ASIA COMMODITY POLYMER INDUSTRY OUTLOOK Plastics Conf 21 Oct … · Capacity, Million Metric Tons...
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10/27/2014 1 ASIA COMMODITY POLYMER INDUSTRY OUTLOOK John King, Vice President, Asia Pacific IHS Chemical Consulting October 21, 2014 Bangkok IHS is a premier provider of global market, industry/ technology information and expertise covering the full energy and chemical value chain including major consuming industry sectors AEROSPACE & DEFENSE 100+ years’ experience delivering unrivaled news, insight and intelligence on defense and security equipment, markets, industries and risk CHEMICAL Over 300 leading industry authorities creating integrated views and analysis across more than 300 chemical markets and 2,000 processes for 95 industries FINANCE Research on 200+ countries and territories with harmonized indicators from IHS analysts and economists TECHNOLOGY World’s largest electronics component database with more than 350 million parts AUTOMOTIVE The world’s largest team of automotive analysts with hundreds of experts located in 15 key markets around the world covering the entire automotive value chain ENERGY Extensive Oil & Gas well information on 5.5+ million wells worldwide dating back as far as 1860 MARITIME World’s largest maritime database with an information gathering heritage of 250+ years with comprehensive information on all vessels 100 GT and over 2
Transcript of ASIA COMMODITY POLYMER INDUSTRY OUTLOOK Plastics Conf 21 Oct … · Capacity, Million Metric Tons...
10/27/2014
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ASIA COMMODITYPOLYMER INDUSTRYOUTLOOK
John King, Vice President, Asia PacificIHS Chemical Consulting
October 21, 2014Bangkok
IHS is a premier provider of global market, industry/ technology information and expertise covering thefull energy and chemical value chain including major consuming industry sectors
AEROSPACE & DEFENSE
100+ years’ experiencedelivering unrivaled news,insight and intelligence ondefense and securityequipment, markets, industriesand risk
CHEMICAL
Over 300 leading industryauthorities creating integratedviews and analysis across morethan 300 chemical markets and2,000 processes for 95 industries
FINANCE
Research on 200+countries and territorieswith harmonized indicatorsfrom IHS analysts andeconomists
TECHNOLOGY
World’s largestelectronics componentdatabase with more than350 million parts
AUTOMOTIVE
The world’s largest teamof automotive analysts withhundreds of experts located in15 key markets aroundthe world covering the entireautomotive value chain
ENERGY
Extensive Oil & Gas wellinformation on 5.5+ millionwells worldwide datingback as far as 1860
MARITIME
World’s largest maritimedatabase with an informationgathering heritage of 250+ yearswith comprehensive informationon all vessels 100 GT and over
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Best-in-ClassBrands
Brought together to form the most comprehensivesource for chemical market research andexpertise in the world – IHS Chemical.
IHS CHEMICAL
IHS Chemical
Agenda
• Introduction
• Impact of Shale and Coal
• Asia: The Epi-centre ofDemand Growth
• Commodity Polymers’Business Dynamics
• Conclusion
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© 2014 IHS, Inc. No portion of this presentation may be reproduced,reused, or otherwise distributed in any form without prior written consent.
2013 World Polymer Demand = 225 Million Metric Tons
Global Demand for Polymers
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PC2%
LLDPE taking marketshare from LDPE infilm
PP taking marketshare from HDPE ininjection molding
Polypropylene25%
PVC17%
PET8%
HDPE16%
LLDPE11%
LDPE9%
PS5%
ABS3%
Polymer Applications Overlap
HDPE taking somebusiness from PVC inpipe
PP / PET takingmarket share from PSin sheet applications
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0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
PP
PET
LDPE
LLDPE
HDPE
PS
PVC
20132012
Price Per Cubic Inch
Relative Cost of Polymers determines usage
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Commodity Polymers’ Price Index
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70
80
90
100
110
120
130
140
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018PET LLDPE PP PS PVC
Price Index
Forecast
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Agenda
• Introduction
• Impact of Shale and Coal
• Asia: The Epi-centre ofDemand Growth
• Commodity Polymers’Business Dynamics
• Conclusion
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© 2014 IHS, Inc. No portion of this presentation may be reproduced,reused, or otherwise distributed in any form without prior written consent.10
Energy and Hydrocarbon Feedstock Costs:Key Drivers In Chemicals Manufacturing
PropyleneEthylene
ButadieneMixed Butylenes
Methane/Hydrogen
BenzeneTolueneXylene
Propylene
Methanol
Condensate
PropaneEthaneButane
BenzeneToluene/XyleneHeavy AromaticsC5/C6 Non Aromatics
Fuel Oil
Ethylene
Unit
Ethylene
UnitGas
ProcessingUnit
GasProcessing
Unit
REFORMER BTX Extraction
RaffinateFCC
RefineryRefinery
SteamReformer Methanol
Synthesis
SynGas
Gasifier
Gas
Coal
Naphtha
Gas Oil
PygasPygas
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Feedstock Price Differential vs. Crude Oil CreateOpportunities
• North American gas coststructure is fundamentallychanged by Shale; low-costsupply dominates for theforeseeable future
• US Ethane infrastructure inplace to supply new facilities,but incremental ethane coststructure begins to pull ethaneprices higher
• Coal prices’ dramatic declinenearly over, but high spreads tooil/naphtha remain – these highdifferentials (or even higher) areneeded to pay for CTO capital
-4.0
0.0
4.0
8.0
12.0
16.0
20.0
Brent - Nat Gas Brent - Coal Brent-ethane
Price Difference, $MMBtu
© 2014 IHS, Inc. No portion of this presentation may be reproduced,reused, or otherwise distributed in any form without prior written consent.12
Unprecedented Ethylene Capacity AdditionsDriven By Low Cost Ethane Supplies
US Ethylene Capacity Additions
2014 2015 2016 2017 2018 2019 2020Projected North American Ethylene (2014 - 2020)
(Thousand Metric Tons per Year) Total AdditionsThrough 2020
Company Location
BASF/Total Port Arthur. TX 170 170ChevronPhillips Cedar Bayou, TX 150 1350 1,500
DowFreeport, andPlaquamine 220 600 900 1,720
Eastman Longview, TX 17 17Equistar All Locations 385 114 363 862ExxonMobil Baytown, TX 750 750 1,500FHR PT Arthur 100 100Formosa Point Comfort, TX 1150 1,150Oxy/Mexichem Ingleside, TX 413 137 550Sasol Lake Charles, LA 387 1163 1,550Westlake All Locations 94 122 216Williams Geismar, LA 129 129 750 750 1,758Braskem Idesa Mexico 250 750 1,000Nova Sarnia 168 168
Firm: 795 935 1,113 918 4,537 3,076 887 12,261
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China Leads Coal Chemical Development
CrudeMethanol
Oxalate Ester Acetyl MTA
In Pilot Test
MerchantMethanol
In Commercial Production
Gasification
MTO/MTP
Ethylene Propylene MEG Ethanol PX
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Many Coal Chemical Projects on the Horizon
CTOCTMEG
• Multiple plants are inoperation
• Many more are underconstruction
• CTO and CTMEG projectsare built in coal-rich west
• MTO projects are builtalong east coast
• Some planned projects willnot be built
MTO
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Ethylene Capacity Additions by RegionCapacity additions in sync with demand growth
-10.0
-5.0
0.0
5.0
10.0
15.0
10 11 12 13 14 15 16 17 18 19 20 21 22 23Total Asia OthersMiddle East West EuropeNorth America Annual Demand Increase
Million Metric Tons
© 2014 IHS, Inc. No portion of this presentation may be reproduced,reused, or otherwise distributed in any form without prior written consent.16
Ethylene Cash Cost SnapshotRegional Comparison
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225
450
675
900
1125
1350
1575
WesternCanada
U.S.Ethane
U.S.WeightedAverage
ChinaCTO
U.S.Coprod.Int. LightNaphtha
WestEurope
Naphtha
U.S. LightNaphtha
NortheastAsia
Naphtha
SoutheastAsia
Naphtha
ChinaMTO
U.S. Dollars Per Metric Ton
Ethylene Cash Costs FromEthane in Saudi Arabia
2013 2023
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Direct Refinery Grade chemical consumption
AlkylationUnit
High OctaneMotorGasoline
Other FuelUses
MotorGasoline
PurificationSplitter Unit
Other Propyleneconsumers
CrudeOil
Steam Cracker(Olefins Plant)
EthanePropane
Naphtha
Ethylene& Olefins
Refining Industry
CrudeUnit
MotorGasoline
ChemicalIndustry
InjectionMolding,Fibers,FilmsPolypropylene
On-Purpose
FCCUnit
Three Routes to Produce Propylene
Nat.Gas
Propylene
© 2014 IHS, Inc. No portion of this presentation may be reproduced,reused, or otherwise distributed in any form without prior written consent.18
A Wave of PDH Projects Is Also Coming
• Many PDH projects underconstruction or in planning
• Located along coastal regions• Rely on import of propane or
LPG• Ease domestic propylene
supply constraint
In operation Under construction Planned
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Unconventionals Drive Propylene Growth
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40
60
80
100
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
Capacity, Million Metric Tons
Conventional PDHCTO/MTO Percent of Unconventional
Percent of Unconventional40%
30%
20%
10%
0%
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On-Purpose Propylene Production TrendsPDH & CTP Investments Accelerate
0
10
20
30
2000 2002 2004 2006 2008 2010 2012 2014 2016 2022Ex Dehydro - PDH Metathesis Olefin CrackingVia Methanol: CTP HS FCC Others On-Purpose
On Purpose Propylene Production, Million Metric Tons
25%
45%
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Global Propylene Capacity Additions Vs.Demand Growth
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-4
0
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00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 23North America Middle EastChina West EuropeOthers Annual Demand Increase
Million Metric Tons, Propylene
Agenda
• Introduction
• Impact of Shale and Coal
• Asia: The Epi-centre ofDemand Growth
• Commodity Polymers’Business Dynamics
• Conclusion
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Percentage
Asia’s Share of the World
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20
40
60
Population GDP Oil Reserves Gas Reserves Coal Reserves
Sources: IHS, BP Statistical Review of World Energy 2013
Percentage
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Asia’s Share of the World is Growing
2012 Asia GDP20.3 Trillion US 2010 Dollars
29.9% Global GDP
China34.3%India
9.4%
Japan27.3%
S. Korea5.7%
Taiwan2.2% Indonesia
3.9%
Rest ofAsia
17.1%
2030 Asia GDP45.8 Trillion US 2010 Dollars
37.8% Global GDP
China47.4%
India12.9%
Japan14.5%
S. Korea4.2%
Taiwan1.7%
Indonesia4.4%
Rest ofAsia
14.8%
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Percentage
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Asia’s Large Increase in Manufacturing SupportsBase Chemical and Polymer Demand Growth
0
20
40
60
80
100
PE PP PVC Polyester Butadiene Bz PX
China Rest of Asia
Share of World Demand Growth 2008-2018, Percent
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China Leads Global Chemical Demand Growth &Manufacturing since Joining WTO
0%10%20%30%40%50%60%70%80%90%
100%
China Share of GlobalManufacturing
Rest of World United States China
China has become the World’sfactory floor
• 2001 entry into WTOcatalyzed a rush to off-shore
• Global supply-chains wereredesigned to leverage lowlabor costs
• Developed countries borethe brunt
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-25%
0%
25%
50%
75%
100%
125%
150%
175%
-40
-20
0
20
40
60
80
100
120
ChinaShare
DemandGrowth,
KTA
China's Share of GlobalChemical Growth
ROW Growth China Growth China Share
China Leads Global Chemical Demand Growth &Manufacturing since Joining WTO
0%10%20%30%40%50%60%70%80%90%
100%
China Share of GlobalManufacturing
Rest of World United States China
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-5 0 5 10 15 20 25 30 35
Americas
Europe
MDE/Afr
China
Rest of Asia
LPG + Liquid Cracking Ethane CrackingCoal/ Methanol PDHOthers
Incremental Ethylene + Propylene Capacity 2013-18, Million Metric Tons
More Olefins Investment in Asia than US andMiddle East Combined
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Agenda
• Introduction
• Impact of Shale and Coal
• Asia: The Epi-centre ofDemand Growth
• Commodity Polymers’Business Dynamics
• Conclusion
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© 2014 IHS, Inc. No portion of this presentation may be reproduced,reused, or otherwise distributed in any form without prior written consent.30
Polyethylene CapacityGrowing in Low Feedstock Cost Locations
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-2.0
0.0
2.0
4.0
6.0
8.0
10.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Asia/Pacific Africa/Middle East North AmericaCentral Europe/CIS South America West EuropeGlobal Demand Change
Million Metric Tons
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-1.00.01.02.03.04.05.06.07.0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Asia/Pacific Africa/Middle East North AmericaCentral Europe/CIS South America West EuropeGlobal Demand Change
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Million Metric Tons
Polypropylene Market ViewChina leading the PP Capacity Growth
© 2014 IHS, Inc. No portion of this presentation may be reproduced,reused, or otherwise distributed in any form without prior written consent.32
Polypropylene Market ViewNortheast Asia
• China’s self-sufficiency grows from75-93%, 2013-18
• China CTO producers prefer to selectCTP-PP process as this production costis relatively competitive comparedwith those in Middle East and NAM.
• China avg. operation rate will reduceto 77-80% (75%?) after 2018 as Chinacomes under pressure of higherproduction costs and export impact oflow production cost resins in NAM &Middle East.
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50%
60%
70%
80%
90%
100%
0
5
10
15
20
25
30
35
40
09 10 11 12 13 14 15 16 17 18 19Domestic Demand ExportsTotal Capacity ImportsOperating Rate, %
Million Metric Tons Operating Rate
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60
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80
90
100
0
20
40
60
80
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Demand Capacity Operating Rate, %
Million Metric Tons Operating Rate, %
ForecastAAGR 2013-2018 = 4.1%
Forecast
PVC Capacity Growth is Slowing Down
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60
70
80
90
100
0
10
20
30
40
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Food Beverage PharmaceuticalCosmetics Other PET Total Capacity
Operating Rate, %
Million Metric Tons Operating Rate, %
Forecast
AAGR 2013-2018 = 5.2%
Global PET Resins Supplies will continue toremain long
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50
60
70
80
90
100
0
5
10
15
20
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Packaging Consumer ProductsElectronics / Appliances Building / ConstructionOthers Total Capacity
Operating Rate, %
Million Metric Tons Operating Rate, %
ForecastAAGR 2013-2018 = 2.0%
PS Demand Growing at the Slowest Rate amongCommodity Polymers
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Agenda
• Introduction
• Impact of Shale and Coal
• Asia: The Epi-centre ofDemand Growth
• Commodity Polymers’Business Dynamics
• Conclusion
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© 2014 IHS, Inc. No portion of this presentation may be reproduced,reused, or otherwise distributed in any form without prior written consent.
Key Takeaways
Excess Capacity in all CommodityPolymers
Large proportion of the polymertrade in Southeast Asia will be intra– regional due to ASEAN FTA
Demand for polymers is expectedto pick up during the next 5 years
Polymer Price outlook needsregular monitoring consideringseveral influencing factors
Producers’ margins will remainunder pressure
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THANK YOU
John KingVice President, Asia PacificIHS Chemical [email protected]
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