Title Petrochemical: Buy FPC, FCFC
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Title:Petrochemical: Buy FPC, FCFC
Download File:Petrochemical industry note 170511--sinopac.pdf 
Summary:Petrochemical: Buy FPC (13% upside), FCFC (27% upside)

FPG core members APR sales totaled NT$110.7bn (-10.8% MoM, +2.1% YoY), NT$484.92bn (+16.3% YoY) for JAN-APR. Elevating inventory and increased output in the US have caused West Texas Intermediate (WTI) Crude Oil to break below US$50/bbl., the lowest level since OPECís current quota system was activated in NOV 2016. With the market divided on by how much or even whether OPEC will limit production after the current quota agreement expires, prices have remained relatively soft and potential buyers downstream are waiting for prices.

Except for ethylene prices that gained support from multiple cracker turnarounds in Asia, other products are all undergoing price corrections. Inventories in China have begun to drop. We will watch to see whether buying will sequentially resume starting from MAY.

Although APR product prices lagged expectation, we believe it was due to deferred demand in the market overall. Petrochemical demand overall may see a modest YoY gain this year.
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