WMStrategy Demo Baltic Countries Low Density Polyethylene Market March 2019
PCA Presentation
1. Strategic view on rosin supply -
demand cycles and the impact
on speculation
resina
2. Quote
Speculation is only a word covering the
making of money out of the manipulation
of prices, instead of supplying goods and
services.
Henry Ford
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
3. Content
• Historic Gum Rosin Price Development
– Comparison of demand and supply
– 3 Phases in History To Consider
• The 80s, 90s and new Millennium till YTD
• Actual Market Situation
– Price volatility
– Is speculation and price volatility recommendable?
– Purchasing vs. selling strategies and vice-versa
– Behavioral Recommendations for PM
• Conclusion
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
5. Historic Gum Rosin Price Development
Comparison of demand and supply
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
6. Historic Gum Rosin Price Development
Comparison of demand and supply
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
7. Historic Gum Rosin Price Development
Comparison of demand and supply
• CGR price from 97 to 04 influenced (or even dominated)
by EU modifiers
• Price stability interesting for EU modifiers but too low
price level for CGR producers in China
• Decision of Chinese producer to start offering more and
more modified gum rosin instead of gum rosin
• as a result………:
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
8. Historic Gum Rosin Price Development
Comparison of demand and supply
• Price elasticity of demand declined in China since no
alternative raw materials besides gum rosin
– No gum rosin from outside China (BGR, IGR etc….)
– No TOR
– No or very limited supply of HCR
• as a consequence….
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
9. Actual Market Situation
Price volatility
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
10. Actual Market Situation
Price volatility
• Why is that?
– Lower Stocks induce higher volatility in price
– Growing domestic demand for Pine Chemicals in China
– Increase of speculation activities from external influencer
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
11. Actual Market Situation
Price volatility
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
12. Actual Market Situation
Price volatility
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
13. Actual Market Situation
Price volatility
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
14. Actual Market Situation
Is speculation and price volatility recommendable?
• Speculation is a normal thing generally speaking
• Negative impact of speculation happens when:
– sales party is selling even though being short quantity-wise
– purchasing party is not buying even though being short quantity-
wise
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
15. Actual Market Situation
Purchasing vs. selling strategies and vice-versa
• Troublesome for both, buying and selling side
• «do not speculate against the market, but cover your
needs month by month»
– Often better to get continuous valuable suggestions than to
speculate
– Market Volatility between demand and supply will remain on a
high level
– And this volatility can appear on short term, even within the
same day
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
16. Actual Market Situation
Behavioral Recommendations for PM
• Proliferate this recommendation also to your
dedicated sales team and specialists who are used
to conclude long term contracts with fixed prices
• in the end this is counterproductive if floating
purchasing prices of raw materials will be higher
than fixed sales prices of end products
• Openly share your stock situation with your
supplying partner giving him a better understanding
of your actual situation enabling him to better guide
you regarding purchasing decisions
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
17. CONCLUSION
• Price volatility will not be less in the future, but
rather increase (see other commodity market such
as energy and other raw materials)
• Follow the market and buy your needs on short term
in order to avoid larger losses on speculation
• Purchasing of raw material is a strategic act which
has to be linked very closely with a consistent risk
management and risk management always has the
target to avoid losses (speculation)
Alessandro Visconti, Petrofer AG, Switzerland - PCA Conference Beijing September 2011
18. resina
Thank you for your attention
For receiving our monthly Newsletter
leave your visiting card with me or send an Email!
