousand Tonnes)Real GDP Growth Rate (%)
16
3rd China International Acetic Acid – Vinyl Acetate Forum
… until the Service Industry Starts Driving the Econ omy
Source: INDB, Haver, Barclays Capital EstimatesNote1: GDP Numbers in 2011 and 2012 are based on Barclays Capital Estimates. Note2: Japanese GDP before 1980 and after 1980 are based on SNA68 and SNA93 respectively.
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011
-32%
-24%
-16%
-8%
0%
8%
16%
24%
32%
Japanese Acetic Acid Production YoY Change (RHS) Japanese Vinyl Acetate Production YoY Change (RHS)Japanese Real GDP Growth Rate (LHS)
Production YoY Change (%)Real GDP Growth Rate (%)
Source: UN National Accounts Statistics, Barclays Capital. Note: Data end at 2009.
GDP Growth after 2000 Fueled by “Others” and the Sha re of G3 Contracting
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
1970 1975 1980 1985 1990 1995 2000 2005
GDP (USDbn)
United States Japan Germany Other OECD Countries China India Brazil Other Non-OECD Countries
17
3rd China International Acetic Acid – Vinyl Acetate Forum
Fixed Capital Formation by Region:Descending in the US, Japan & Germany
Source: UN National Accounts Statistics, Barclays Capital. Note: Data end at 2009.
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
1970 1975 1980 1985 1990 1995 2000 2005United States Japan Germany Other OECD Countries China India Brazil Other Non-OECD Countries
Fixed Capital Formation (USD bn)
Appliances Have Prevailed in Major Chinese Cities
90.9%
87.0%
86.1%
85.9%
84.3%
80.6%
79.5%
76.9%
73.3%
72.3%
68.9%
66.4%
61.2%
60.1%
59.5%
54.9%
51.9%
40.6%
39.3%
35.5%
35.2%
32.9%
26.3%
26.3%
22.9%
18.0%
17.5%
15.6%
13.9%
12.3%
11.0%
10.6%
6.5%
0% 25% 50% 75% 100%
Refrigerator
Washing machine
Mobile phone
Air conditioner
Microw ave
Desktop PC
Range hood
Digital camera
Fan
MP3/MP4
Notebook PC
DVD/VCD/CD player
Vacuum cleaner
Audio player
Color TV (LCD)
Water purif ier
Digital video camera
Dish sanitizer
Camera
Color TV (CRT)
Home game machine
Dishw asher
Video camera
Portable game player
Facsimile
Color TV (PDP)
Dryer
Piano
Portable information device
Motorcycle
Golf equipment
Moped
Ski equipment
Source: JMAR, Barclays Capital
43.1%
41.0%
32.2%
27.1%
26.0%
24.2%
18.6%
18.0%
17.5%
17.3%
15.1%
13.0%
12.7%
10.1%
9.7%
9.7%
9.3%
9.0%
8.9%
8.5%
8.1%
7.6%
7.2%
6.5%
5.7%
5.2%
5.0%
5.0%
4.1%
3.7%
3.3%
3.3%
3.1%
2.2%
1.1%
0% 10% 20% 30% 40% 50%
Mobile phone
Notebook PC
Digital camera
Color TV (LCD)
Refrigerator
Air conditioner
Desktop PC
MP3/MP4
Microw ave
Digital video camera
Washing machine
Fan
Water purif ier
Color TV (PDP)
Range hood
Vacuum cleaner
Dish sanitizer
DVD/VCD/CD player
Portable game player
Dishw asher
Camera
Audio player
Home game machine
Piano
Facsimile
Dryer
Golf equipment
Nothing
Portable information device
Color TV (CRT)
Video camera
Ski equipment
Motorcycle
Moped
Others
Survey Overview
Durable Consumer Goods Ownership
Durable Consumer Goods Purchases over the Past Year
Survey region Three major cities - Beijing, Shanghai, and GuangzhouSurvey coverage
① RMB30,000+ in annual household income
Valid responses 1,621 individualsSurvey method Internet Survey entity CIIC&COMRSurvey period 1-11 August, 2009
Residents of two years or longer aged 20-59 andmeeting the following two criteria
② Respondent accounts for 50%+ of annual householdincome (male or female)
Samples were distributed roughly evenly by region and age groups
20-29 30-39 40-49 50-59 TotalBeijing 135 136 136 135 542Shanghai 135 134 136 135 540Guangzhou 135 135 135 134 539Total 405 405 407 404 1,621
18
3rd China International Acetic Acid – Vinyl Acetate Forum
Cumulative Distribution of World Population by Per- capita GDP
Source: UN National Accounts Statistics, Barclays Capital
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
0 1 2 3 4 5 6 7Cumulative Population (bn people)
Per Capita GDP(USD)
US
Japan
Germany
UK
South Korea
Russia
Saudi Arabia
Mexico
BrazilChina
Indonesia
India
Shift to High-volume, Low-variety: Cumulative Shipments of Major Game Consoles
Source: NPD, Barclays Capital
0
50
100
150
200
250
83/3 86/3 89/3 92/3 95/3 98/3 01/3 04/3 07/3 10/3
Famicom Super Famicom PlayStation
PlayStation2 PlayStation3 Wii
Game Boy Advance PSP DS
(million units)
19
3rd China International Acetic Acid – Vinyl Acetate Forum
1,0002,0003,0004,0005,0006,0007,0008,0009,000
0 1,000 2,000 3,000 4,000 5,000 6,000
(Lbs.)
(CC)
Japanese Car American Car European Car
1,0002,0003,0004,0005,0006,0007,0008,0009,000
0 1,000 2,000 3,000 4,000 5,000 6,000
(Lbs.)
(CC)
Japanese Car American Car European Car
CY2000CY1975
Automotive Vehicle Spec.: Curb Weight vs. Displacem ent
Source: Ward’s Automotive Yearbook, Barclays Capital
Source: Seibido, Barclays Capital
KSF is “Inexpensive, Massive & Stable Workforce”for Standardized Product Assembly
Digital Camera Automobile
2000: 15.28mn units 2007: 125.11mn units 1998: 56.26mn units 2007: 73.15mn units
South Korea57,500(13.6%)
China41,000(9.7%)
Europe183,400(43.3%)
SouthAmerica18,700(4.4%)North
America52,000(12.3%)
Japan55,350(13.1%)
Rest ofAs ia
15,220(3.5%)
CountryThousand Units
(%)
South Korea165,300(14.7%)
India109,550(9.8%)
Japan48,650(4.3%)
China541,650(48.2%)
SouthAmerica42,100(3.7%)
NorthAmerica37,250(3.3%)Europe
105,800(9.4%)
Rest of Asia72.90(6.6%)
CountryThousand Units
(%)
China24,670(19.2%)
Japan9,890(7.7%)
Korea7,370(5.7%)
Rest of Asia4,990(3.9%)
Europe17,180(13.4%)
NorthAmerica30,130(23.5%)
SouthAmerica
1,320(1.0%)
Taiwan32,660(25.5%)
CountryThousand Units
(%)
China226,380(91.5%)
Taiwan8,850(3.6%)
Europe710
(0.3%)
Korea5,740(2.3%)
Japan5,650(2.3%)
CountryThousand Units
(%)
Mobile Phone Personal Computer
2000: 423.15mn units 2007: 1,123.20mn units 2000: 128.21n units 2007: 247.33mn units
Japan11,170(73.1%)
South Korea790
(5.2%)
Indonesia470
(3.1%)
Malaysia500
(3.3%)
China450
(2.9%)
Taiwan1,900
(12.4%)
CountryThousand Units
(%)
China73,960(59.1%)
Japan31,900(25.5%)
Indonesia5,900(4.7%)
Malaysia3,900(3.1%)
Vietnam3,600(2.9%)
Thailand2,500(2.0%)
Philippine1,000(0.8%)
South Korea2,350(1.9%)
CountryThousand Units
(%)
America17,660(34.0%)
China1,630(3.1%)
Brazil1,570(3.0%)
Others10,380(20.0%)
South Korea1,950(3.8%) France
2,950(5.7%)
Germany5,730
(11.0%)
Japan10,050(19.4%)
CountryThousand Units
(%)
Others25,610
(35.2%)
UnitedStates10,780
(14.8%)
China8,880
(12.2%)SouthKorea4,090
(5.6%)
Germany6,210(8.5%)
Japan11,160
(15.3%)
France3,020(4.2%)
Brazil2,970
(4.1%)
CountryThousand Units
(%)
20
3rd China International Acetic Acid – Vinyl Acetate Forum
Analyst Certification:
I, Mikiya Yamada, hereby certify that (1) the views expressed in this research report accurately reflect my personal views about
any or all of the subject securities or issuers referred to in this research report and (2) no part of my compensation was, is or will
be directly or indirectly related to the specific recommendations or views expressed in this research report.
Analyst Certification, Related Stocks
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