Strategy Note /

Thailand (Bualuang): Thai Market Strategy - Commodity trading playbook

  • Crude prices have risen steadily during the past couple of months

  • Looking to the seasonal GRM pattern

  • Demand looks set to rise faster than fleet supply

Poramet Tongbua
Poramet Tongbua

Equity Research Analyst

Bualuang Securities
14 January 2021

Broadly recovering demand will push up product prices in 2021 (and smaller supply adds are a plus). Crude supply discipline among OPEC+ members should keep oil prices elevated through this year (or at least till non-OPEC producers pump substantially more). Demand fluctuations for some products (a side effect of COVID-19) may cause erratic price movements compared to historical seasonal price patterns in the short run, but we expect overall seasonal patterns to resume by 2H21.  

Oil & petrochemical prices 

Crude prices have risen steadily during the past couple of months, reflecting recovering demand and production discipline among OPEC+ members. We expect the uptrend to continue, supported by an ongoing demand recovery, augmented by COVID-19 vaccine rollouts. 

Recovering demand will also boost chemical prices and spreads. Only modest industry-wide PET resin capacity adds are slated for this year, augering well for IVL’s earnings prospects. PE and PTA capacity will rise more substantially, limiting the scope for upside to their spreads, but demand will expand and some new plants may miss SCODs.