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1、Buy,Buy,Buy,Deutsche BankMarkets Research,North AmericaUnited StatesIndustrialsChemicals/Commodity,PeriodicalRailcar and PetchemUpdate,Date22 October 2012David Begleiter,CFA,US chemical shipments up slightly.Ethane prices rose 3c/galRailcar loadings 4-week moving avg.up 0.5%,weekly loadings up 0.9%T
2、he 4-week moving average of chemical railcar loadings increased 0.5%inWeek#41(ended October 13)vs.0.1%increase the prior week.Loading YTDare down 1.04%.Chemical railcar loadings represent 23%of total US chemicalshipment tonnage(followed by trucks,barges,and pipelines),offering ameasurement of broade
3、r chemical industry activity and demand trends.Themore volatile measure of weekly loadings increased 0.9%YoY(versus a 1.4%increase in the prior week)and declined 2.2%sequentially(vs.a 4.3%decreasein the prior week).Ethane prices rose 3c/gal last week to 35c/gal(down 56%YTD)Ethane prices rose 3c/gal
4、last week to 35c/gal while spot ethylene prices fell3c/gal to 56c/lb.Spot ethylene margins subsequently compressed 4c/lb to32c/lb.Polymer grade propylene activity has remained quiet with prices flat at53c/lb.Contract prices for November are projected to increase 1.5c/lb,Research Analyst(+1)212 250-R
5、amanan SivalingamAssociate Analyst()212 250-Jermaine BrownResearch Associate(+1)212 250-3624jermaine-Top picksAshland(ASH.N),USD69.96LyondellBasell(LYB.N),USD54.33Eastman Chemical(EMN.N),USD56.08,The Flint Hills Port Arthur,TX ethylene facility(1.9%of NA capacity)remainsdown for a maintenance outage
6、 that is expected to last until early November.Eastmans HCC-4 cracker at Longview(1.1%of NA capacity)is down formaintenance which is expected to last until the end of this month.We expectethylene capacity outages to increase sequentially in October(5%of NAethylene capacity offline),vs 2.7%offline in
7、 September,and decrease inNovember(1.7%of NA capacity offline).,(GDP,Real YoY)US 0.4%Euroland 0.6%Japan-0.7%G7 0.3%Asia ex-Japan 6.8%China 9.0%,2008,2009-2.6%-4.1%-5.3%-3.5%5.7%9.1%,20103.0%1.9%4.1%2.9%9.4%10.3%,2011 2012E 2013E1.8%2.1%2.0%1.4%-0.5%0.0%-0.7%2.4%0.8%1.4%1.4%1.3%7.3%6.1%6.7%9.2%7.7%8.
8、2%,We expect ethane prices to rise to 46c/gal in November on higher propaneprices which we expect to rise on seasonal demand increases from the winter,Global 2.7%-0.9%Source:DB Global Economics Team,5.1%,3.6%2.9%3.2%,heating season and lower inventory levels due in part to the start-up ofEnterprise
9、expanded export terminal in Q4.Housing recovery continues with third straight month of 800k+new permitsIn light of a macroeconomic landscape characterized by soft GDP growth(Est.1.8%for Q4),U.S.housing remains one of the few subsectors showingcontinued improvement.Housing starts for September rose 1
10、5%MoM to 872k,the highest level since July 2008(923k).September also marks the thirdconsecutive month of 800k+housing permits(894k;up 11.6%MoM).Withexisting home sales up 11%YoY to 4.75MM and distressed sales making up asmaller percentage of existing sales(24%),we believe that improving housingdata
11、validates our belief that the U.S.housing sector is in recovery mode andshould provide a tailwind for growth in subsequent quarters.Preferred namesexposed to U.S.housing are PPG and Omnova(OMN).We maintain our equal-weight stance on the sectorWe prefer exposure to high-quality companies within the c
12、hemicals sector:Ashland(ASH,Buy,TP$80:Top Specialty Chemical idea),Eastman Chemical(EMN,Buy,TP$63:Top Differentiated Chemical idea),and LyondellBasell(LYB,Buy,TP$55:Top Commodity Chemical idea)_All prices are those current at the end of the previous trading session unless otherwise indicated.Prices
13、are sourcedfrom local exchanges via Reuters,Bloomberg and other vendors.Data is sourced from Deutsche Bank and subjectcompanies.Deutsche Bank does and seeks to do business with companies covered in its research reports.Thus,investors should be aware that the firm may have a conflict of interest that
14、 could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.DISCLOSURES ANDANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1.MICA(P)072/04/2012.,Oct-10,Oct-11,Jan-11,Jun-11,Jan-12,Nov-10,Dec-10,Nov-11,Dec-11,Aug-11,Sep
15、-11,Jun-12,Aug-12,Nov-10,Nov-11,May-11,May-11,May-12,Nov-11,Nov-11,Jan-12,Jun-12,Jan-12,Jun-12,Jul-12,May-12,May-12,Feb-12,Feb-12,Mar-12,Mar-12,Oct-11,Oct-11,Apr-12,Sep-11,Aug-12,Sep-12,Sep-11,Apr-12,Jul-12,May-12,Aug-11,Sep-11,Aug-12,Sep-12,Dec-10,Dec-11,Aug-12,Dec-11,Dec-11,Dec-11,Dec-11,Sep-12,Fe
16、b-11,Feb-12,Mar-11,Mar-11,Mar-12,Feb-11,Feb-12,Mar-12,Jan-11,Jun-11,Jan-12,Jun-12,Oct-10,Oct-11,Oct-12,Apr-11,Apr-12,Oct-12,Apr-11,Apr-12,Jul-11,Jul-11,Jul-12,Jul-12,22 October 2012Chemicals/CommodityRailcar and Petchem UpdateFigure 1:Chemicals railcar loadings for week ended October 13,2012(Week#41
17、),%YoY,%Sequential,4-week moving averagePrior weekWeek endedPrior weekYTD 2012,0.5%0.1%0.9%1.4%(1.04%),(0.1%)2.0%(2.2%)(4.3%),Source:Association of American Railroads and Deutsche BankFigure 2:U.S.Ethylene Production Cash Costs-Spot Co-Production Credits,Weekly Avg.Cents/Pound,Change from Last Week,
18、Purity EthanePropaneCo-Prod.Int.Lt.NaphthaButaneLight NaphthaGas OilWeighted Avg.Source:IHS Chemical,13.621.241.134.351.979.020.9,0.4(0.5)5.71.87.51.01.2,Figure 3:Mt.Belvieu Ethane Purity Prices(North America)c/gallon1009080706050403020Source:IHS ChemicalFigure 5:US Ethylene Pipeline Gulf Coast FOB
19、Spot Prices(c/lb)7570,Figure 4:Mt.Belvieu Propane Non-TET(North America)c/gallon170160150140130120110100908070Source:IHS ChemicalFigure 6:US Chemical Grade Propylene Gulf Coast FOBSpot Prices(c/lb)9080,657060,5550,6050,454040,3530Source:Bloomberg Finance LP,3020Source:Bloomberg Finance LP,Nov-11,Jan
20、-12,Jun-12,May-12,Feb-12,Mar-12,Oct-11,Oct-11,Dec-11,Apr-12,Jul-12,Sep-11,Aug-12,May-1995,May-2000,May-2005,May-2010,Mar-1996,Mar-2001,Mar-2006,Mar-2011,Nov-1997,Nov-2002,Nov-2007,Jul-1999,Jul-2004,Sep-1998,Jan-1997,Sep-2003,Jan-2002,Sep-2008,Jan-2007,Jul-2009,Jan-2012,Sep-12,Figure 7:Figure 8:China
21、 Acetic Acid Spot Prices(CNY/ton)450040003500300025002000Source:Bloomberg Finance LP,Figure 8:US ethane-based ethylene production costs areadvantaged vs other regions(c/lb)65605550454035302520151050,Figure 9:US ethane supply has been increasing steadilysince 2005(000 of bpd)1100100090080070060050040
22、0,Western US Ethane,US,US,US Light Northeast West Southeast,Canada,Weighted Coprod Naphtha,Asia,Europe,Asia,Average,LightNaphtha,Naphtha Naphtha Naphtha,22 October 2012,Chemicals/Commodity,Railcar and Petchem Update,Table Of Contents,US Chemicals Railcar Data.6Key end market data.8,End Market:Agricu
23、lture.9End Market:US Construction.11End Market:US Automotive&Electronics.13,US macro indicators.14,US output indicators.14US financial market indicators.16,Overseas macro indicators.17Sector Valuation&Risks.18,Table of Exhibits,Figure 1:Chemicals railcar loadings for week ended October 13,2012(Week#
24、41).2Figure 2:U.S.Ethylene Production Cash Costs-Spot Co-Production Credits.2Figure 3:Mt.Belvieu Ethane Purity Prices(North America).2Figure 4:Mt.Belvieu Propane Non-TET(North America).2Figure 5:US Ethylene Pipeline Gulf Coast FOB Spot Prices(c/lb).2Figure 6:US Chemical Grade Propylene Gulf Coast FO
25、B Spot Prices(c/lb).2Figure 7:Figure 8:China Acetic Acid Spot Prices(CNY/ton).3Figure 8:US ethane-based ethylene production costs are advantaged vs other regions(c/lb).3Figure 9:US ethane supply has been increasing steadily since 2005(000 of bpd).3Figure 10:Chemical distribution channels,by volume a
26、nd cost.6Figure 11:Chemical and petroleum railcar loadings(4-wk m.a.,%YoY).6Figure 12:Four-week moving average of weekly railcar loadings(2009-Present).6Figure 13:Sequential growth in weekly chemical railcar loadings(2009-Present).7Figure 14:Weekly railcar loadings(000s,2009-Present).7Figure 15:Four
27、-week moving average of weekly railcar loadings,%YoY(2000-Present).7Figure 16:Four-week moving average of weekly railcar loadings(000s,2000-Present).7Figure 17:US chemical companies revenue exposures to key end markets.8Figure 18:Corn stocks-to-use ratios are at the lowest levels since the mid-1970s
28、.9Figure 19:US Corn and Soy Acreage(1970-2013E;millions of acres).9Figure 20:US Corn Yields(1970-2013E;bushels per acre).10Figure 21:US Soybean Yields(1970-2013E;bushels per acre).10Figure 22:Global Corn Consumption(MM tons).10Figure 23:Arable Land Per Capita.10Figure 24:Global Corn Yields by Countr
29、y/Region(bu/acre;2011).10Figure 25:Global Corn Acreage by Region(millions of acres;2011).10Figure 26:US construction data has stabilized since record lows in mid-09 and is beginningto show signs of improvement.11Figure 27:Private non-residential construction has surpassed public non-residential,cons
30、truction.11Figure 28:Household debt to asset ratio returning to trend levels.12Figure 29:Household Debt/GDP ratio also returning to trend levels.12Figure 30:Housing-related consumption remains well above homebuilder sentiment.12Figure 31:Housing starts appear to have bottomed and have ticked up in 2
31、012.12Figure 32:North American auto builds.13Figure 33:North American printed circuit board book-to-bill ratio.13Figure 34:US Chemicals Shipments on Internal Waterways.14,Figure 35:Chemicals Railcar Loadings,Capacity Utilization,and Industrial Production.14Figure 36:Growth in railcar loadings is ahe
32、ad of industrial production.15Figure 37:ECRI Leading Index vs.Industrial Production.15Figure 38:Industrial Production vs.ISM PMI Index.15Figure 39:Industrial Production vs.ISM Mfg.New Orders.15Figure 40:Industrial Production vs.Conference Board Leading Indicators.15Figure 41:Conference Board Leading
33、 Indicators vs.Real GDP.15Figure 42:Chemicals sector multiples vs the yield curve.16Figure 43:A steeper yield curve has previously led rising chemicals IP.16Figure 44:Eurozone confidence indicators.17Figure 45:ZEW German economic sentiment indicator(12mo m.avg.).17Figure 46:OECD Europe CLI vs Euro a
34、rea Industrial Production.17,2,4,6,8,10,12,14,16,18,20,22,24,26,28,30,32,34,36,38,40,42,44,46,48,50,52,2,4,6,8,10,12,14,16,18,20,22,24,26,28,30,32,34,36,38,40,42,44,46,48,50,52,22 October 2012Chemicals/CommodityRailcar and Petchem UpdateUS Chemicals Railcar DataFigure 10:Chemical distribution channe
35、ls,by volume and cost,By tonnage(882MM tons),By cost*($40.0 billion),RailTruckWaterbornePipeline,Air&Other,30%48%18%4%,20%67%10%3%,Source:American Chemistry Council.*Cost is cost of transportation,not value of product,2010 dataYear to date,chemical railcar loadings are down 1.0%Year to date,chemical
36、 railcar loadings are down approximately 1.0%.With ethanolcomprising approximately 21%of chemicals loadings and DoE blending up 10%(est.)in11,we estimate that ethanol is boosting 12 US chemicals railcar loadings by roughly2%.Figure 11:Chemical and petroleum railcar loadings(4-wk m.a.,%YoY)60%50%40%,
37、30%20%10%0%(10%),Week#41,Jan,Feb,Mar,Apr,May,Jun,Jul,Aug,Sep,Oct,Nov,Dec,Chemicals railcar loadings(4-wk m.a.%YoY)Ethanol-driven Increase in loadings(estimated from blending,4-wk m.a.%YoY)Petroleum Products railcar loadings(4-wk m.a.%YoY)Source:Association of American RailroadsFigure 12:Four-week mo
38、ving average of weekly railcar loadings(2009-Present)33,00031,00029,00027,00025,000,23,000,Week#41,Jan,Feb,Mar,Apr,May,Jun,Jul,Aug,Sep Oct,Nov,Dec,Source:Association of American Railroads,2010,2011,2012,SequentialChange,-,-,Jan-00,Jan-01,Jan-02,Jan-03,Jan-04,Jan-05,Jan-06,Jan-07,Jan-08,Jan-09,Jan-10
39、,Jan-11,Jan-12,Jan-00,Jan-01,Jan-02,Jan-03,Jan-04,Jan-05,Jan-06,Jan-07,Jan-08,Jan-09,Jan-10,Jan-11,Jan-12,Figure 13:Sequential growth in weekly chemical railcarloadings(2009-Present)35%25%15%5%(5%),Figure 14:Weekly railcar loadings(000s,2009-Present)3432302826,(15%)(25%),Jan,Feb,Mar,Apr,May,Week#41J
40、un Jul,Aug,Sep,Oct,Nov Dec,2422,Week#41,Jan Feb Mar,Apr May Jun Jul,Aug Sep Oct NovDec,2010,2011,2012,2010,2011,2012,Source:Association of American RailroadsFigure 15:Four-week moving average of weekly railcarloadings,%YoY(2000-Present)30%20%10%0%(10%)(20%)(30%)(40%)Source:Association of American Ra
41、ilroads,Source:Association of American RailroadsFigure 16:Four-week moving average of weekly railcarloadings(000s,2000-Present)32302826242220Source:Association of American Railroads,-,-,-,-,-,-,22 October 2012Chemicals/CommodityRailcar and Petchem UpdateKey end market dataFigure 17:US chemical compa
42、nies revenue exposures to key end markets,Company3M,Auto&Transport11%,Construction4%,Electronics10%,CommentsIndustrial 25%;Healthcare 18%;Consumer 15%;Energy 3%,Safety&Security 14%,Air Products,15%,Energy 24%,Genl Mfg 15%,Chemicals 17%,Metals 10%,Medical 7%,Food 3%,Others 10%,Airgas,2%,13%,Industria
43、l Repair&Maintenance:27%Retail&,Wholesale:4%Other 3%Medical:9%;Food;6%;Analytical:2%Utilities:2%,Petrochemical:7%“Auto&Transport”is onlyTransport and no Auto,Albemarle,6%,9%,15%,Refining 32%,Pharma/Ag 12%,Industrial 10%,Packaging 9%,Oilfield 4%,Other 3%,Ashland,8%,17%,Coatings 6%,Lubricants 15%,Chem
44、icals 5%,Pulp/paper 12%,Energy 3%,Regulated Ind 3%,Marine 4%,Infrastructure 2%,Packaging/converting 3%,Retail consumer 3%,Personal Care3%,Medical 2%,Others 14%,CabotCelanese,15%11%,10%3%,10%,Tire 45%;Others 20%Filter Media 22%;Paints Consumer&Medical,Apps 12%;Consumer Paper&Packaging 3%,Cytec,17%,47
45、%,Chemical Processing:13%,Mineral Processing 7%;Plastic:4%;,Adhesives:3%;Other:9%“Auto&Transport”consists ofAutomotive only,DuPont,20%,10%,9%,Agriculture/food 21%;Food Ingred,Ref Other,packaging 3%;Chemicals/petchem 5%;Textile/apparel 5%;Plastics 3%;Other industrial 7%;Aerospace 4%;Paper 1%;Healthca
46、re 1%;Personal care 3%.“Construction”includesresidential,commercial construction”,Ferro,10%,34%,21%,Appliances 8%;Containers 8%;Household furnishings 7%;,Industrial 6%;Others 6%,HB Fuller,10%,Adhesives:72%;Paints:8%;Packaging:4%;Insulating glass:4%;Consumer:2%,LyondellBasell,7%,10%,Refining/Fuels:35
47、%;Packaging:18%;Consumer:12%;Coatings:,4%;Textiles/Furnishings:4%;Other:10%.“Auto&Transport”consists of Transportation only.“Construction”consists of“Building&Construction”.,PPG,30%,27%,Consumer goods 21%;Industrial goods 10%;Chemical products:,5%;Aerospace 4%;Marine 3%(Auto consists of OEM 19%,Auto
48、 aftermarket 11%),Praxair,7%,Manufacturing 24%;Chemicals 10%;Energy 13%;Food andBeverage 7%;Aerospace 2%;Healthcare 10%;Metals 16%;Other 11%,Rockwood Holdings,11%,13%,8.00%,Metal Treatment 17%;Chemicals/Plastics 14%;Life Sciences,12%;Consumer Products 2%;Paper 2%;Environmental 2%;Other 8%,Valspar,3%
49、,30%,Industrial 36%,Packaging 21%,Other 10%“Auto&Transport”is,automotive refinish and“Construction”is architectural paintsSource:Company data,Deutsche Bank estimates,70/71,72/73,74/75,76/77,78/79,80/81,82/83,84/85,86/87,88/89,90/91,92/93,94/95,96/97,98/99,00/01,02/03,04/05,06/07,08/09,10/11,12/13E,E
50、nd Market:AgricultureFigure 18:Corn stocks-to-use ratios are at the lowest levels since the mid-1970sSource:Deutsche BankFigure 19:US Corn and Soy Acreage(1970-2013E;millions of acres)10595857565554535,Source:Deutsche Bank,USDA,US Corn Acreage,US Soy Acreage,70/71,72/73,74/75,76/77,78/79,80/81,82/83
