德银-美股-化工商品行业-美国化工业出货量上升2.9%-20170116-Deutsche_Bank-Railcar_＆_PetroChemical_Update：US_Chemical_Shipments_up_2.9％.Ethane_down_0.5cgal_to_26.5cgal_30页_738kb

Deutsche Bank Markets Research Summary - Railcar & PetroChemical Update

Core Content

This report provides an analysis of the US chemical industry, focusing on railcar loadings and petrochemical prices, alongside key end market data and macroeconomic indicators.

Key Points

Chemical Railcar Loadings

• 4-week moving average: Increased by 2.9% in Week #41 (ended 10/07/2017) compared to a 1.3% increase the previous week.
• Year-to-date (YTD) loadings: Rose by 0.51% in 2017.
• Weekly loadings: Increased by 10.4% YoY, but decreased by 1.5% sequentially.
• Railcar loadings as a distribution channel: Represent 20% of total US chemical shipment tonnage, with trucks being the largest at 48%, followed by waterborne at 18%.
• Ethanol impact: Approximately 21% of railcar loadings, and the 10% increase in ethanol blending in '16 is expected to boost '17 US chemicals railcar loadings by 2%.

Petrochemical Prices

• Ethane: Prices fell by 0.5 c/gal to 26.5 c/gal (vs fuel value of 20 c/gal). With 600k bpd of new demand from ethylene crackers, we expect prices to rise to 30 c/gal by year-end '17.
• Propane: Prices remained flat at 94 c/gal, but inventories are 17% and 9% below 3 and 5-year averages, respectively. Propane exports are expected to increase by 20% in '16 compared to 12% in '15.
• Ethylene: Spot prices dropped by 0.5 c/lb to 28.5 c/lb, and margins fell by 0.5 c/lb to 11.9 c/lb.
• Propylene: Polymer grade (PG) prices were lower, with October deals ranging from 45-47 c/lb. September contract prices increased by 7 c/lb for PG and 45.0 c/lb for chemical grade due to Hurricane Harvey supply disruptions.

Ethylene Production

• Capacity offline in October: ~13% of North American ethylene capacity is expected to be offline due to maintenance and hurricane-related disruptions.
• Production losses: IHS forecasts 5.2B lbs (6.3%) of ethylene production losses in '17, up from 4.5B lbs (5.5%) in '16 and 3.1B lbs (4.1%) in '15.

Key End Market Data

• Agriculture: Corn, soybeans, and wheat stocks-to-use ratios are monitored, indicating supply and demand dynamics.
• Construction: US construction data has stabilized since the mid-2009 lows, with private non-residential construction surpassing public non-residential.
• Automotive & Electronics: NA PCB book-to-bill ratios reflect consumer electronics demand, particularly for flame-retardant plastic additives.

US Macro Indicators

• Output indicators: Chemicals and petroleum shipments are tracked, showing trends in industrial activity.
• Industrial Production: Correlated with financial indicators such as the ECRI Leading Index, ISM PMI Index, ISM New Orders, and Conference Board Leading Indicators.
• Financial market indicators: Chemicals sector multiples are compared with the yield curve, with a steeper yield curve historically linked to rising chemicals IP.

Overseas Macro Indicators

• Eurozone confidence indicators and ZEW German economic sentiment are monitored for international market trends.
• OECD Europe CLI is compared with Euro area Industrial Production to assess economic health.

Sector Valuation & Risks

Valuation Metrics

• Companies are valued using forward P/E, EV/EBITDA, ROIC, and FCF Yield.
• Valuation ratios are compared with the S&P 500 and historical averages to assess relative performance.

Key Risks

• Industrial production is closely linked to chemical volumes.
• Energy prices influence input costs.
• Key risks include recession, surge in energy prices, and sharp changes in chemicals-intensive sectors like housing and automotive.

Top Picks

• DowDuPont (DWDP.N): Buy, Price: $71.43, Target Price (TP): $80
• Eastman Chemical (EMN.N): Buy, Price: $88.65, Target Price: $100
• Ashland (ASH.N): Buy, Price: $66.46, Target Price: $74

Key Figures

• Figure 1: Chemicals railcar loadings for week ended October 7, 2017 (Week# 41)
• Figure 2: U.S. Ethylene Production Cash Costs - Spot Co-Production Credits
• Figure 3: Mt. Belvieu Ethane Purity Prices (North America)
• Figure 4: Mt. Belvieu Propane Non-TET (North America)
• Figure 5: US Ethylene Pipeline Gulf Coast FOB Spot Prices
• Figure 6: US Chemical Grade Propylene Gulf Coast FOB Spot Prices
• Figure 7: US spot ethylene cash margins have fallen from 18 c/lb in April to 14.8 c/lb in mid-September
• Figure 8: Propane Export Capacity (MM bbls/month)
• Figure 9: China Acetic Acid Spot Prices (CNY/ton)
• Figure 10: US ethane-based ethylene production costs are advantaged vs other regions
• Figure 11: US ethane supply has been increasing steadily since 2005

Conclusion

The report highlights the volatility in petrochemical prices, trends in railcar loadings, and sector-specific risks and valuation metrics. It suggests growth in the chemicals sector is expected to continue, driven by new ethylene crackers and improving construction and automotive sectors. Key companies like DowDuPont, Eastman Chemical, and Ashland are highlighted as top picks with buy ratings.