FOURTH ANNUAL ASIA CHEMICAL CONFERENCE 2016 … · © 2016 IHS Markit 5 0 20 40 60 80 2011 2013...
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ihsmarkit.com Presentation © 2016 IHS Markit Jinsu Yim, Director, +65 6439 6150, [email protected] Global Propylene Market Outlook: In Excess for How Long? 10 November 2016 FOURTH ANNUAL ASIA CHEMICAL CONFERENCE 2016
Transcript of FOURTH ANNUAL ASIA CHEMICAL CONFERENCE 2016 … · © 2016 IHS Markit 5 0 20 40 60 80 2011 2013...
ihsmarkit.com
Presentation
© 2016 IHS Markit
Jinsu Yim, Director, +65 6439 6150, [email protected]
Global Propylene Market Outlook: In Excess for How Long?
10 November 2016
FOURTH ANNUAL ASIA CHEMICAL CONFERENCE 2016
Contents
© 2016 IHS Markit 2
119 Million tons
Steam Cracker
58 Million tons
Refinery
38 Million tons
Metathesis
5 Million tons
PDH
11Million tons
CTO/MTO
6 Million tons
Others
1 Million tons
2016
© 2016 IHS Markit
3 3
Historical Low Propylene/Ethylene Ratio
0.5
1.0
1.5
05 06 07 08 09 10 11 12 13 14 15 16 17 18NAM Contract Price NEA Spot Price SEA Spot Price WEP Contract Price
Propylene Tighter than Ethylene
Global P/E Ratio
P/E
Rati
o
Source: IHS Markit © 2016 IHS Markit
Ethylene Tighter than Propylene
© 2016 IHS Markit
PDH and CTO lead unconventional production
Stm. Crackers 44%
FCC Splitters 25%
Dehydro 13%
Metathesis 4%
Olefin Cracking 1%
Methanol to Olefins
2%
Methanol to
Propylene 1%
Coal to Olefins 4%
Coal to Propylene 1%
HS FCC 4%
Others On-
Purpose 1%
World: 2021 PG/CG Propylene Prod. by Feedstock
Source: IHS Markit © 2016 IHS Markit
Production = 119.9 Million Metric Tons
Stm. Crackers 50%
FCC Splitters 29%
Dehydro 9%
Metathesis 4%
Olefin Cracking 0.4%
Methanol to Olefins
2%
Methanol to Propylene
0.2%
Coal to Olefins 2%
Coal to Propylene
1%
HS FCC
3%
Others On-
Purpose 0.5%
World: 2016 PG/CG Propylene Prod. by Feedstock
Source: IHS Markit © 2016 IHS Markit Production = 98.1 Million Metric Tons
4
2016 2021
22 MM tons 36 MM tons
On-Purpose Capacity
© 2016 IHS Markit 5
0
20
40
60
80
2011 2013 2015 2017 2019 2021
Refinery/ FCC Steam Cracker
Millio
n M
etr
ic T
on
s P
er
Ye
ar
© 2016 IHS Markit
Source: IHS Markit
CTO/
CTP 13% MTO/
MTP 9%
PDH 41%
Metathes
is 19%
Others 18%
CTO/
CTP 19%
MTO/
MTP 9%
PDH 42%
Metathes
is 15%
Others 15%
Total Propylene Capacity =
22 Million Metric Tons Per Year
Total Propylene Capacity =
36 Million Metric Tons Per Year
2021 2016
© 2016 IHS Markit
Source: IHS Markit
Slower Growth From Conventional Production
© 2016 IHS Markit
Propylene prices to stay close for all regions
6
0
500
1,000
1,500
2,000
2,500
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
Do
llars
Per
Metr
ic T
on
NEA CFR NAM Pipeline WEP CIF
Global Propylene Spot Prices
Source: IHS Markit © 2016 IHS Markit
© 2016 IHS Markit
50%
60%
70%
80%
90%
100%
0
40
80
120
160
11 12 13 14 15 16 17 18 19 20 21
Demand Production Total Capacity Operating Rate
World: PG/CG Propylene Supply & Demand
Source: IHS Markit @2016 IHS Markit
(% AAGR = 10-15/15-25)
Op
era
tin
g R
ate
Millio
n M
etr
ic T
on
s
World Propylene Supply Remains Long
© 2016 IHS Markit
Asia Propylene Supply Changes Short to Balance
50%
60%
70%
80%
90%
100%
0
20
40
60
80
100
11 12 13 14 15 16 17 18 19 20 21
Production Demand Total Capacity Operating Rate
Asia Propylene Supply/Demand Balance
Source: IHS Markit © 2016 IHS Markit
Millio
n M
etr
ic T
on
s
Op
era
tin
g R
ate
8
© 2016 IHS Markit
Dependence on On-Purpose Production Increase
0%
11%
22%
33%
44%
55%
0
15
30
45
60
75
01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
NEA On-purpose CHI On-purpose KOS On-purpose Total Capacity
Total NE Asia Propylene Capacity
© 2016 IHS Markit
Millio
n M
etr
ic T
on
s P
er
Year
Source: IHS Markit
On
-pu
rpo
se C
ap
acit
y
9
© 2016 IHS Markit
NE Asia Will Be Self-sufficient for Propylene Monomer
-4
-3
-2
-1
0
1
212
13
14
15
16
21
12
13
14
15
16
21
12
13
14
15
16
21
12
13
14
15
16
21
JAP SKOR TAI CHI
Export Import
Propylene Monomer Trade
© 2016 IHS Markit
Millio
n M
etr
ic T
on
s
Source: IHS Markit
10
© 2016 IHS Markit
Propylene Equivalent Trade Flow
11
2011
2016
2021
*Others: Africa, Indian Sub., CIS & Baltic, Central Europe
North America
Middle East
1,720
890
1,950
South America
-367 -465 -701
West Europe
1,142 748
-404
Northeast Asia
-3,062
-2,262
-156
Southeast Asia
-305 -228 -231
2,366
3,813 3,681
Others*
-1,432
-2,413
-4,008
© 2016 IHS Markit
China Propylene Rapidly Changes
12
© 2016 IHS Markit
More Private Company Owns Propylene Capacities
Sinopec 45%
PetroChina 27%
CNOOC 2%
Shenhua 1%
Others 25%
China C3 Ownership Changes from 2010
© 2016 IHS Markit
Source: IHS Markit
13
2016
Sinopec 24%
PetroChina 18%
CNOOC 2% Shenhua
4%
Others 52%
© 2016 IHS Markit
Source: IHS Markit
to 2016
© 2016 IHS Markit
Dependence on Alternate Technologies for Propylene Production to Increase
14
0
20
40
60
80
100
0
10
20
30
40
50
11 12 13 14 15 16 17 18 19 20 21Steam Crackers Refinery On Purpose On Purpose % of Total Capacity
Million Metric Tons Percent, % China’s Propylene Capacity
Source: IHS Markit © 2016 IHS Markit
Millio
n M
etr
ic T
on
s
Perc
en
tag
e
© 2016 IHS Markit
Abundant Shale Gas In North America Boost PDH in Asia
15
-150
0
150
300
450
600
750
0
200
400
600
800
1,000
1,200
Gap Propane CFR NEA Propane FOB Mont Belview
Propane FOB Mont Belview vs CFR NEA
Source: IHS Markit © 2016 IHS Markit
US
Dolla
r P
er
metr
ic T
on
US
Dolla
r Per m
etric
Ton
© 2016 IHS Markit
Propane import increased in line with PDH
16
0
2
4
6
8
10
Total import US
Propane import in China
© 2016 IHS Markit Source: IHS Markit
Millio
n M
etr
ic T
on
s
© 2016 IHS Markit
Coal/Methanol based Propylene Will Contribute More Than 25 Percent in China
0
2
4
6
8
10
12
14
11 12 13 14 15 16 17 18 19 20 21
CTO CTP MTO MTP
CTO/MTO Projects in China
© 2016 IHS Markit
Millio
n M
etr
ic T
on
s
Source: IHS Markit
Completed Projects (by end 2016)
CTO/CTP: 11
MTO/MTP: 15
Upcoming Projects (by end 2021)
CTO/CTP: 10
MTO/MTP: 3
17
© 2016 IHS Markit
Project Owner Location Capacity
kt/a Start Up
Operating
1 Bohai Chemical Tianjin
5,008
Oct/2013
2 Zhejiang Satellite PC I Pinghu, Zhejiang Aug/2014
3 Ningbo Haiyue Ningbo, Zhejiang Sep/2014
4 Shaoxing Sanjin Shaoxing, Zhejiang Sept/2014
5 Shandong Chambroad Binzhou, Shandong April/2015
6 Donghua Energy Co., Ltd-Yangzijiang I Zhangjiagang, Jiangsu May/2015
7 Yantai Wanhua Yantai, Shandong Aug/2015
8 Shandong Shenchi Dongying, Shandong Sep/2015
9 Hebei Haiwei Jingxiam, Hebei Jul/2016
10 Ningbo Fuji 1 Ningbo, Zhejiang Oct/2016
11 Qixiang Tengda Zibo, Shandong Aug/2016
Operating
Under Construction
12 Fujian Meide PC I Fuzhou, Fujian 660 mid/2017
Under Planning
13 Zhejiang Satellite PC II Pinghu, Zhejiang 600 2021
14 Hebei Haiwei II Jingxian, Hebei 500 2021
15 Fujian Meide PC II Fuzhou, Fujian 660 2021
16 Donghua Energy Co., Ltd-Yangzijiang II Zhangjiagang, Zhejiang 660 2019
17 Donghua Energy Co., Ltd-Ningbo Fuji II Ningbo, Zhejiang 660 Unknown
18 Jiangsu Weiming Dafeng, Jiangsu 660 Unknown Under construction
Planning
PDH Projects in China
3,080
© 2016 IHS Markit
20
40
60
80
100
120
0
10
20
30
40
50
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Net Equivalent Import Domestic Derivative Equivalent Demand Self-sufficiency
Millio
n M
etr
ic T
on
s
Pe
rce
nta
ge
19
China Move Towards Self-Sufficiency
19
China’s Propylene Capacity
© 2016 IHS Markit Source: IHS Markit
© 2016 IHS Markit
Adding Too Much Capacities In Asia?
20
© 2016 IHS Markit 21
Asia Map including India
10,280 9,748 8,188
11,484
945 657
4674 2045 1400 576
3657 1679 580
Cracker Refinery Metathesis
5602 2707 790
865
Cracker Refinery PDH Metathesis
2,304 4,000
Cracker Refinery
2021 Propylene Capacity for Major Asia Country
© 2016 IHS Markit
Oversupply Increasing in Korea
86%
90%
94%
97%
101%
104%
0
2
4
6
8
10
11 12 13 14 15 16 17 18 19 20 21
Production Demand Total Capacity Operating RateSource: IHS Markit © 2016 IHS Markit
Millio
n M
etr
ic T
on
s
Op
era
tin
g R
ate
22
© 2016 IHS Markit 23
0
2
4
6
8
10
12
11 12 13 14 15 16 17 18 19 20 21 26
Steam Crackers Refinery/ FCC On-Purpose
S. Korea Propylene Capacity
© 2016 IHS Markit
Mil
lio
n M
etr
ic T
on
s P
er
Ye
ar
Source: IHS Markit
-1
0
1
2
3
4
5
6
11 12 13 14 15 16 17 18 19 20 21 26
Propylene Acrylonitrile Polypropylene
Others Net Trade
S. Korea Propylene Equivalent Trade
© 2016 IHS Markit
Mil
lio
n M
etr
ic T
on
s P
er
Ye
ar
Source: IHS Markit
South Korea Propylene & Derivatives
© 2016 IHS Markit
New Derivatives Focus on PP & PO
24
-2
0
2
4
6
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
AN Acrylic Acid Phenol Oxo-Alcohol PP Propylene Oxide Others
Asia Propylene Derivative Capacity Addition
© 2016 IHS Markit
Millio
n M
etr
ic T
on
s
Notes: All capacities in per ton propylene basis
Source: IHS Markit
© 2016 IHS Markit
Propylene Cost Competitiveness
25
© 2016 IHS Markit
26
NEA Propylene Production Technology
26
531 582
874
493 411
-800
-400
0
400
800
1,200
Naphtha Cracker* CTO* MTO* PDH FCC Splitter
Feedstock Co-Credits Variable Fixed Total
Breakdown of Cost Structure for 2016
© 2016 IHS Markit
Do
llars
Per
Metr
ic T
on
Notes: *Per Ton Light Olefins Basis
Source: IHS Markit
© 2016 IHS Markit
Crackers become more competitive in a low crude oil environment
27
0
500
1,000
1,500
2,000
Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17Non-Integrated Naphtha Cracker* Integrated (BDE/BTX) Naphtha Cracker*Metathesis PDHMTO* (Basis: Shanghai, E China) CTO* (Basis: Inner Mongolia, NW China)
NEA On-Purpose Propylene Production Cost
Notes: *Per Metric Ton Light Olefins © 2016 IHS Markit
Do
llars
Per
Metr
ic T
on
© 2016 IHS Markit 28
Coal-based Economics still Attractive in the Long-term
0
400
800
1,200
1,600
11 12 13 14 15 16 17 18 19 20 21Non-Integrated Naphtha Cracker* Integrated Naphtha Cracker* Metathesis
FCC Splitter PDH MTO* (Basis: Shanghai, E China)
CTO* (Basis: Inner Mongolia, NW China)
NEA On-Purpose Propylene Production Cost
Notes: *Per Metric Ton Light Olefins © 2016 IHS Markit
Do
llars
Per
Metr
ic T
on
© 2016 IHS Markit 29
PDH is propylene price setter in Asia
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
0
500
1,000
1,500
2,000
Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16
PDH Cost Naphtha cracker Cost Propylene, CFR NEA P/E Ratio
PDH vs Naphtha cracker cost
© 2016 IHS Markit
Do
llars
Per
MT
Source: IHS Markit
P/E
Ratio
© 2016 IHS Markit
Key takeaway box
30
• Aggressive investment in on-purpose propylene and short ethylene balance made historical low P/E ratio. • China PDH feedstock exposure to US propane
increases. • NE Asia PDH producers will set
propylene floor and ceiling prices in Asia
• Asia moves towards self-sufficient propylene and derivatives in the future
• Prices more dependent on economics of alternate routes - Seasonal propane price - Ethylene margin for naphtha cracker
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