Guoyuan Futures says U.S. midterms will hit Chinese energy-chem futures mainly
via changes in expected international crude, refined-product and LPG supply,
with effects transmitting through the naphtha, aromatics and olefins chains to
domestic contracts. Different commodities have distinct cost structures and
domestic supply/demand, so price elasticity and persistence will vary. Domestic
contracts most directly linked to international energy prices and supply include
crude oil, fuel oil (including low-sulfur grades), LPG, bitumen, PX, benzene and
propylene. The firm judges direct market impact will concentrate around the Nov.
4 key voting stage; if results meet expectations, persistence depends on
follow-up policy; if Republicans unexpectedly retain both chambers, markets
should guard against concentrated upside in crude and other highly sensitive
energy-chemical contracts.
