德银-美股-化工商品行业-美国化工品出货量上升4.7%-20171022-Deutsche_Bank-Railcar_＆_PetroChemical_Update：US_Chemical_Shipments_up_4.7％.Ethane_down_0.7cgal_to_25.8cgal_30页_734kb

Summary of Deutsche Bank Markets Research: Railcar & PetroChemical Update

Core Content Overview

This report provides an analysis of the US chemical industry, focusing on railcar loadings, petrochemical prices, and macroeconomic indicators. It also includes sector valuation metrics and risk assessments for key chemical companies.

Key Industry Trends

• Chemical Railcar Loadings:

  • The 4-week moving average of chemical railcar loadings increased by 4.7% in Week #42 (ended 10/14/2017), compared to a 2.9% increase the previous week.
  • Weekly loadings rose by 6.2% YoY, with a 0.7% sequential decrease.
  • Year-to-date (YTD) loadings are up by 0.64%.
  • Railcar loadings represent 20% of total US chemical shipment tonnage, followed by trucks, barges, and pipelines.

• Ethane Prices:

  • Ethane prices declined by 0.7 c/gal to 25.8 c/gal.
  • Ethane prices are currently 6.8 c/gal above their fuel value of 19 c/gal.
  • The US ethane supply/demand fundamentals are expected to tighten further in Q4'17 due to new ethylene crackers coming online.
  • By year-end 2017, ethane prices are forecasted to reach 30 c/gal, reflecting historical premiums for fractionation, transportation, and storage costs.

• Propane Prices:

  • Propane prices fell by 3.4 c/lb to 90.4 c/gal.
  • Propane inventories are 16% and 9% below 3 and 5-year averages, respectively.
  • Longer-term, we expect propane inventories to decline due to increased exports (up 20% in '16 vs 12% in '15; up in '17E).

• Ethylene Prices:

  • Spot ethylene prices increased by 1.3 c/lb to 29.8 c/lb.
  • Margins also rose by 1.3 c/lb to 13.2 c/lb.
  • Propane contract prices for September settled up by 7 c/lb to 46.5 c/lb (PG) and 45.0 c/lb (chemical grade) due to supply disruptions from Hurricane Harvey.

• Ethylene Production Outages:

  • Approximately 14% of North American ethylene capacity is expected to be offline in October.
  • Key outages include:
    • CP Chem's Cedar Bayou and Sweeny crackers (2.1% and 0.6% of NA capacity)
    • Equistar's La Porte cracker (3.1% of NA capacity)
    • Planned turnarounds at Shell, Dow, and Nova Chemicals crackers.

Sector Valuation & Investment Ideas

• Valuation Metrics:

  • Companies are valued using forward P/E, EV/EBITDA, ROIC, and cash return on capital.
  • The report highlights a strong correlation (R² > 70%) between chemical sector valuations and returns on capital.

• Top Picks:

  • DowDuPont (DWDP.N): $71.18, Buy, Target Price (TP) $80
  • Ashland (ASH.N): $66.73, Buy, TP $74
  • Eastman Chemical (EMN.N): $88.82, Buy, TP $100

Key End Markets

• Agriculture:

  • Ethanol is a significant component of chemical loadings, contributing 21%.
  • Ethanol production is expected to boost US chemical railcar loadings by about 2% in '17.
  • Corn, soybeans, and wheat stocks-to-use ratios and production data are analyzed.

• Construction:

  • US construction data has stabilized since record lows in mid-2009 and is showing signs of improvement.
  • Private non-residential construction has surpassed public non-residential construction.

• Automotive & Electronics:

  • PCB book-to-bill ratios indicate consumer electronics demand.
  • Front-end semiconductor bookings are typically led by back-end bookings.
  • The report notes that flame-retardant plastic additives are a key factor in PCB demand.

US Macro Indicators

• Industrial Production:

  • Growth in railcar loadings is ahead of industrial production.
  • The ECRI Leading Index and Industrial Production are closely correlated.
  • Industrial Production is also correlated with ISM PMI Index, ISM New Orders, and Conference Board Leading Indicators.

• Financial Market Indicators:

  • The chemicals sector multiples are compared with the yield curve.
  • A steeper yield curve has historically led to rising chemicals IP.

Overseas Macro Indicators

• Eurozone Confidence Indicators:
  • Includes ZEW German economic sentiment indicator and OECD Europe CLI.
  • These indicators are compared with Euro area Industrial Production.

Risks

• Chemicals volumes are closely linked with industrial production.
• Input costs are tied to energy prices, particularly oil and natural gas.
• Key risks include:
  • A recession in overall GDP (domestic or international, depending on company exposure).
  • A surge in energy prices.
  • Sharp deterioration or improvement in chemicals-intensive sectors like housing and automotive production.

Conclusion

The report underscores the positive trend in chemical railcar loadings and the tightening ethane supply/demand fundamentals expected in the coming quarters. It also highlights the valuation dynamics and investment opportunities within the chemicals sector, emphasizing the importance of macroeconomic indicators and energy prices in shaping sector performance.