We estimate that global propylene supply addition should reach 8-9mtpa during 2021-2022F, following naphtha cracker and refinery expansion in China. The startup of propane dehydrogenation projects (PDH) also looks accelerated at 2.8-4.1mtpa during 2021-2022F from 1.0mtpa during 2017-2019. Based on our estimates, 60-90% of additional propylene capacities are from China during 2021-2024F.
The strong demand for ethylene derivatives, particularly polyethylene (PE), and limited arrival of US cargoes should be able to offset the new supply pressure, in our view. In the case of excess supply, we believe the producers at the high end of the cost curve, such as methanol-based producers, are likely to lose market share to the low-cost players (most likely crude-oil-to-chemical complexes). Post 2023F, ethylene capacity additions should fall to 4-5mtpa.
■ We believe new ethylene capacity is well spread out during 1Q-3Q21F while strong ethylene derivative demand should continue to support ethylene price. ■ Global ethylene capacity addition looks slim post 2022F on limited expansion by US producers and potential delay of some ASEAN projects.
■ As IRPC’s crude inventory holding period is longer than other Thai refiners’, crude inventory gains were likely as high as US$10/bbl in 1Q21F.
· Financial services – Top net buy sector among local retail investors, has been a net buy sector since the start of 2021. · Consumer products – Second largest net buy sector and has been a net buy sector for the past three weeks.
· Local institutional investors turned weekly net buyer after 18 weeks of net selling They net bought RM116.7m of Malaysian equities last week, making them the largest net buyer of Malaysia equities. Retail investors were relegated to the second largest net buyer spot last week. Foreign investors were the only net seller last week and their net sell flows jumped 202% wow to RM235m.
Volpara Solid 4Q trading update as expected VHT released a solid 4Q trading update. The 4Q is traditionally the strongest quarter and we were not disappointed. Of most interest was the increase in ARPU to US$1.40 (from US$1.22 in 3Q), however importantly ARPU signed during the quarter on average was US$2.50.
· Bursa Malaysia splits the 918 companies listed on the stock exchange into 13 broad sectors. · The performances of the companies listed on the main market in same-sector classifications are captured under the Bursa Malaysia Sectorial Index Series. The inclusion of a company in a sector depends on the company's main source of operating revenue.
■ Wider PE-ethane spreads should lead to EBITDA margin expansion. ■ PTT Global Chemical should see more tailwinds from strong prices for propylene derivatives. Asian PE prices supported by strong demand Asian polyethylene (PE) prices were still on the uptrend in early-Apr 21, especially low density polyethylene (LDPE), the price of which increased sharply to US$1,575/t on a supply outage in the Middle East and resilient demand in Asia.
■ SCC’s Vietnam-based olefins plant of 1. mtpa should be the company’s long-term EPS growth driver, thanks to feedstock cost competitiveness. ■ Asian PVC-EDC spread was at a 10-year high in Apr 21, which should support SCC’s chemical EBITDA in the near term. Expanded ethylene capacity right on time to capture strong demand SCC’s project to expand ethylene capacity by 300ktpa achieved on-spec production in Mar 21 and started commercial production in Apr 21F.