D Mr. Steve Jenkins PCI
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8/10/2019 D Mr. Steve Jenkins PCI
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Overcapacity in the Xylenes Chain
Steve JenkinsPCI Xylenes & Polyesters Asia Sdn Bhd
INDIAN POLYESTER 2014AUGUST 2014, MUMBAI
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
Polyester Chain Vital Statistics
Since 2000, 669 million tonnes of polyester have been produced
Polyester consumption growth averaged 6.3% globally, 9.3% in Indiaand 14.7% in China from 2000-2014
In 2000, China accounted for 18.3% of global polyester production and6.4% of consumption. India had 5.7% of global production.
In 2020, China is forecast to account for 53.9% of global polyesterproduction and 32.3% of consumption. India is forecast to produce 11%of global polyester by this time.
Estimated investment in the PX-PTA-Polyester chain since 2000 is
$77.4 bn, over $5bn per year on average.
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World Polyester Production Growth by Region
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
000
Tonnes
Staple Filament PET Film Others
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PTA Production Growth by Region
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
000
Tonnes
North America South America Europe Middle East/Africa
China Indian Subcontinent North East Asia South East Asia
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Paraxylene Production Growth by Region
-2,000
-1,000
0
1,000
2,000
3,000
4,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
000
Tonnes
North America South America Europe Middle East/Africa
China Indian Subcontinent North East Asia South East Asia
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
Polyester Capacity Growth by Region
-2,000
0
2,000
4,000
6,000
8,000
10,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
000
Tonnes
North America South America Europe Middle East/Africa
China Indian Subcontinent North East Asia South East Asia
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PTA Capacity Growth by Region
-4,000
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
000
Tonnes
North America South America Europe Middle East/Africa
China Indian Subcontinent North East Asia South East Asia
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
Paraxylene Capacity Growth by Region
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
000
Tonnes
North America South America Europe Middle East/Africa
China Indian Subcontinent North East Asia South East Asia
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
Polyester/PTA/PX Capacity Growth 2010-2020
-4,000-2,000
02,0004,0006,0008,000
10,00012,000
2010 2012 2014 2016 2018 2020
000
TonnesPTA
-1,000
0
1,000
2,000
3,000
4,000
5,000
6,0007,000
2010 2012 2014 2016 2018 2020
000
TonnesPX
-2,000
0
2,000
4,000
6,000
8,000
10,000
2010 2012 2014 2016 2018 2020
000
TonnesPolyester
North America South America Europe Middle East/Africa
China Indian Subcontinent North East Asia South East Asia
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Global Polyester Industry Utilisation
70%
75%
80%
85%
90%
95%
NameplateUtilisation
PX PTA Polyester Polymer
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500
1,000
1,500
2,000
2,500
2000 2003 2006 2009 2012
USD/Tonne
Crude Oil Naphtha PX PTA PSF 1.5 den
Value Chain for Polyester & Intermediates
1.5 den Polyester Staple Fibre 150 den Polyester Filament Fibre
PET Packaging Resin
-
500
1,000
1,500
2,000
2,500
2000 2003 2006 2009 2012
USD/Tonne
Crude Oil Naphtha PX PTA POY 150 den
(500)
-
500
1,000
1,500
2,000
2,500
2000 2003 2006 2009 2012
USD/Ton
ne
Crude Oil Naphtha PX PTA PET
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
-
100
200
300
400
500
2000 2003 2006 2009 2012
USD/Tonne
PSF 1.5 den
Polyester Fibre & Packaging Spreads
1.5 den Polyester Staple Fibre 150 den Polyester Filament Fibre
PET Packaging Resin
-
100
200
300
400
500
600
2000 2003 2006 2009 2012
USD/Tonne
POY 150 den
(200)
(100)
-
100
200
300
400
2000 2003 2006 2009 2012
USD/Tonne
PET
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100
200
300
400
500600
700
2000 2003 2006 2009 2012
USD/Tonne
PX
Naphtha, Paraxylene & PTA Spreads
ParaxyleneNaphtha Spread
PTA-Paraxylene Spread
Naphtha-Crude Spread
-
100
200
300
400
500
600
2000 2003 2006 2009 2012
USD/T
onne
PTA
-
20
40
60
80
100
120140
160
2000 2003 2006 2009 2012
USD/Tonne
Naphtha
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
65%
70%
75%
80%
85%90%
95%
100%
105%
110%
115%
0
2,000
4,000
6,000
8,000
10,000
12,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
PolymerUtilisation
K
T
Staple Filament PET Resin
Film Polymer Capacity Polymer Utilisation Rate
India Polyester Market Outlook
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
Outlook for Polyester
Margin cycle may have bottomed out for polyester, with prospect
of increasingly competitive PX prices and ongoing marginsqueeze for PTA giving some positive outlook.
Inventory release from Chinas cotton stockpile may negatively
impact PSF.
Investment in new assets continues, although at reduced rate.Scale investment continues to drive the business cycle.
Many polyester assets sit idle in China, Korea, and Taiwan butindustry wide capacity rationalisation is not progressing. Idled
plants are likely to be scrapped as M&A options are limited.
Options for cost reduction through investment focused on scaleof build, with less room to drive conversion efficiencies. Smallold plants scrapped in favour of building large, new assets.
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
India PTA Market Outlook
70%
75%
80%
85%
90%
95%
100%
-2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
UtilisationRate
KT
Production Consumption Capacity Net Trade Utilisation Rate
PTA investments (RIL, JBF) well-balanced with current demand
outlook. Self-sufficiency in PTA
2015-2019
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
Outlook for Polyester & Intermediates
Asia margins may stabilise if Chinas cartel are successful in holdinglower production levels, but gross oversupply persists in N Asia
Rate of investment is slowing, but capacity will continue to be added into2015, driving down overall industry utilization
Plant closures have been carried out and more are planned, but are toosmall and too few to have any meaningful impact on utilisation andmargin in the next 12-18 months
Asset renewal is one of the few options for survival, but this can lead tofurther unwanted capacity, keeping margins persistently low and
extending to current downcycle for several more years to come.,
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
PTA Breakeven Cash Cost Curve
950
1000
1050
1100
1150
1200
1250
700
3935
6605
9345
19195
21505
24280
26870
29055
32505
35855
42891
44681
47281
50431
53281
56081
57731
59681
61651
63246
64746
66836
68121
70071
71406
USDPer
Tonne
Cumulative Capacity
Based on PX@$1400/tonne
Demand estimate 57.5 million tonnes annualised rate
$120/te gap between
leader and laggard
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
India PX Market Outlook
70%
75%
80%
85%
90%
95%
100%
105%
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Utilisatio
nRate
KT
Production Total Consumption Capacity Net Trade Utilisation Rate
PX investments (RIL, OMPL) push India
slightly long on PX 2015-2020. PX costslikely to remain highly competitive for
downstream.
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Outlook for Paraxylene
Margins set to fall as competition between integrated refiners andcondensate-based operations intensifies.
Role of gasoline and middle distillate fuel spreads may play largerrole in determining PX production levels the next 2-3 years thanpreviously seen
Investments in PX will peak by 2017/2018 based on current projectassessments
Restructuring has already taken place, with non-integrated assetsclosed or under severe financial pressure
Technology allows more PX to be made from limited supplies offeedstock naphtha, integrates refinery-based assets further andallowing for more energy efficient operations, driving downproduction costs/improving PX margins
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INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI
PX Breakeven Cash Cost Curve
$300/te gap between
leaders and laggards
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INDIAN POLYESTER 2014AUGUST 2014 MUMBAI
Thank You For Your Kind Attention
Any Questions ?