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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
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�� 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
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
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GSI GSI -- The NetworkThe Network
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Asian Asian PETPET
Australian Australian PETPET
African African PETPET
American American PETPET
CommodityCommodity
GSI transforms PET into a commodityGSI transforms PET into a commodity
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World Financial CrisisWorld Financial Crisis
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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”
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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:
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Than we moved to Than we moved to WritedownsWritedowns momentmoment
Subprime
Writedowns
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For a total of 1 trillion USD For a total of 1 trillion USD -- FT Dec. 17th 2008FT Dec. 17th 2008
Source: IMF
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Then it was the time of recession:Then it was the time of recession:
Subprime
Recession
Writedowns
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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
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Subprime Mortgages
Financial Crisis
Writedowns
Now it is the time of UnemploymentNow it is the time of Unemployment
Unemployment
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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
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Growth in Global Industrial Production and Growth in Global Industrial Production and Merchandise TradeMerchandise Trade
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
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Impact of the Financial Crisis on the PET MarketImpact of the Financial Crisis on the PET Market
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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
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PricePrice
FlowsFlows
TradersTraders
DemandDemand
SupplySupply
Impact of the Global Financial Crisis on the Impact of the Global Financial Crisis on the European PET Market.European PET Market.
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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
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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
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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)
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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
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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
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DemandDemand PricePrice
SupplySupply
FlowsFlows
TradersTraders
Impact of the Global Financial Crisis on the Impact of the Global Financial Crisis on the European PET Market.European PET Market.
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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
TradersTradersSupplySupply
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World PET Surplus reaching 22 World PET Surplus reaching 22 mlnsmlns in 2010in 2010
Source: Tecnon Orbichem
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 Production moving to Asia and Middle EastPET Production moving to Asia and Middle East
KMT
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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
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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
FlowsFlows
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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
Source: Tecnon Orbichem
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-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
Source: Tecnon Orbichem
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-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
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
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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
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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
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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
Source: China Custom
MT
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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
Source: China Custom
MT
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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
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DemandDemand PricePrice
SupplySupply
FlowsFlows
TradersTraders
PricePrice
Impact of the Global Financial Crisis on the Impact of the Global Financial Crisis on the European PET Market.European PET Market.
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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
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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
How the financial crisis is having an impact on PET How the financial crisis is having an impact on PET PricePrice
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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
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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
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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
How the financial crisis is having an impact on PET How the financial crisis is having an impact on PET PricePrice
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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
How the financial crisis is having an impact on PET How the financial crisis is having an impact on PET PricePrice
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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
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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
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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
How the financial crisis is having an impact on PET How the financial crisis is having an impact on PET PricePrice
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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
How the financial crisis is having an impact on PET How the financial crisis is having an impact on PET PricePrice
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Baltic Dry Index from Jan 2006 until PresentBaltic Dry Index from Jan 2006 until Present
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Baltic Dry Index short termBaltic Dry Index short term
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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
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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
How the financial crisis is having an impact on PET How the financial crisis is having an impact on PET PricePrice
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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
How the financial crisis is having an impact on PET How the financial crisis is having an impact on PET PricePrice
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Exchange rate US Dollar / RoubleExchange rate US Dollar / Rouble
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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
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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
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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
How the financial crisis is having an impact on PET How the financial crisis is having an impact on PET PricePrice
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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
How the financial crisis is having an impact on PET How the financial crisis is having an impact on PET PricePrice
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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
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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
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DemandDemand PricePrice
SupplySupply
FlowsFlows
TradersTradersTradersTraders
Impact of the Global Financial Crisis on the Impact of the Global Financial Crisis on the European PET Market.European PET Market.
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Financial Crisis impact on Traders and AgentsFinancial Crisis impact on Traders and Agents
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)