Post on 28-Jun-2020
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 2
Consulting
Multiclient Products
Training/Workshops
www.nglstrategy.com
“Connecting high quality analyticswith commercial decision making”
Commercial Advice
Market Insights
Retainer Agreements
NGLS Expertise
LPG
Ethane
Olefins and their feedstocks
Global petchem gases trade
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 3
IT SHALL BE KNOWN AS NGLSTRATEGY, LLC “NGLS”. THIS PRESENTATION IS FOR GENERAL INFORMATION PURPOSES ONLY. IT SHOULD NOT BETAKEN AS PROFESSIONAL ADVICE ON THE MERITS OF THE SUBJECT MATTER OF THIS PRESENTATION. IF NECESSARY, PROFESSIONAL ADVICESHOULD BE OBTAINED FROM A PRACTITIONER WITH EXPERTISE IN THE FIELD OF THIS SUBJECT MATTER. NGLS MAKES NO REPRESENTATIONS,OR WARRANTIES, OF ANY KIND WITH RESPECT TO THE ACCURACY, COMPLETENESS OR SUITABILITY FOR ANY PURPOSE OF THE INFORMATIONCONTAINED IN THIS PRESENTATION. NGLS EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR APARTICULAR PURPOSE REGARDING THE MATERIALS AND THIS PRESENTATION. THESE SLIDES MAKING UP THIS PRESENTATION ARE THEINTELLECTUAL PROPERTY OF NGLS AND ARE PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES OF AMERICA AND OTHERCOUNTRIES. USE OF THESE SLIDES ARE STRICTLY PROHIBITED WITHOUT EXPRESS PERMISSION OF NGLS.
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Disclaimer
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Sep-17 4
LPG: One Product, Two Different Stories (Propane vs Butane)
LPG Demand: Petchems Influence
LPG Pricing Linked More to Other Products Economics
Retail Market: Present & Potential
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E
•
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 6
N. Eu
rop
e In
flue
nce
s
Far East Influ
en
ces
N. A
me
rica
Infl
ue
nce
s
A.G
. In
flu
en
ces
Glo
bal
In
flu
en
ces
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 7
N. Eu
rop
e In
flue
nce
s
Far East Influ
en
ces
N. A
me
rica
Infl
ue
nce
s
A.G
. In
flu
en
ces
Glo
bal
In
flu
en
ces
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E
•••
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 9
Incremental Propane Production since 2010
Incremental Butane Production since 2010
East of SuezWest of Suez
0
30
2012 2014 2016 2017
mm
t
0
30
2012 2014 2016 2017
mm
t
0
30
2012 2014 2016 2017
mm
t
0
30
2012 2014 2016 2017
mm
t
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 10
Incremental Propane Demand since 2010
Incremental Butane Demand since 2010
West of Suez
0
30
2012 2014 2016 2017
mm
t
0
30
2012 2014 2016 2017
mm
t
0
35
2012 2014 2016 2017
mm
t
0
30
2012 2014 2016 2017
mm
t
East of Suez
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 11
Import / ExportSeaborne Trade Balance
Per RegionPropane
Import / ExportSeaborne Trade Balance
Per RegionButane
East of SuezWest of Suez
0
30
2010 2012 2014 2016 2017 2020
mm
t
-30
0
30
2010 2012 2014 2016 2017 2020
mm
t
-30
0
2010 2012 2014 2016 2017 2020
mm
t
-30
0
30
2010 2012 2014 2016 2017 2020
mm
t
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 12
Import / ExportSeaborne Trade Balance
Per RegionPropane
Import / ExportSeaborne Trade Balance
Per RegionButane
East of SuezWest of Suez
0
30
2010 2012 2014 2016 2017 2020
mm
t
-30
0
30
2010 2012 2014 2016 2017 2020
mm
t
-30
0
2010 2012 2014 2016 2017 2020
mm
t
-30
0
30
2010 2012 2014 2016 2017 2020
mm
t
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E
•••
Retail vs Petchem Demand 2010-2020 Cumulative Increase (%) 2010-2020
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 14
0
100
200
2010 2012 2015 2017 2020
Retail Petchem
mm
t
0%
40%
80%
2010 2012 2015 2017 2020
Retail Petchem
Cu
mu
lati
ve I
ncr
eas
e %
Propane Petchem Demand East Propane Petchem Demand West
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 15
0 10 20
Cracking - local sources
Cracking - seaborneimports
PDH - local sources
PDH - seaborne imports
mm t
2017 2016
0 10 20
Cracking - local source
Cracking - seaborneimports
PDH - local source
PDH - seaborne imports
mm t
2017 2016
PDH much more significant in East
Seaborne imports for cracking more
significant in West
Globally, PDH demand up, cracking demand down
Butane Demand in Petchems & Refinery Applications
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 16
0
10
20
2016 2017 2016 2017
West East
Steam Cracking nBDH MA/BDO PO/TBA/ETBE
iBDH/MTBE Alkylation Aromatics
mm
t
East of Suez gasoline components more significant than
cracking demand
Globally gasoline component demand upcracking demand down
West of SuezCracking demand &
PO/ETBE/TBAdominates
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E
••
• Mont Belvieu especially complex• Cracking more influential in West• PDH influence greater East, but occasional
Propane Butane
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 18
0%
10%
20%
30%
40%
50%
60%
70%
80%
2010 2011 2012 2013 2014 2015 2016 2017
Mt. Belvieu (Propane)/WTI
CFR N. Europe (Propane)/Brent
CFR Far East (Propane)/Brent
% o
f vo
l vs
Cru
de
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2010 2011 2012 2013 2014 2015 2016 2017
Mt. Belvieu (Butane)/WTI
CFR N. Europe (Butane)/Brent
CFR Far East (Butane)/Brent
% o
f vo
l vs
Cru
de
M. Belvieu Price Determinants
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 19
Domestic Supply/Demand
Dynamics
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-170
600
1,200
$/t
MB Propane Retail Estimate vs WTI
Cracking Value PDH Value
Fuel Value N.Europe Netback (based on long-term contracts)
Far East Netback (based on long-term contracts)
Export Cancellations
Terminalling fees
Inventory Levels/Changes
Trading Decisions
External Events
Cracker Incremental Cash Margins Advantage N. Europe
Cracker Incremental Cash Margins Advantage Far East
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E
Oct-2017 20
-200
0
200
400
600
Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17
Naphtha vs Propane Advantage Naphtha vs Butane Advantage
$/t
-600
-400
-200
0
200
400
600
Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17
Naphtha vs Propane Advantage Naphtha vs Butane Advantage
$/t
LPG Advantage
Naphtha Advantage
Oct-2017 20
0
10
2014 2015 2016 2017
LPG Cracking NW Europe
mm
t
0
10
2014 2015 2016 2017
LPG Cracking Far East
mm
t
Far East Propylene Price versus Costs
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 21
0.50
0.70
0.90
1.10
1.30
1.50
1.70
0
200
400
600
800
1,000
1,200
Jan
-15
Mar
-15
May
-15
Jul-
15
Sep
-15
No
v-1
5
Jan
-16
Mar
-16
May
-16
Jul-
16
Sep
-16
No
v-1
6
Jan
-17
Mar
-17
May
-17
Jul-
17
Sep
-17
$/t
Propylene price PDH Metathesis MTP P/E ratio
PDH Uneconomic
MTP Uneconomic Key variables:
Methanol pricePropane priceEthylene price
High PDH plant operating rates favoured by:
High Methanol price (MTP uneconomic)
High Ethylene price (metathesis uneconomic)
Low propane prices
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E
••
Actual vs Theoretical Retail Demand Growth in Some Key Countries
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 23
0.0
6.0
12.0
2012 2016 2020 2012 2016 2020 2012 2016 2020 2012 2016 2020
Thailand Indonesia Turkey Nigeria
Actual Theoretical Kg/Capita Growth Theoretical Population Growth
mm
t
Population Growth:
Theoretical growth based on
population growth and stable consumption per
capita (basis 2012)
Kg/Capita Growth:
Theoretical growth based on
per capita assumptions according to
market potential (basis 2012)
Price Changes
GovernmentIntervention
High PotentialLimited Growth
-20
20
2012 2014 2016 2017 2020
mm
t
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 24
High Growth
Some Growth
Stable to Decreasing Stable to
DecreasingStable to
Decreasing
Some Growth High Potential
Retail Growth West
0
50
2012 2014 2016 2017 2020
mm
t
Retail Growth East
General Factors
Weather
Population
GDP/Inflation
Price Elasticity
Consumption per Capita
Market Factors
Government intervention
Competition with other products
Anticipating Changes
Infrastructure
Funding Availability
Marketing/Penetration
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E
CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 26
Period of Change
Production Dynamics Stabilization
Adjustment of the Demand Dynamics
Rebalancing of Pricing Mechanisms
Change of Market Structure
Change of Trading Structure
MaturityGas Related Production
Shale Gas/Tight Oil
Increase of Large Bulk Demand
Slower increase in Retail Demand
Large Price Fluctuations
New Price Dynamics (i.e. US)
Government/Market Reaction
New Demand Creation
Competition with other Fuels
Opportunities Creation
Trading Patterns
Contractual Changes
Competition ↑/ Margins ↓
Finding Market Balance