Impact of the Global Financial Crisis on the European PET ... of the Global Financial... · Impact...

Proud to serve solutions.

www. gsiplastic.com 1

Impact of the Global Financial Crisis on the Impact of the Global Financial Crisis on the European PET Market. Focus on Russia & CISEuropean PET Market. Focus on Russia & CIS

February 17th, 2009Moscow - Russia



�� G.S.I. Global Service International G.S.I. Global Service International srlsrl

�� World Financial CrisisWorld Financial Crisis

�� Impact of the financial crisis on:Impact of the financial crisis on:�� PET Supply / DemandPET Supply / Demand�� PET FlowsPET Flows�� PET PricePET Price�� PET TradersPET Traders

�� ConclusionsConclusions

AgendaAgenda



Proud to serve solutions

ProducerProducer

GSI GSI -- Business ModelBusiness Model

BuyerBuyer

-- MarketingMarketing-- Business knowledgeBusiness knowledge-- Logistical supportLogistical support-- Customer CareCustomer Care-- Specialized personnelSpecialized personnel-- Informative flowInformative flow-- Claim managementClaim management

MATERIALMATERIAL

PAYMENTPAYMENT




We are not a speculative partnerWe are not a speculative partner

GSI GSI -- Business ModelBusiness Model

-- MarketingMarketing-- Business knowledgeBusiness knowledge-- Logistical supportLogistical support-- Customer CareCustomer Care-- Specialized personnelSpecialized personnel-- Informative flowInformative flow-- Claim managementClaim management




Polyester Business Polyester Business -- GSIGSI’’ss Global viewGlobal view

The long lasting business relationships developed during these years allow GSI to have updated information throughout the Polyester chain

PETPETRaw Raw Materials

Fibers



GSI GSI -- The NetworkThe Network



Asian Asian PETPET

Australian Australian PETPET

African African PETPET

American American PETPET

CommodityCommodity

GSI transforms PET into a commodityGSI transforms PET into a commodity



World Financial CrisisWorld Financial Crisis



Everything started with Subprime MortgagesEverything started with Subprime Mortgages

February 13th 2007 on Financial Times:

“Fears grow over the Subprime loan market”

March 5th 2007 on Financial Times:

“The Subprime trap”June 12th 2007 on Financial Times:

“Bankruptcy and closure of dozens of Subprime lenders”August 22nd 2007 on Financial Times:

“Lehman Brothers to shut Subprime unit”



Subprime

Number of articles on the Financial Times Number of articles on the Financial Times including the word including the word ““ SubprimeSubprime ”” by month:by month:



Than we moved to Than we moved to WritedownsWritedowns momentmoment

Subprime

Writedowns



For a total of 1 trillion USD For a total of 1 trillion USD -- FT Dec. 17th 2008FT Dec. 17th 2008

Source: IMF



Then it was the time of recession:Then it was the time of recession:

Subprime

Recession

Writedowns



GDP Growth 2009 forecast by IMF, the lowest GDP Growth 2009 forecast by IMF, the lowest number rate since the World War IInumber rate since the World War II

%

Source: IMF



Subprime Mortgages

Financial Crisis

Writedowns

Now it is the time of UnemploymentNow it is the time of Unemployment

Unemployment



Number of articles on ft.com including the Number of articles on ft.com including the following words by monthfollowing words by month

Subprime Mortgages

Financial Crisis

Unemployment

Writedowns



Growth in Global Industrial Production and Growth in Global Industrial Production and Merchandise TradeMerchandise Trade

Annualised 3 months % change

Source: IMF



Real Commodity Prices (1995 = 100)Real Commodity Prices (1995 = 100)

1995 = 100

Source: IMF



PET Price FOB Asia LC at Sight and OilPET Price FOB Asia LC at Sight and Oil

800

1000

1200

1400

1600

Jan-2

006

Apr-20

06Ju

l-2006

Oct-20

06Ja

n-200

7Apr

-2007

Jul-2

007Oct-

2007

Jan-2

008

Apr-20

08Ju

l-2008

Oct-20

08Ja

n-200

9

30507090110130150

PET FOB Asia USD/MT WTI USD/Barril

USD/BarrelUSD/MT



Impact of the Financial Crisis on the PET MarketImpact of the Financial Crisis on the PET Market



Impact of the Global Financial Crisis on the Impact of the Global Financial Crisis on the European PET Market.European PET Market.

DemandDemand PricePrice

SupplySupply

FlowsFlows

TradersTraders



PricePrice

FlowsFlows

TradersTraders

DemandDemand

SupplySupply




0

2000

4000

6000

8000

10000

12000

14000

16000

18000

2005 2006 2007 2008 2009 2010

0%

2%

4%

6%

8%

10%

12%

14%

Demand Increase %

World PET DemandWorld PET Demand

KMT

Source: Tecnon Orbichem



The increase in PET Consumption 2008 vs 2007 will be at the lowest level ever

Forecast for 2009 demand are very difficult

World PET DemandWorld PET Demand

In some areas of the World like China, Middle East and South America we are still seeing reasonable growth, whic h are compensated by reductions in Countries severely hit by the financial crisis

The financial crisis is having an impact on PET gro wth, along with lighter weighted bottles and Recycled PET are reducing the growth’s speed



PET deliveries to Russia in 2008PET deliveries to Russia in 2008

0

20000

40000

60000

80000Ja

n

Feb

Mar

Apr

May

Jun

Jul

Aug Sep

Oct

Nov

Dec

DomesticImports

MT

We expect a decrease of PET deliveries to Russia during H2 ‘08 in comparison with H2 ‘07 between 20% and 30%, mainly driven by :- important pre-buying done by some major players in the first half ‘08- very poor summer- 6 consecutive months of Prices decrease (with consistent inventory reductions)



Chinese & Koreans PET exports in Chinese & Koreans PET exports in ‘‘08 to Russia08 to Russia

Source: Customs

0

5000

10000

15000

20000

25000

30000

35000

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

Korea China



According to a preliminary estimation by the Canadean Soft Drink service the total non alcoholic beverage sales in Russia sank 2,6% in 2008, compared with a 13,2% increase in 2007.The Financial Crisis impact on the bottles demand will have an effect on 2009 statistics.

Russia nonRussia non --alcoholic beverages sales downalcoholic beverages sales down




SupplySupply

FlowsFlows

TradersTraders






SupplySupply

FlowsFlows

TradersTradersSupplySupply



World PET Surplus reaching 22 World PET Surplus reaching 22 mlnsmlns in 2010in 2010


0

5000

10000

15000

20000

2005

2006

2007

2008

2009

2010

KMT

Delayed start ups and plant closures are reducing the World Capacity increase for 2009 at 100.000 MT



PET Business CyclePET Business Cycle

0

5.000

10.000

15.000

20.000

25.000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

65,0

70,0

75,0

80,0

85,0

90,0

Max Production Demand Utilisation Rate %


KMT



World PET ProducersWorld PET Producers

1) 1.500 KMT Eastman2) 1.270 KMT M&G3) 1.000 KMT Invista4) 858 KMT FET5) 800 KMT NanYa6) 680 KMT Wellman7) 510 KMT Jade8) 460 KMT KP9) 450 KMT Equipolymer10) 445 KMT Indorama

1) 1.850 KMT M&G 2) 1.500 KMT Indorama 3) 1.400 KMT Jade 4) 1.000 KMT Artenius5) 950 KMT FET6) 800 KMT NanYa7) 800 KMT DAK8) 750 KMT Eastman 9) 700 KMT China Res.10) 590 KMT Invista

2006 2010



0

4000

8000

12000

16000

20000

2006 2010

Asia

Middle Eastand Africa

East Europe

West Europe

Americas

PET Production moving to Asia and Middle EastPET Production moving to Asia and Middle East

KMT





SupplySupply

FlowsFlows

TradersTraders





SupplySupply

FlowsFlows

TradersTraders

FlowsFlows



0

5000

10000

15000

20000

2005

2006

2007

2008

2009

Capacity Demand Balance

World PET Surplus moving from 2,1 World PET Surplus moving from 2,1 mlnsmlns (2005) to 3,3 (2005) to 3,3 mlnsmlns(2009), 22% of Demand(2009), 22% of Demand

KMT




-1000

1000

3000

5000

700020

05

2006

2007

2008

2009

2010

World Surplus Asia Surplus Middle East and Africa Surplus

World Surplus moving to 6 World Surplus moving to 6 mlnsmlns MT in 2010MT in 2010

KMT




-1000

-500

0

500

2005

2006

2007

2008

2009

2010

North America South America W.Europe E.Europe Mid East & Africa

Trade flows Trade flows ‘‘05 05 -- ‘‘10 (Exports 10 (Exports -- Imports) by areaImports) by area

KMT



0

200000

400000

600000

800000

1000000

2000 2002 2004 2006 2008Chinese Exports Koreans Exports

Chinese Chinese ‘‘08 PET exports 8,5% lower than 08 PET exports 8,5% lower than ‘‘0707Korean Korean ‘‘08 PET export 0,5% lower than 08 PET export 0,5% lower than ‘‘0707

Source: Chinese Custom



0

40000

80000

120000ja

n-0

7fe

b-0

7m

ar-0

7ap

r-07

may

-07

jun

-07

jul-

07au

g-07

sep

t-07

Oct

-07

no

v-07

dec

-07

jan

-08

feb

-08

mar

-08

apr-

08m

ay-0

8ju

n-0

8ju

l-08

aug-

08se

p-0

8o

ct-0

8n

ov-

08d

ec-0

8

China Exports Korea Exports

Chinese & Korean PET exports Chinese & Korean PET exports ‘‘07 07 -- ‘‘08 by month08 by month

Source: Chinese Custom



0

100000

200000

300000

400000

500000

H2 2006 H2 2007 H2 2008

Chinese PET exports 2nd half Chinese PET exports 2nd half ‘‘06 06 vsvs ‘‘07 07 vsvs ‘‘0808

Source: China Custom

MT

Moving back to 2006 levels



0%

20%

40%

60%

80%

100%Ja

n

Feb

Mar Apr

May Jun

Jul

Aug Sep

Oct

Nov Dec

East Europe Asia South AmericaNorth America Africa Middle EastEuropean Union Australia

Chinese PET exports by destinationChinese PET exports by destination


MT



0%

20%

40%

60%

80%

100%Ja

n

Feb

Mar Apr

May Jun

Jul

Aug Sep

Oct

Nov Dec

European Union East Europe AsiaSouth America Africa Middle EastNorth America Australia

Korean PET exports by destinationKorean PET exports by destination


MT





SupplySupply

FlowsFlows

TradersTraders




SupplySupply

FlowsFlows

TradersTraders

PricePrice




How the financial crisis is having an impact on PET How the financial crisis is having an impact on PET PricePrice

The collapse of Ocean Freights

Exchange rates fluctuation

Impact of a lower World demand on Oil, Px, PTA and MEG

Pressure on PET margins due to a softening demand

Open Credit costs







Open Credit costs




0

50

100

150

200

250

Jan-

2006

Mar

-200

6M

ay-2

006

Jul-2

006

Sep

-200

6N

ov-2

006

Jan-

2007

Mar

-200

7M

ay-2

007

Jul-2

007

Sep

-200

7N

ov-2

007

Jan-

2008

Mar

-200

8M

ay-2

008

Jul-2

008

Sep

-200

8N

ov-2

008

Jan-

2009

Are Asian PET margins under pressure because Are Asian PET margins under pressure because of the softening PET Demand?of the softening PET Demand?

USD/MT



0

50

100

150

200

250

Jan-

2006

Mar

-200

6M

ay-2

006

Jul-2

006

Sep

-200

6N

ov-2

006

Jan-

2007

Mar

-200

7M

ay-2

007

Jul-2

007

Sep

-200

7N

ov-2

007

Jan-

2008

Mar

-200

8M

ay-2

008

Jul-2

008

Sep

-200

8N

ov-2

008

Jan-

2009

USD/MT

Asian PET Producers margins are already at the lowest acceptable level

Are Asian PET margins under pressure because Are Asian PET margins under pressure because of the softening PET Demand? NOof the softening PET Demand? NO







Open Credit costs




Is the World Demand softening having an impact Is the World Demand softening having an impact on Oil, on Oil, PxPx, PTA, MEG?, PTA, MEG?

500

700

900

1100

1300

1500

1700Ja

n-20

06

Mar

-200

6

May

-200

6

Jul-2

006

Sep

-200

6

Nov

-200

6

Jan-

2007

Mar

-200

7

May

-200

7

Jul-2

007

Sep

-200

7

Nov

-200

7

Jan-

2008

Mar

-200

8

May

-200

8

Jul-2

008

Sep

-200

8

Nov

-200

8

Jan-

2009

30

50

70

90

110

130

150

MEG Asia PTA Asia Px Contract Asia Oil

USD/BarrilUSD/MT



500

700

900

1100

1300

1500

1700Ja

n-20

06

Mar

-200

6

May

-200

6

Jul-2

006

Sep

-200

6

Nov

-200

6

Jan-

2007

Mar

-200

7

May

-200

7

Jul-2

007

Sep

-200

7

Nov

-200

7

Jan-

2008

Mar

-200

8

May

-200

8

Jul-2

008

Sep

-200

8

Nov

-200

8

Jan-

2009

30

50

70

90

110

130

150

MEG Asia PTA Asia Px Contract Asia Oil

Is the World Demand softening having an impact Is the World Demand softening having an impact on Oil, on Oil, PxPx, PTA, MEG? Yes, PTA, MEG? Yes

USD/BarrilUSD/MT







Open Credit costs




Baltic Dry Index from Jan 2006 until PresentBaltic Dry Index from Jan 2006 until Present



Baltic Dry Index short termBaltic Dry Index short term



020406080

100120

Jan-

2006

Apr-2

006

Jul-2

006

Oct

-200

6Ja

n-20

07Apr

-200

7Ju

l-200

7O

ct-2

007

Jan-

2008

Apr-2

008

Jul-2

008

Oct

-200

8Ja

n-20

09

FOB Shanghai CIF Odessa 2006 until PresentFOB Shanghai CIF Odessa 2006 until Present

USD/MT







Open Credit costs




Exchange rate US Dollar / RoubleExchange rate US Dollar / Rouble



DDP Moscow USD/MT and RUB/MTDDP Moscow USD/MT and RUB/MT

1200

1400

1600

1800

2000

2200

Jan-

200

6M

ar-2

006

May

-200

6Ju

l-200

6Sep

-2006

Nov

-2006

Jan-

200

7M

ar-2

007

May

-200

7Ju

l-200

7Sep

-2007

Nov

-2007

Jan-

200

8M

ar-2

008

May

-200

8Ju

l-200

8Sep

-2008

Nov

-2008

Jan-

200

9_M

ar_2

009

33000

38000

43000

48000

53000

DDP Moscow USD/MT DDP Moscow RUB/MT

USD/MT RUB/MT



1200

1400

1600

1800

2000

2200

Jan-

200

6M

ar-2

006

May

-200

6Ju

l-200

6Sep

-2006

Nov

-2006

Jan-

200

7M

ar-2

007

May

-200

7Ju

l-200

7Sep

-2007

Nov

-2007

Jan-

200

8M

ar-2

008

May

-200

8Ju

l-200

8Sep

-2008

Nov

-2008

Jan-

200

9_M

ar_2

009

33000

38000

43000

48000

53000

DDP Moscow USD/MT DDP Moscow RUB/MT

USD/MT RUB/MT

Decreasing imports competitiveness in

the short term

DDP Moscow USD/MT and RUB/MTDDP Moscow USD/MT and RUB/MT







Open Credit costs




Open Credit costsOpen Credit costs

Compromising Buyers and Compromising Buyers and Sellers financial positionSellers financial position

Negative Price trend depreciating

stock values

Poor Demand driven by: poor season, negative

price trend, financial crisis

Less Credit available from

Banks and Suppliers

==Higher Open Credit costsHigher Open Credit costs





SupplySupply

FlowsFlows

TradersTraders




SupplySupply

FlowsFlows

TradersTradersTradersTraders




Financial Crisis impact on Traders and AgentsFinancial Crisis impact on Traders and Agents

Trading Co.Trading Co. AgentAgent

Negative Price trend Negative Price trend depreciating stock valuesdepreciating stock values

Higher cash cost for Higher cash cost for financing speculationsfinancing speculations

Poor DemandPoor Demand

==

==



ConclusionsConclusions



Impact of the Financial Crisis on PET industryImpact of the Financial Crisis on PET industry

A reduction in the World Trade flow is driving Ocea n Freights to an historical low

The financial crisis hit PET bottles final demand a t the very end of 2008, and the major effects will be see n in 2009

The slowing World demand is reducing Oil quotations with a consequent impact on the raw materials to produce Polyester

PET production industry rationalization is moving m ost of the World production to the Middle East and Asia



St. Lawrence FoundationSt. Lawrence Foundation




73




74




75




76




77




78




79




80




81




82



RescaldinaRescaldina , Via 29 , Via 29 MaggioMaggio , 16/18 (Italy), 16/18 (Italy)Tel.: +390331576662 Tel.: +390331576662 -- Fax: +390331576737Fax: +390331576737

[email protected]@gsiplastic.com

A1517 ECO International Digit PlazaA1517 ECO International Digit PlazaNo. 66 No. 66 GuanheGuanhe East Road East Road -- Changzhou, Jiangsu Province (China)Changzhou, Jiangsu Province (China)

Tel.: +8651988172059 Tel.: +8651988172059 -- Fax: +8651988172069Fax: +8651988172069xuxu @[email protected]

Impact of the Global Financial Crisis on the European PET ... of the Global Financial... · Impact...

Documents

Transcript of Impact of the Global Financial Crisis on the European PET ... of the Global Financial... · Impact...