วันพฤหัสบดีที่ 17 พฤศจิกายน พ.ศ. 2554
Bird flu virus found in poultry markets
วันพุธที่ 16 พฤศจิกายน พ.ศ. 2554
US Morning Market Analysis: Aromatics prices fall overnight
Asian benzene prices fell $8/mt day on day November 15 to be assessed at $980/mt FOB Korea following a drop in US prices on November 14. The US benzene price on November 14 was assessed at $917.90/mt FOB USG.
Arbitrage opportunities for Asian cargo to the US continue to remain closed, but a reverse arbitrage situation is looking closer to reality with the slip in the November 15 Asian benzene price being comparably smaller than the plunge in the US. South Korea exported 99,430 mt of benzene in October, down 22.4% month on month and 17.4% year on year, latest Korea Customs Service data showed November 15.
Exports to the US declined 58.1% month on month and 47% year on year to 23,613 mt due to the closed arbitrage to the US and Asia being the most expensive region globally for benzene in the month. In Europe November 14 the benzene price was assessed at $920.50/mt CIF ARA. (See chart 1)
Asian toluene on an FOB Korea basis was assessed at $1,102.50/mt November 15 down $27/mt from the day before, amid declines in upstream energy. December ICE Brent traded at $113.13/barrel at 4:30 pm Singapore time (0830 GMT), down $1.32/b day on day.
The Asian price remained at a sharp premium to the US toluene price, which was assessed November 14 at $1,021/mt FOB USG. The European toluene price was assessed Monday at $1,082/mt FOB Rdam. (See chart 2)
Asian isomer-grade mixed xylenes closed November 15 at $1,189.50/mt FOB Korea and $1,199.50/mt CFR Taiwan, down $15/mt and $13/mt, respectively, on the back of weaker crude and equity markets. In the US, the mixed xylene price on November 14 was assessed at $1,036/mt FOB USG. (See chart 3)
Vessel space on the US-Asian shipping route remained tight, with US-South Korea freight rates heard in the range of $80-$85/mt and US-China freight rates at $80-$100/mt. "[There is] no space and it is not a matter of price," a South Korean trader said.
Asian paraxylene fell $13/day on day November 15 to settle at $1,432/mt CFR Taiwan/China despite buyers being out in force seeking cargoes. Downstream purified terephthalic acid slipped $4/mt over the same period to close at $1,068/mt CFR China for Taiwan origin cargoes.
With more PTA plants cutting operating rates or shutting down in December, as well as around 30,000 mt of deep-sea PX arriving in late December, supply could ease a little, sources said. In production news, China's Sinopec Zhenhai Refining & Chemical Company, or ZRCC, has lowered its paraxylene operating rate to 60% in November due to technical problems with the plant, a company source said November 15.
The US paraxylene price was assessed at $1,332.50/mt FOB USG. The European paraxylene price was assessed at $1,345/mt FOB USG. (See chart 4)
Asian styrene monomer for H1 December was assessed down $5/mt day on day November 15 to $1,311/mt FOB Korea tracking lower energy prices and overall weaker sentiment as global economic concerns ticked up again. The market appeared quiet November 15; sources said sellers were holding their offers at similar levels to November 14 but buyers were not active in the market.
Surging European SM prices could attract some cargoes from Asia, a trader said, but it was not confirmed that any shipment deals had been done. However, sources were concerned that only the prompt European market was firm enough to digest any arbitrage cargoes. The European market is in a $110/mt backwardation from November to December, with November assessed at $1,520/mt FOB Korea and December at $1,410/mt FOB Korea November 14. The US styrene price was assessed at $1,227/mt FOB USG Monday. (See chart 5)
All of the charts featured were built on Platts on the Net. The formulas we use are estimates to illustrate industry-wide trends. Subscribers to Platts on the Net can modify the formulas to better reflect their own assumptions. If you are a Platts on the Net subscriber, and would like access to these charts or the formulas used to build them, or for more information about Platts on the Net, please contact Jim Foster at
วันอาทิตย์ที่ 13 พฤศจิกายน พ.ศ. 2554
Lead vs. Lag Indicators
People often ask “what’s the difference between a Leading and a Lagging indicator?”.
When developing a Balanced Scorecard (or any other performance management system), it is recommended to use a combination of Leading and Lagging Indicators. Kaplan and Norton call these “Performance Drivers” and “Outcome Measures”.
The idea is that Lagging Indicators without Leading Indicators tell you nothing about how the outcomes will be achieved, nor can you have any early warnings about being on track to achieve your strategic goals.
Similarly, Leading Indicators without Lagging Indicators may enable you to focus on short-term performance, but you will not be able to confirm that broader organisational outcomes have been achieved. Leading Indicators should enable you to take pre-emptive actions to improve your chances of achieving strategic goals.
Implicit in the design of any balanced performance management framework, such as the Balanced Scorecard (BSC), is the cause and effect chain of goals and strategies. So, “investing in organisational capability” leads to “efficient and effective processes”, which deliver the products and services that “satisfy customers” and ultimately lead to “profit” in the private sector, or “positive stakeholders/funders” in the public sector.
Because there is this cause and effect chain, there is a corresponding chain of Leading and Lagging Indicators. For example, “Satisfied/Motivated Employees” is a (well-proven) Leading Indicator of “Customer Satisfaction”. Similarly, “high-performing processes” (e.g. to 6 Sigma levels) would be expected to be a Leading Indicator of “Cost Efficiency”.
Arguably, the BSC perspectives focussed on Organisational Capability (or Learning & Growth) and Processes contain Leading Indicators of external performance that are contained within the Finance and Customer perspectives.
However, it’s not as easy as that, because within each BSC perspective, you will usually want a combination of Leading and Lagging Indicators. For example, you are likely to want to measure “Employee Satisfaction” and could readily identify a Leading Indicator of this such as an index of “Leadership Capability”, or maybe “No. of days training per employee”.
It is sometimes said that Leading Indicators will be measured more frequently than Lagging Indicators, but that may not be helpful as a definition. You could measure “Complaints Received” or “Customer Satisfaction” every day, both of which might be described as Lagging Indicators. Equally, you could measure process “Error Rates”, or “On-Time Delivery” every day and these are probably Leading Indicators.
The view that Lagging Indicators cannot be adjusted until it is too late is also not necessarily very helpful. In the example above, knowing that you have an error rate of 25% is already too late!
One definition that might help is that Leading Indicators are often captured at the level of individual processes, whereas Lagging Indicators may be the result of changes in a number of Leading Indicators. So, a process cycle-time or error rate might be Leading Indicators, measured at the process level and Customer Satisfaction would be a Lagging Indicator, measured at the organisation level.
If you are measuring “activity” (i.e. at a process level), it is more likely that you are using Leading Indicators. The closer you move to process inputs and activities, the closer you get to Leading Indicators of downstream, (Lagging) performance. If you are measuring aggregated effects, or outcomes, at an organisational level, you are more likely to be using Lagging Indicators.
Remember, the overall purpose of selecting metrics is to enable you to track performance towards your goals. So, you should aim to identify and then control those metrics that drive you towards your ultimate goals.
Read more articles on our Performance Management page.
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วันศุกร์ที่ 11 พฤศจิกายน พ.ศ. 2554
Solar Glut Worsens as Supply Surge Cuts Prices 93%: Commodities
The cost of solar cells and microchips has nowhere to go but down because of a supply glut for the commodity they’re made from, a brittle charcoal-colored semiconductor baked in ovens at 600 degrees centigrade.
Polysilicon has plunged 93 percent to $33 a kilogram from $475 three years ago as the top five producers more than doubled output, data compiled by Bloomberg shows. The industry next year will produce 28 percent more of the raw material than will be consumed, up from 20 percent this year, said Robert Schramm- Fuchs and Shai Hill, analysts at Macquarie Group Ltd.
“Polysilicon is a grossly, grossly, grossly oversupplied commodity product,” said Paul Leming, director of research at Ticonderoga Securities in New York. “We’re staring at years of stability where polysilicon pricing sits at something approaching cost of production and doesn’t move.”
The shift is squeezing margins for manufacturers led by Hemlock Semiconductor Corp. and Wacker Chemie AG. (WCH) Solar-cell makers that use the material such as JA Solar Holdings Co. and Suntech Power Holdings Co. drove down the cost of photovoltaics, tipping three U.S. manufacturers into bankruptcy this year.
“The solar PV market has certainly reached a point where some illusions are meeting reality,” Wacker Chief Executive Officer Rudolf Staudigl told investors in an Oct. 28 conference call. “About the length of the downturn in polysilicon, I simply cannot answer.”
Cells and Chips
Polysilicon accounts for a quarter of the cost of a finished solar panel. The photovoltaic industry consumes almost 90 percent of the supply, which is also is the foundation of most computer chips made by manufacturers such as Intel Corp. (INTC), the world’s largest.
Lower polysilicon prices will have less of an effect on computer chips because, while the amount used varies between different designs, the material accounts for about 5 percent of the production cost on average, according to Janardan Menon, an analyst at Liberum Capital in London.
“There has been some impact for semiconductor companies, but it’s not anywhere like what you’ve seen on the solar side,” he said in a telephone interview today.
Price declines for products at every step in the solar supply chain triggered a 60 percent drop in the Bloomberg Global Leaders Solar Index since February tracking 37 shares. It’s led to speculation that more poly producers and panel makers may either combine or go bust in the coming months. Q-Cells SE (QCE), once the world’s biggest cell maker, has said it’s open to takeovers.
‘Shakeout Started’
“Two-thirds of the existing 66 polysilicon producers could fall victim to the shakeout that has just started,” the Macquarie analysts wrote in a note on Nov. 8. “The total number of Chinese polysilicon producers could fall to as little as four over the next three years, down from 35 known to us today.”
About 90 percent of China’s polysilicon plants comprising half the country’s production may suspend production because of the price slump, according to Xie Chen, an analyst at the China Nonferrous Metals Industrial Association, which acts as a conduit between industry and government.
Hemlock -- named for a Michigan town where it’s based and owned jointly by Dow Corning Corp. and the Japanese companies Shin-Etsu Handotai Co. and Mitsubishi Materials Corp. -- will raise its capacity 28 percent when a plant in Tennessee opens next year. It’s already increased 89 percent since 2008.
The company said today it’s delaying plans to add additional phases to the plant, citing a lack of demand.
Poly Makers
Wacker of Munich, OCI Co. of South Korea, GCL-Poly Energy Holdings Ltd. (3800) of China and Renewable Energy Corp. ASA of Norway round out the top five makers and together had capacity to make 131,000 tons of polysilicon last year, up from 50,000 tons in 2008, Bloomberg data shows.
“I haven’t seen any industry like this,” Woo-Hyun Lee, Seoul-based OCI’s chief operating officer, told a conference in Singapore on Nov. 2. “When the price drops so suddenly it hurts. Now there is very little room for fluctuation.”
OCI’s shares have lost about 40 percent this year through yesterday in Korea and Wacker has declined 46 percent in German trading. GCL-Poly has the highest debt compared with its equity, or 113 percent, of the top five that are publicly traded, Bloomberg data show.
Prices Plunge
Spot prices will fall into the $20s from about $33 today and are likely to stabilize at around $30 once a shake-out reduces oversupply after 2012, according to Sean McLoughlin, an industry analyst in London at HSBC Bank Plc, echoing a similar forecast by Macquarie. Leming of Ticonderoga says prices will reach $25 within three weeks and likely remain near that level for at least two years.
About 90 percent of supplies are sold under long-term contracts, many of which are under pressure to be renegotiated. Charges for contract cancellations can be more than 20 percent of their value, HSBC said.
Chemical companies such as Hemlock and Wacker make poly by baking raw silicon that’s derived from refined sand. It´s done in bell-shaped ovens containing silane gas, which then condenses over a period of days into rod-shaped chunks of 99.9999 percent pure polysilicon.
The rods are sliced into wafers using diamond-edged saws to make solar cells that are fastened onto panels to transform the sun’s rays into electricity.
Narrowing Margins
Wacker’s profit margin will shrink by 4 percentage points to 21 percent in the fourth quarter from the previous three months, according to a Bloomberg survey of five analysts who looked at earnings before interest, tax, depreciation and amortization compared to sales.
REC has developed a technique which works in a few hours and reduces the energy required by as much as 90 percent, making it the cheapest way of making solar-grade silicon, according to McLoughlin at HSBC. REC’s so-called fluidized bed reactor process grows beads of polysilicon from pressurized gas and tiny liquidized seeds of semi-purified material.
Polysilicon has been used as a semiconductor in computer microchips for decades. Supplies only became scarce from 2004, when European nations began introducing subsidies for clean energy. The price soared to $475 in March 2008 from about $30 in 2003. New capacity began to come on stream in 2008.
The famine turned to a glut when demand growth for panels slowed as solar-energy subsidies were cut. With plants taking at least two years to build, new factories are set to keep opening.
Expanding Capacity
Hemlock announced plans for its new factory in December 2008 when polysilicon was selling for $178 on the spot market. Wacker, the No. 2 producer, will double its capacity to about 60,000 tons by 2013, and LDK Solar Co. Ltd., the second-largest maker of wafers, will triple its poly capacity to 55,000 tons by the end of that year with a giant factory in Inner Mongolia.
The global supply of polysilicon is set to reach about 500,000 tons by 2014, Ewald Schindlbeck, head of Wacker’s polysilicon unit, said in an interview. That compares with 266,000 tons this year, according to Macquarie.
Even in an industry used to profit margins higher than 40 percent, the drop is hurting smaller producers. PV Crystalox Solar Plc last month cut production and fired workers at its poly ingot plant in Britain. It has costs of about $37 a kilo, according to McLoughlin.
Staudigl said that Wacker is negotiating individual agreements with clients and assessing issues such as their credit-worthiness. The company has contracts to sell almost all its planned production through 2015, spokesman Christof Bachmair said in a telephone interview.
While Wacker and the leading polysilicon producers may have fixed prices with clients for the next few years, that may offer them little protection should those prices push their clients into bankruptcy before they can make good on their commitments, said Gordon Johnson, an analyst at Axiom Capital Management Inc.
“Prices are going to go significantly lower,” he said in a Nov. 4 phone interview from his office inNew York. “There will be certain people that go out of business.”
To contact the reporters on this story: Marc Roca in London at mroca6@bloomberg.net; Ben Sills in Madrid at bsills@bloomberg.net
To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net
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US Morning Market Analysis: Asian aromatics tumble overnight
The Asian benzene market continued to fall for a second day November 10, with the benchmark FOB Korea marker moving down $15.50/mt day on day to $984.50/mt. Sentiment was hit by weaker crude oil prices amid continuing macroeconomic concerns, especially in the eurozone.
Benzene sellers in Asia have found it difficult to sell their cargoes outside the region with the arbitrage window to the US firmly shut, but demand in many parts of Asia was heard to be weak. In the US November 9 the benzene price was assessed at $956.80/mt FOB USG. In Europe, the benzene price November 9 was assessed at $921.50/mt CIF ARA. (See chart 1)
In plant news, Japan's Tosoh plans to shut its aromatics unit for a one-month turnaround in mid-March 2012, a company official said November 10. The unit can produce 154,000 mt/year of benzene, 65,000 mt/year of toluene and 32,000 mt/year of mixed xylenes.
Asian toluene on an FOB Korea basis was assessed at $1,115.50/mt November 10, shedding $37/mt or 3.2% compared to the day before as sentiment turned bearish on eurozone concerns and falling regional equities.
Front month ICE Brent crude futures traded at $112.45/barrel at 4:30 pm Singapore time (0830 GMT), down $2.54/b from the day before, while CFR Japan naphtha sank $13/mt day on day to be assessed at $888/mt. The European toluene price was assessed at $1,102/mt FOB Rdam. The US price was assessed at $1,048/mt FOB USG. (See chart 2)
Asian isomer-MX tumbled $27 day on day November 10 in tandem with downstream paraxylene, closing at $1,178.50/mt FOB Korea and $1,193.50/mt CFR Taiwan. The market was jittery as traders were closely monitoring PX's movements, which started falling earlier in the day. The US price remained well below the Asian price, with the assessment November 9 at $1,033/mt FOB USG. (See chart 3)
Asian paraxylene tumbled $39/mt day on day November 10, erasing gains November 9 amid worsening downstream purified terephthalic acid, renewed eurozone worries and falling crude. The CFR Taiwan/China marker was at $1,432/mt. Market sentiment was extremely weak as PTA plunged early in the day, with South Korean-origin cargoes heard traded at $1,030/mt CFR China and discussion levels for Taiwan-origin PTA at around $1,050/mt CFR China, down $40/mt or 3.67% on day.
The plunge was exacerbated by PTA futures on China's Zhengzhou Commodity Exchange, which saw the most heavily traded January contracts losing Yuan 266/mt ($42/mt) or 3.27% on day. "With PTA doing so badly, buyers are all scared," a Chinese trader said. "No one wants to be caught in a falling market," he added. In the US November 9, the paraxylene price was assessed at $1,362.50/mt FOB USG. The European PX price was assessed at $1,371/mt FOB Rdam. (See chart 4)
Asian styrene monomer prices fell $24/mt day on day November 10 to $1,292/mt FOB Korea on economic concerns. In plant news, Japan's Denki Kagaku Kogyo, or Denka, will shut each of its SM plants for about 40 days' maintenance in 2012, a company source said Thursday. Its 240,000 mt/year SM plant at Chiba will shut in May, while the 270,000 mt/year plant operated by Denka's 60% owned subsidiary Chiba Styrene Monomer Company will shut in November. Also, Nippon Steel Chemical plans to shut both its SM plants at Oita for maintenance in 2012, a company source said November 10.
In downstream news, China's Tianjin Dagu Chemical has delayed the startup of its new 200,000 mt/year acrylonitrile-butadiene-styrene plant in Tianjin due to poor market conditions, a source close to the company said November 10. In the US November 9, the styrene price was assessed at $1,230/mt FOB USG, the lowest globally. In Europe, the December styrene price was assessed November 9 at $1,340/mt FOB Rdam. (See chart 5)
All of the charts featured were built on Platts on the Net. The formulas we use are estimates to illustrate industry-wide trends. Subscribers to Platts on the Net can modify the formulas to better reflect their own assumptions. If you are a Platts on the Net subscriber, and would like access to these charts or the formulas used to build them, or for more information about Platts on the Net, please contact Jim Foster atjim_foster@platts.com.
วันอังคารที่ 8 พฤศจิกายน พ.ศ. 2554
Fed Intervention and the Market: A New Update By Doug Short November 7, 2011
At present we are in the early stages of the latest Federal Reserve intervention, Operation Twist, which was officially announced on September 21 after several days of rumors. We've now seen several bouts of aggressive Fed attempts to manage the economy following the collapse of the two Bear Stearns hedge funds in mid-2007 about three month before the all-time high in the S&P 500.
Initially the Fed Funds Rate (FFR) underwent a series of cuts, and with the bankruptcy of Bear Stearns, the Fed launched a veritable alphabet soup of tactical strategies intended to stave off economic disaster: PDCF, TALF, TARP, etc. But shortly after the bankruptcy filing, the Fed really swung into high gear. The FFR fell off a cliff and soon bounced in the lower half of the 0 to 0.25% ZIRP (Zero Interest Rate Policy). The thud to the FFR bottom coincided with the first of two rounds of quantitative easing in an effort to promote increased lending and liquidity.
If a picture is worth a thousand words, this chart needs little additional explanation — except perhaps for those who are puzzled by the Jackson Hole callout. The reference is to Chairman Bernanke's speech at the Fed's 2010 annual symposium in Jackson Hole, Wyoming. Bernanke strongly hinted about the forthcoming Federal Reserve intervention that was subsequently initiated in November of 2010, namely, the second round of quantitative easing, aka QE2.
The lastest major strategy, Operation Twist, which was announced on September 21st, has just begun and will run through June 2012. The Fed will sell $400 billion of shorter-term Treasury securities and use the proceeds to buy longer-term Treasury securities in an effort to lower interest rates.
Prior to the much-rumored "Twist" announcement, the yield on the 10-year note had been hovering around 2.19, which was 47 basis points above the historic closing low of 1.72 set a month earlier on September 22.
The FFR has been essentially at zero for three years. What has the 10-year note done since the "Twist" announcement? The interim high daily close was 2.42 on October 27th. The interim low was 2.01 on November 1st.
It's too soon, of course, to tell how successful the "Twist" strategy will be for lowering interest rates; the program is barely off the ground. According to the Freddie Mac survey, the 30-year mortgage rate has fluctuated between 3.94% and 4.18% since the first week in September, and the most recent average (as of November 3rd) is 4.00%. But we will watch Treasury yields and mortgage rates in the weeks ahead to see if Operation Twist lives up to the Fed's expectations.
The past three years have been an exciting time for many professional traders and their seasoned amateur counterparts. And it's been a dream-come-true for institutional HFT (high frequency trading) with computerized algorithms. Of course, there have been perils, even for seasoned pros, as thebankruptcy of MF Global illustrates.
On the other hand, savers — those benighted souls looking for income from CDs, Treasury yields, and FDIC insured money markets — have had a rude introduction to the new reality, one that will apparently be with us for a very long time.
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