China's refined copper industrial utilisation rate investigation and analysis by October 2016

Published by OILCHEMDATA.COM

Editor: Kahler

OILCHEMDATA was committed to investigate over 29 Chinese copper smelting enterprises' utilisation rate in October 2016, and acquired data as follow:
Total capacity of electrolytic copper: 8.6 million mt annually;
Total running capacity: 6.7 million mt annually;
Industrial utilisation rate: 77.7%, up 0.2% from September.

Details as shown below:

October saw a big fluctuation of discount and premium of electrolytic copper's price, low end RMB100 and high end RMB370 or so, and currently remaining between RMB100-150. While copper smelting plants' processing charge also edged up, as during 4th season 20 grade TC/RC smelting plants' processing charge at around USD104/mt, gain USD3~4/mt. Spot market fueled by rising copper's price, was running well in trading, as market supply was abundant and traders were positive to sales, meanwhile downstream purchase had small increase.

Smelting plants front, Yunnan Copper Industrial Company's revenue during January-September was RMB38.23 billion, down 20.49% year on year; Zijin Mining Industrial Corporation realized a net profit RMB886 million in a single season from July to September, surged by 154.42%; Tongling Nonferrous Company's revenue in 3rd season was RMB23.13 billion, up 4.22%. Tongling planned to build a biggest copper-based new material industrial base of China, with an effort to extend deep processing industrial chain through copper rods (line, cable), PCB, copper strip, copper bar, copper tube, copper powder, copper artwork, etc.; Zhongse Holdings' Baxiaku Copper Project has launched into production, with annually processing ability 30 million mt copper ore and 40 years of designed services years, and ore's average grade 0.36%. Shengzhou Copper Industrial Company located in Changzhou has upgraded, with shutdown of its electrolytic copper production and focus on copper products. From the overview, inventory in three places decreased, and each gaint smelting enterprise has no cutting of their output and no turnaround plan. OILCHEMDATA expect a small rise of utilisation rate in upcoming November.

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Crude Oil Global Market Monthly Analysis by September 2016

International oil price in September was fluctuating with uptrend, but from the whole view it held steadiness. The major influencing factors include FED meeting and Frozen Production Meeting. By market close on September 29th, WTI 43.03-47.83 dollars/bbl, Brent 45.45-49.99 dollars/bbl.

Early the September, Russia and Saudi Arab agreed to colaborate on stabilizing oil market and increasing the possibility of limiting oil output. In addition, American crude oil inventory hit a 17-year low in a single week, pushing oil price to a big surge. At mid-September, EIA announced that global crude oil demand growth is slower than expected, and glut situation may extend to first half of the year 2017, added with concerns over possible growth of Negerian and Libya oil export, pulling oil price down. Late the September, American crude oil inventory once more slumped down unexpected, and FED announced no interest rate lift in September, and OPEC announced an agreement of limiting production has been reached, fueling oil price to rebound.



Market Forecast:

September 2016, WTI price weight gained 0.28 dollar/bbl than August, while Brent price weight down 0.01 dollar/bbl than August. WTI price average at USD45/bbl while Brent at USD47/bbl, flat from August.
Supply front, despite OPEC no longer sustain policy of non cutting production, the real output of both OPEC and Russia were still on a high track, besides, Libya and Iran are still with intention of growing their production. The downtrend of production in U.S. has been slowed remarkably, however the oversupply situation could not be altered soon. Demand front, US commercial crude oil inventory was decreasing for weeks but still stayed at above 500 million bbl level. Meanwhile, the refineries in Europe and US have entered turnaround season, followed with dropped utilisation rate. Economy view, Only China appeared with sign of turning well among global economies, with steadily running pace. Policy front, unclear foresight to interest rate lift by FED soften US dollars, which gave positive support to oil price. Geopolitical view, Middle East was relatively peaceful, with no marked influence. In spite of agreement of limiting production announced by oil producing contries, which has lifted the confience among traders, market still worried if it could be implemented, in addition, if the limited output volume is not as much as to relieve the pressure from glut, the fundamental bearish may extend. It is expected in October the international oil price still hard to surge.Supply-demand front will be still bearish, but end-bottom support maybe solid, which save it with limited space downtrend. Brent price may be running at USD45-52/bbl.






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Will anticipated market supply increase pull back the rising SBR price？

By October 2016,there were 11 ESBR (emulsion styrene butadiene rubber) produtive enterprises in China,with total capacity 1.47 million mt/a. This investigation cover all the ESBR production enterprises of China, including 2 in Northern China, 4 in Eastern China, 2 in Southern China, 2 in Northeast China and 1 in Northwest China.

Chinese SBR production output in September increased both year on year and month on month.
According to data released by oilcehmdata, September output increased by 8.91% m-o-m and 9% y-o-y. All units that shut down in August recovered production except long-term shutdown Lvgang unit and Lanzhou Petrochem extend its turnaround,especially Yangtze unit which shutdown since August has recovered production from September 20th,and now running 2 lines production with up to 90% utilisation rate.

January-September 2016 output down by 0.13%
China produced totally 655,100mt SBR rubber from January to September 2016, down by 0.13% year on year. Qilu Petrochem's SBR unit was running monthly output averagely at around 23,000mt since this year, higher than 20,000mt in 2015. From January to August 2016, Qilu company's SBR unit produced 185,000mt or so, up 13% from the same period of 2015. Secondly, Weitai and Lanzhou Petrochem's SBR output were seen with remarkably increase, and Shenhua and Zhechen company as well.
October 2016 Chinese SBR plants are planning a totally higher output
According to oilchemdata, October 2016 Chinese SBR plants are planning 81,500mt output, increasing 11,800mt from September, up 16.93% m-o-m. among which, 1502 planned a totally 39,850mt output (excluding 3150mt of 1502E),increasing 3950mt m-o-m; 1500E planned a totally 10,700mt output, increasing 4100mt m-o-m;oil rubber planned a totally 27,800mt output,increasing 2700mt m-o-m.

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Is synthesis rubber market in short of goods? Market talks

Guide:  
the EX-work price of BR (butadiene rubber) in the early September has risen to a new high in 2016, up 25% year on year, which has brought topic among the most market players over its spread price to various sorts of natural rubber. So what is the engine to drive such rise since September? All those said "short of goods" is real in the market? Below is our analysis:

The import quantity of BR（butadiene rubber) decreased remarkably while on USD market BR supply is tight

According to the supervision by oilchemdata, China's total imported quantity of BR (butadiene rubber) and SBR (styrene butadiene rubber) decreased by 2.01% year on year, among which, SBR import quantity increased by 5.4% year on year, while BR import quantity decreased by 13.4%. The main reason that BR import quantity enlarge the drop from January to July 2016 is: first, butadiene's price stayed at high level. Some overseas BR rubber units was running at low utilisation rate due to high cost of butadiene; second, Gaoqiao's BR units shut down, followed by shutdown of Huayv's BR unit, while Sinopec has tight resources of BR, and Zhongyou raised its direct supply rate,so that there is rare flow of BR spot goods in market. Some market players consider to channel the import source, but USD offer to distributors seems high and good supply is tight, USD market traders are mostly wait-and-see; the third point, SBR import is relatively stable, and major SBR units overseas are running normally, with normal goods supply, but the increased import quantity can not set off the decrease of imported BR quantity. Therefore, the synthesis rubber import quantity was running at sliding trend from January to July 2016.

Producer-low profit, with low utilisation rate

Chinese SBR/BR Units Turnaround Plan August-September 2016
 ’000mt/year

According to the supervision by oilchemdata, China's total imported quantity of BR (butadiene rubber) and SBR (styrene butadiene rubber) decreased by 2.01% year on year, among which, SBR import quantity increased by 5.4% year on year, while BR import quantity decreased by 13.4%. The main reason that BR import quantity enlarge the drop from January to July 2016 is: first, butadiene's price stayed at high level. Some overseas BR rubber units was running at low utilisation rate due to high cost of butadiene; second, Gaoqiao's BR units shut down, followed by shutdown of Huayv's BR unit, while Sinopec has tight resources of BR, and Zhongyou raised its direct supply rate,so that there is rare flow of BR spot goods in market. Some market players consider to channel the import source, but USD offer to distributors seems high and good supply is tight, USD market traders are mostly wait-and-see; the third point, SBR import is relatively stable, and major SBR units overseas are running normally, with normal goods supply, but the increased import quantity can not set off the decrease of imported BR quantity. Therefore, the synthesis rubber import quantity was running at sliding trend from January to July 2016.



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China Main Port (CMP) Petroleum Coke Market Dynamics Weekly (August 05-12th 2016)

Imported coke price at Chinese main ports: carbon grade: FPCC sponge coke with 9% coke sulfur content at RMB630/mt. US sponge coke with 4% sulfur at RMB600/mt, US high volatile sponge coke with 3% sulfur at RMB780-800/mt.

Fuel grade petroleum coke: US shot coke with 6% sulfur at RMB500/mt, and shot coke with 4% sulfur at RMB790-810/mt, 4.8% sulfur at RMB600/mt, 4.5% sulfur at RMB560-570/mt.

Inventory of petroleum coke at Chinese main ports:  

Rizhao Port at 185,000mt, Fangcheng Port at 170,000mt, Zhenjiang Port at 305,000mt, Nanjing Port at 170,000mt, Nansha Port at 95,000mt, Taizhou Port at 40,000mt, Nantong Port at 20,000mt, Qinzhou Port at 40,000mt, Longkou Port at 20,000mt.

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Asian propylene market in July 2016 ran stable-to-rise

Asian propylene market in July 2016 ran stable-to-rise, with market close on July 28th at USD705/mt FOB South Korea and USD750/mt CFR China, both gain 6 dollars/mt from early July. Early the month, backed on well profit, PP producers were running at favorable utilisation rate. Futures market arouse an uptrend of spot market. Chinese Bohai Chemicals Group's PDH unit was still in shutdown, and the imported cargoes' price accordingly ran high. However, RMB's appreciation was stirring among some trader.

Afterwards, Chinese import market began sliding in spot price due to shock of crude oil market and fluctuation of PP futures market. Some market players lack of confidence as the rising demand for PP spot goods would not last long yet with not so strong performance. Coming to the end July, G20 Summit would push part of East China's producers to shut down their units in hope of assurance of improving air quality, followed by shutdown among downstream users. Therefore, August import discussion is going downward. Spot market trade was not so well as some sentiment against it came into influence. Oilchemdata forecast next month the trade discussion ......

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