China’s chemicals industry is booming. DB Research expects chemicals turnover there to grow by 10% . in the ten years ahead, with China gaining importance not only due to its demand for but also its output of chemical products. The increase in capacity is mainly being financed by direct investments as part of cooperative ventures with foreign business partners. If key underlying conditions like restrictions in the energy sector and bottlenecks in transportation did not hamper its growth, the performance of the Chinese chemicals industry could even be more impressive. Chemical industry in China: Overtaking the competition October 25, 2005 Chemicals industry at the crossroads. China is becoming an increasingly important consumer and supplier of chemical products. Reasons: Strong demand within the country and cost advantages over Western industrial countries both in the production of chemical products and for key customer industries building up production capacities. Growth boom in China. DB Research expects chemicals turnover in China to boom up to 2015. Sales should grow by 10% annually to nearly EUR 400 bn – versus increases of merely % in the USA and 3% in Germany. With this growth, China’s chemicals industry will increase its share of the world market from 8% to 13%. This would make China the second biggest producer after the USA as of2015. Major capacity build-up. Western multinationals and local Chinese companies are currently setting up extensive production capacities in China. For example, over 2 million tonnes of ethylene capacity are set to go onstream in 2005, and a further nearly 4 million tonnes are likely to be added in 2006 (as a comparison: German ethylene production in 2004: 5 million tonnes). Direct investment plays a key role. The increase in capacity is mainly being financed by direct investments as part of cooperative ventures with foreign business partners. Curbing factors. The growth of the chemicals industry in China is being hampered because important underlying conditions are not in place. This holds for restrictions in the energy sector as well as bottlenecks in transportation. Import demand stays high. Even though China is now the world’s fourth-largest maker of chemical products, domestic production is unable to cover demand in all segments. In 2004, the country imported products worth EUR 44 bn, which is roughly equivalent to Belgium’s total chemicals turnover. Author Uwe Perlitz +49 69 910-31875 @ Chemicals turnover in China is booming EUR bnEditor Hans-Joachim Frank 1000Technical Assistant Martina Ebling 800Deutsche Bank Research 600Frankfurt am Main 400Germany Internet: 200E-mail: @ 0Fax: +49 69 910-31877 2004200520102015Managing Director NorbertEU-25ChinaGermany Walter Sources: VCI, DB Research China Special Current Issues
China’s chemicals industry is booming. DB Research expects chemicals turnover there to grow by 10% . in the ten years ahead, with China gaining importance not only due to its demand for but also its output of chemical products. The increase in capacity is mainly being financed by direct investments as part of cooperative ventures with foreign business partners. If key underlying conditions like restrictions in the energy sector and bottlenecks in transportation did not hamper its growth, the performance of the Chinese chemicals industry could even be more impressive. Current Issues 1. Status quo The global chemicals industry is at a crossroads, largely because Growing chemicalsChina is becoming an increasingly important consumer and supplier consumptionof chemical products. The reasons are strong demand within the EUR bncountry and cost advantages over Western industrial countries both CNDEEU-25Worldin the production of chemical products and for key customer 199450903431,147industries building up production capacities. In China, chemicals 199558933631,190consumption has increased by about 12% . over the past ten 199667893661,219years, while the EU-25 and the USA have posted figures of only 4% 199781933891,382apiece and Germany merely 2%. The industrial countries are shifting 199881953941,344chemicals activities to China, following their main clients – the 1999931004091,453automobile, electricals & electronics, communications and textiles 20001291114671,788industries – that were attracted by the Chinese sales prospects and 20011391104791,802cost advantages. To remain competitive, direct contact between 20021491094801,786Western chemicals producers and customer companies in China is 20031571094861,697often of pivotal importance. The big chemicals companies mainly 20041621105141,766want to profit from high demand in the country and lower wage 1 Source: VCI costs. Average labour costs in the Chinese chemicals sector are lower than EUR 1 per hour, compared with about EUR 5 in Poland and more than EUR 20 in Germany. Furthermore, construction costs are relatively low and licensing procedures are considerably shorter than in Europe. These favourable conditions are attracting more chemicals companies. Western chemicals manufacturers currently are not only establishing sites for simple production processes, but also for high-value-added products that incorporate the latest technology. Research and development sites are also being set up. Chemicals sector is No. 4 for German Following the labour-intensive sectors, the capital-intensive direct investment chemicals industry is now increasingly investing in China. According to Germany’s Bundesbank, the chemicals sector had invested about EUR bn there by 2003. It is therefore No. 4, following the automobile, electricals & electronics and mechanical engineering industries. Germany’s overall chemicals investment in foreign countries until 2003 was about EUR 42 bn – EUR 24 bn in EU countries and EUR 8 bn in the USA. Growing German investments in ChinaEUR mTotalAuto-Engineer-ElectricalsIndustyChemicalsmobileing& electonics20004,0426021,4864041,05220014,7466632,0464071,00320024,2735271,9343921,00120034,6754692,2404731,017Source: Deutsche Bundesbank 2 China is No. 4 in chemicals With chemicals turnover of EUR 137 bn, China has become No. 4 of the world’s biggest chemicals manufacturers. Only in the USA, Japan and Germany were even more chemicals produced in 2004. Chinese turnover is equivalent to about 97% of the German level in this sector. Already in 1999, China displaced fourth-ranked France. Ten years ago, China’s share of global chemicals turnover was only %. Gaining strength in the following years, last year's share was 2 October 25, 2005
China’s chemicals industry is booming. DB Research expects chemicals turnover there to grow by 10% . in the ten years ahead, with China gaining importance not only due to its demand for but also its output of chemical products. The increase in capacity is mainly being financed by direct investments as part of cooperative ventures with foreign business partners. If key underlying conditions like restrictions in the energy sector and bottlenecks in transportation did not hamper its growth, the performance of the Chinese chemicals industry could even be more industry in China already at about 8%, and is expected to rise considerably in the years ahead. The biggest chemicals companies in China are: Chemicals turnover more— China National Petroleum Corporation (CNPC), than tripledEUR bn— China National Petrochemical Corporation (Sinopec), CNDEEU-25World— China National Offshore Oil Corporation (CNOOC) and 1994411093671,143— China National Chemical Corporation (CNCC). 1995461123891,185Most of these companies are state-owned. As the chemicals 1996541103981,214industry occupies a key position in the economy, the Chinese 1997661184291,380government continues to actively steer market entry for foreign 1998671174331,341companies. Generally speaking, the best possible foreign invest-1999761214541,446ment currently is a joint venture with a Chinese partner. To avoid 20001041355211,775economic overheating, the government has recently established 20011141345361,784entry barriers for selected industries. The basic chemicals market 20021241335421,775and especially the market for petrochemicals are affected. Only 20031321365531,696major projects with a production volume of 800,000 tonnes . are currently being permitted. Restructuring not yet ruled out At present, China’s chemicals industry is still concentrating on the production of basic chemicals, . inorganic and organic feedstocks like ethylene, propylene, ammonia, benzene and chlorine. However, the Chinese government plans to raise the special chemicals’ share of overall production from 30% to 45% in the years ahead. A series of measures is planned to create stronger investment incentives for the manufacturers of special chemicals products. One example is the Shanghai industry park established specifically for such products. Furthermore, Chinese chemicals production is shifting to the less developed west of the country which is due to Beijing’s attempts to 20041371425861,776 3 Source: VCIGlobal chemicals turnover:China is making strongShares in %USA these regions by creating investment incentives. The Otherstextiles industry has already responded to the government gramme by moving in the desired direction. Other sectors – the chemicals industry – are likely to join in. chemicals are key China The cyclical business with basic chemicals is of great importance (Chinese market share about 70%), as demand from the main customers, especially the automobile and construction industries, is 1994very strong. Germany’s BASF, the world’s biggest chemicals company, was one of the first foreign entities to discover the market. Asia’s share of the company’s overall chemicals turnover is expected to rise from 16% at present to 20% by 2010. In mid-2005, BASF and its Chinese partner Sinopec started up a Others further chemicals plant in Nanjing with about 1,500 employees. bn tonnes of chemicals and plastics are produced in the over EUR 2 bn chemicals complex. The complex consists of a Japancracker that separates crude oil into its main components, ethylene propylene, and downstream chemical plant. Among other Ger-things, ethylene and propylene are needed to produce plastics for Chinamanythe ship-building, automobile and IT industries, household goods toys. The cornerstone of the complex was laid in 2001 and it Sources: VCI, DB Research 4 was already completed by end-2004. The factory in Nanjing and two bigger plants in Shanghai and Caojing are the company's base in China. October 25, 2005 3
China’s chemicals industry is booming. DB Research expects chemicals turnover there to grow by 10% . in the ten years ahead, with China gaining importance not only due to its demand for but also its output of chemical products. The increase in capacity is mainly being financed by direct investments as part of cooperative ventures with foreign business partners. If key underlying conditions like restrictions in the energy sector and bottlenecks in transportation did not hamper its growth, the performance of the Chinese chemicals industry could even be more impressive. Current Issues Local chemicals companies in the Further Western oil and chemicals groups and local Chinese fast lane companies are currently building up large-scale chemicals capacities. We expect three further crackers to be operating by end- 2005. Overall ethylene capacities are likely to reach more than 2 m tonnes this year (capacity in 2004 almost 10 m tonnes); in 2006 capacities are expected to rise again by almost 4 m tonnes (global ethylene production in 2004 more than 100 m tonnes). Pent-up demand for special chemicals The production of special chemicals (market share: about 30%) Basic chemicals dominantneeded for a large number of products like coatings, additives, in Chinaadhesives, flavours, scents and pharmaceutical feedstocks will Market share 2004, %continue to expand in China. Special chemicals providers which produce dyes and additives for textile production benefit from the Organic and inorganicbooming Asian textile industry. Today, more than 50% of all chemical are produced in Asia, with half of the total volume produced in . Almost all textile fibres are produced synthetically, because fibres like cotton are by no means able to satisfy demand. Paints and manufacturers also benefit from the flourishing textile industry. Detergents and body China is the biggest producer of synthetic dyes worldwide, at almost care ,000 tonnes annually. Moreover, this sector produces about Other ,000 tonnes of organic pigments. Since domestic manufacturers in many cases do not fully satisfy the quality standards required for Sources: Global Insight, VCI5 exports, foreign companies have good opportunities in this market. “China Pharmaceutical”, a dominant player If things develop the way the planning authorities wish, China’s role as the world’s leading manufacturer of vitamins will be even more distinct in future. China Pharmaceutical, a company that is still state-owned, plays a central role in this context. It already commands one-fifth of the market worldwide. With other products, . penicillin, the company has increased its share to 10%. One advantage is the China offers great advantages in drug low level of development costs for drugs: USD 120 m in China development compared with USD 800 m in the USA and in Europe. Drug development lasts eight to ten years on average in the USA; in China it takes five to eight years for a medication to be approved – an advantage for the pharmaceuticals industry worth millions. The main reason for the shorter approval periods is not because of the less strict authorisation procedures. The substances also go through Chemicals imports in a three-stage clinical examination process that the companies have comparisonto qualify for by providing clinical data. The country’s advantage is EUR bnthe large number of patients with a specific disease pattern that can 199419992004 2004/be tested more quickly. The pharmaceuticals industry can further-more tap a much larger pool of graduates in the natural sciences. 1994China has 170,000 graduates in this field, compared with only % 25,000 in Germany. But in the field of high-quality generics or EU-15155237354+ patented products, China will not be a serious competitor for Germany294567+ chemicals manufacturers for a long time. EU-10*101630+ in all, the very profitable market for special chemicals has great EU-25165252384+ in China. Chemicals of high quality and purity are in USA295891+ demand by Chinese customers. This means that the quality Japan172228+ end products can be improved and their export rates increased. China152844++ demand stays high Even though China is now the world’s fourth-largest manufacturer of chemicals products, domestic production is unable to cover demand in all segments. In 2004, China’s chemicals imports were valued at World335522745+*Poland, Czech Rep., Slovakia, Hungary, SloveniaLithuania, Estonia, Latvia, Malta, Cyprus Source:about EUR 44 bn (1995: EUR bn). This is equivalent to an VC6 I 4 October 25, 2005
China’s chemicals industry is booming. DB Research expects chemicals turnover there to grow by 10% . in the ten years ahead, with China gaining importance not only due to its demand for but also its output of chemical products. The increase in capacity is mainly being financed by direct investments as part of cooperative ventures with foreign business partners. If key underlying conditions like restrictions in the energy sector and bottlenecks in transportation did not hamper its growth, the performance of the Chinese chemicals industry could even be more industry in China import ratio of 27%. The rate is 6 percentage points lower than in New ethylene capacities1995. The reason for the decrease is big domestic chemicals com-in Chinapanies providing better supply in the market. It has to be borne in mind that in chemicals trade, according to Price Waterhouse CompanyCapa-TargetCoopers, shipping costs and tariffs often account for 30% of the citydateoverall costs. Chinese chemicals imports are currently equivalent to '000 tthe overall sector turnover in Belgium. Sinopec/BP9002005DB Research does not expect China to cover domestic demand on BASF/Sinopec6002005its own in the medium term. There are two main reasons: first of all, Maoming Petrochem4202005chemicals consumption is rising enormously as a result of the ex- Qilu Petrochem2702005pected dynamic economic growth. Second, the market is demanding Formosa Petrochem1,2002006high-quality products that China will not be able to produce in Shell/CNOOC8002006sufficient quantities in the foreseeable future. Daqing General6002006 Lanzhou Petrochem3602006Since 2001, when China joined the World Trade Organisation, 1 Petrochem3202006obstacles for chemicals imports have been reduced largely. Now, Jilin Chemical2202006Chinese companies at least are no longer obliged to buy raw materials primarily in their home country. Liberalisation progress due Source: Oppenheim Research 7 to the new membership eliminated structural deficits and highly improved the quality of China as a business location. Even though import tariffs for more than 1,000 chemicals were reduced from 15% to about 7%, a process starting in 2005, it is still more advantageous to operate in the domestic market thanks to lower costs for production and transport. 2. Medium-term development DB Research expects the Chinese chemicals industry to boost output considerably in the medium term, driven mainly by the good performance of the domestic customer industries (automobile, electricals & electronics and construction in particular) and by stimuli from private consumption. According to the National Bureau of Statistics of China, industry’s contribution to GDP rose from about 40% to 50% in the last decade and is expected to rise further – above all at the expense of the agricultural sector. Further build-up of chemical capacities ahead China: GDP leaderReal GDP, % yoyGiven the expanding Chinese economy, it is not surprising that chemicals industry capacities are to be increased significantly in the 200020032006years ahead to meet the prospective demand. The demand for Westernpropylene, to give one example, is twice the capacity currently . Therefore, DB Research expects the risk of growing capacities to be low, at least in the short and medium term. all, China still needs to import chemical products to cover Great one-third of its demand. However, neighbours from the such as Korea and Japan that are big exporters could face Eastern problems when the Chinese increase their chemicals capacities. economy is support expect China's GDP to rise by over 5% per year until 2020. An stronger increase can only be expected for India and . Chinese industrial production is expected to expand at a Quelle: DB Research 8 double-digit rate on average in the years ahead. In terms of GDP (at 1 See Bhaskaran, Manu (2003). China as potential superpower: regional responses. Deutsche Bank Research, China Special, February 25, 2003. Frankfurt am Main. 2 See Bergheim, Stefan (2005). Global growth centres 2020: Formel-G for 34 economies. Deutsche Bank Research. Current Issues No. 313, February 9, 2005, Frankfurt am Main. October 25, 2005 5
China’s chemicals industry is booming. DB Research expects chemicals turnover there to grow by 10% . in the ten years ahead, with China gaining importance not only due to its demand for but also its output of chemical products. The increase in capacity is mainly being financed by direct investments as part of cooperative ventures with foreign business partners. If key underlying conditions like restrictions in the energy sector and bottlenecks in transportation did not hamper its growth, the performance of the Chinese chemicals industry could even be more impressive. Current Issues 1995 purchasing power parity exchange rates) China is already the China and India:second largest economy after the USA. According to Germany’s Dynamic vehicle productionBundesbank, China accounts for almost 7% of overall world trade by '000 unitsnow. Thus, among the most important nations in world trade, China 200020022004 2004/occupies third place after the USA and Germany. 2000With wages and salaries rising, Chinese consumers are becoming % demanding. Therefore, it is not surprising that private con-EU-1517,10316,88416, surged during the past years, a development which is Germany5,5275,4695,570+ to continue in the years ahead. EU-101,2811,2311,482+-2518,38418,11518, automobile production USA12,77412,28011, chemicals industry is hoping for higher demand especially from Japan10,14510,25710,512+ expanding Chinese automobile industry. A steadily increasing China2,0693,2515,071+ of a vehicle is made of plastic (2004: 13%; 1980 only India8018961,511+%). Automobile production in China did not start until 1950 but it World57,89058,31162,977+ become one of the main locations of the global automobile Source: VDA9 industry by now. One reason was the country’s immense backlog demand for motor vehicles. In 2004, about 5 m vehicles were produced there, which already is a share of over 8% of the global automobile industry (Germany: just under 9%). According to the German automobile association VDA, the number of vehicles per 1,000 inhabitants in China is still very low, at 19. The population’s steadily rising mobility needs and the rapidly increasing goods traffic will generate strong demand for vehicles also in future. By 2020, China is likely to be the largest vehicle producer in the world. Now all international car companies, . Volkswagen, General Number of vehiclesMotors, Toyota, Hyundai, Honda, BMW and DaimlerChrysler, are varies considerablyactive in the Chinese market. However, the Chinese automobile Vehicles per '000 industry’s overall sales potential should not be overestimated, with inhabitants, 2003/04excess capacities of about 10-20% already squeezing prices today. The Chinese chemicals industry therefore has to boost its sales of EU-15573plastic components on the global market even more. Germany588USA780Positive stimuli from construction industry Japan568China19The Chinese population (currently about bn) will grow by 150 m India10inhabitants by 2020, to more than bn. About 300-500 m people World134are expected to move from rural to urban areas, where there are Source: VDA10 better employment possibilities. The high number of “resettlers” is as large as the overall EU-25 population. This would be the largest case of migration ever. According to the latest official data from Chinese authorities, about 500 m people live in their cities. In 15 years’ time the urban population is likely to total around one billion. The large industrial areas will therefore continue to have an adequate labour supply at their disposal in future. The resulting Private consumption: Highconstruction boom in the cities will mainly generate business for the growth in Chinaproducers of plastic components (window frames, insulating Real, % yoymaterials, pipes) and of paints and lacquers. 14Big back-log in consumer demand 12China10The consumption-related sectors of the chemicals industry are 8geared towards expansion too, favoured by the development of 6incomes. The country now has a growing middle class that is Germany4becoming increasingly demanding concerning consumer goods for 2everyday use, like cosmetics. China is already the second largest 0market for cosmetics in Asia. Given the stable double-digit growth -2rates in China, today’s No. 1, Japan, is likely to lose the lead over 2000200120022003200420052006the coming years. Cosmetics demand is very high, especially in the Source: DB Research11 prospering cities. One example is Hong Kong, where inhabitants 6 October 25, 2005
China’s chemicals industry is booming. DB Research expects chemicals turnover there to grow by 10% . in the ten years ahead, with China gaining importance not only due to its demand for but also its output of chemical products. The increase in capacity is mainly being financed by direct investments as part of cooperative ventures with foreign business partners. If key underlying conditions like restrictions in the energy sector and bottlenecks in transportation did not hamper its growth, the performance of the Chinese chemicals industry could even be more industry in China currently spend a larger share of their income on cosmetics than Europeans or Americans do. About half of the nationwide sales comes from national companies and more than one-third comes from international companies that in some cases have been producing in China for years (the rest is imported). The communications industry, especially the manufacturers of Chemical turnovermobile telephones, flat screens etc., is also building up sizeable forecastproduction capacity to satisfy demand. Chinese companies are USD bnincreasingly already competing with Japanese and Korean companies. 2004200520102015EU-15559581700851Production forecast up to 2015 Germany142149172200All in all, DB Research expects chemicals turnover to rise from EU-1027283851EUcurrently EUR 137 bn to almost EUR 400 bn (+10% .) by 2015. -25586610737902USA415430510606We think the main reason for such high growth is the good Japan186186186186performance of the domestic customer industries, especially the China137151243392auto, electricals & electronics and construction industries as well as India485176111private consumption. World1,7761,8652,3803,038In contrast, US chemicals turnover is expected to rise by % . Sources: VCI, DB Research to EUR 600 bn by 2015, German turnover by 3% . to EUR 200 12 bn. China is then likely to be the second biggest manufacturer of chemical products after the USA. The Chinese market share might increase from currently 8% to about 13% on the global chemicals market. 3. Impediments to growth Growth in the Chinese chemicals industry could be stronger and its share of the global market even bigger if important framework conditions did not have a hampering effect. Energy shortage is a brake A shortage of electricity is the main reason why production has been Chemicals exportshindered in many places for some time now. This shortage can only growing worldwirdbe eliminated in the medium term and will require maximum effort. EUR bnThe fact that energy is scarce was already evident in the early 1990s. For this reason, China started building projects that, from an 199419992004 2004/ecological perspective, proved to be highly controversial. The EUR 199425 bn Three Gorges Dam, the biggest water construction project in % world, is one example. EU-15183289437+ power bottlenecks have occured since 2004, with the Germany496699+ Delta near Shanghai and the southern Pearl River Delta EU-10*6818+ affected most. These regions are China’s growth centres and EU-25189297455++ location of numerous chemicals companies. At peak times in the Japan202939+, energy shortfalls of up to 25 gigawatts may occur, China51119+ to the Chinese energy supervisor SERC. This is India246+ to about one-fifth of the capacity installed in Germany. World331515756+ need to be prepared to shut down production for several days a week, to move operations from day to night or to set up their * Poland, Czech Rep., Slovakia, Hungary, Slovenia, Lithuania, Estonia, Latvia Malta, Cyprusown generators. The supply shortage is likely to be eliminated by 2007 when new power stations come on stream. Source: VCI 13 Transport also a bottleneck In China, insufficient freight capacity and the road and rail infrastructure, which have been poor for a long time, are increasingly hampering industrial development. It is the chemicals industry in particular that is dependent on roads in China that are October 25, 2005 7
China’s chemicals industry is booming. DB Research expects chemicals turnover there to grow by 10% . in the ten years ahead, with China gaining importance not only due to its demand for but also its output of chemical products. The increase in capacity is mainly being financed by direct investments as part of cooperative ventures with foreign business partners. If key underlying conditions like restrictions in the energy sector and bottlenecks in transportation did not hamper its growth, the performance of the Chinese chemicals industry could even be more impressive. Current Issues heavily travelled. Rail transportation seems a possible alternative and is inevitable in some remote areas, but the rail network, similar to the roads, is strained to the limit and in even worse state. 4. Outlook We expect Chinese GDP to outstrip that of the USA and the EU-25 in future. Such expansionary development will boost chemicals consumption. However, Chinese companies should seek to satisfy the more sophisticated demand by changing the range of products they offer and by improving their products’ quality. They could profit from Western know-how. China’s chemicals exports increased by 14% . to almost EUR 20 bn in the last ten years (in comparison, Germany’s by 7% . to about EUR 100 bn). Generally speaking, China’s chemicals industry currently shows the highest growth Offshoring expected to increase potential in international comparison, suggesting that chemicals companies from Western industrial countries invest there more heavily. It is an advantage that there are low market entry hurdles for international companies. In contrast, the legal framework conditions in Europe are expected to worsen. One example is the planned EU regulation REACH that requires the “Registration, Evaluation and Authorisation of Chemicals”. This might speed up the process of shifting European production to China even further. As Chinese production facilities are increasingly being modernised, the country is correspondingly able to improve the chemicals products' quality and thus to boost export opportunities. The gigantic increase in capacity in the chemicals sector has mainly been financed so far at big companies by direct investments as part 3 of cooperative ventures with foreign partners. As in other sectors, China is increasingly boosting domestic investments in the chemicals sector by pursuing capital procurement schemes of its own devising. Uwe Perlitz (+49 69 910-31875, @) ————————————————- 3 See Hansakul, Syetarn (2004). China’s financial sector: institutional framework and main challenges. Deutsche Bank Research, China Special, March 22, 2004, Frankfurt am Main. © 2005. Publisher: Deutsche Bank AG, DB Research, D-60262 Frankfurt am Main, Federal Republic of Germany, editor and publisher, all rights reserved. When quoting please cite “Deutsche Bank Research“. The information contained in this publication is derived from carefully selected public sources we believe are reasonable. We do not guarantee its accuracy or completeness, and nothing in this report shall be construed to be a representation of such a guarantee. Any opinions expressed reflect the current judgement of the author, and do not necessarily reflect the opinion of Deutsche Bank AG or any of its subsidiaries and affiliates. The opinions presented are subject to change without notice. Neither Deutsche Bank AG nor its subsidiaries/affiliates accept any responsibility for liabilities arising from use of this document or its contents. Deutsche Banc Alex Brown Inc. has accepted responsibility for the distribution of this report in the United States under applicable requirements. Deutsche Bank AG London being regulated by the Securities and Futures Authority for the content of its investment banking business in the United Kingdom, and being a member of the London Stock Exchange, has, as designated, accepted responsibility for the distribution of this report in the United Kingdom under applicable requirements. Deutsche Bank AG, Sydney branch, has accepted responsibility for the distribution of this report in Australia under applicable requirements. Printed by: Druck- und Verlagshaus Zarbock GmbH & Co. KG ISSN Print: 1612-314X / ISSN Internet and e-mail: 1612-3158
