Polycarbonate Market Overview - Media-tech association · Market Overview May 2018 Martin Wiesweg...

Confidential. © 2018 IHS MarkitTM. All Rights Reserved.Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

Polycarbonate

Market OverviewMay 2018

Martin Wiesweg

Senior Director Polymers EMEA

+49 173 5329327

[email protected]

Confidential. © 2018 IHS MarkitTM. All Rights Reserved.

IHS Markit addresses strategic challenges

with interconnected capabilities

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& Solutions

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Over 12,000 employees, in 130

offices in 34 Countries


Agenda

• Energy – cost drivers

• Supply Overview

• Pricing

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Dated Brent WTI-Cushing

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Outlook

Brent and WTI crude oil price outlook

Notes: WTI = West Texas Intermediate.

Source: IHS Markit, Argus Media Limited (historical) © 2018 IHS Markit

• World demand. World liquids demand growth

stays robust this year, at 1.8 MMb/d, Growth

eases to 1.5 MMb/d in 2019.

• OPEC production. The Gulf-3, led by Saudi

Arabia, maintain output restraint through most

of 2018, while output from the rest of the group

falls in part because of involuntary losses,

especially from Venezuela. Russia and KSA

announced recently a lift in output.

• US production. With the annual WTI price

averaging roughly $70/bbl this year and next,

US crude output rises at a blistering annual

pace of 1.3 MMb/d in 2018 and 1.1 MMb/d in

2019.

• Global liquids balance. Lower OPEC output

and strong world demand growth help tighten

the liquids balance in 2018, even as US supply

rises rapidly.

Oil prices to stay loftier for longer, sustained by supply outages and risks


Phenol Follows Benzene’s Lead

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Delta Phenol Avg Acquisition Benzene contract

© 2018 IHS MarkitSource: IHS Markit

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Polycarbonate Highlights❑ Rationalization of plants in the US,

Singapore, Japan and Brazil have removed

excess capacity raising operating rates

❑ Increased vulnerability to interruption

❑ Prises continue to move up

❑ New plants announced in China add

significant capacity in 2019 and beyond

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Global Polycarbonate Demand by End Use

Automotive (Non-Window)

13%

Automotive (Window)1%

Optical Media10%

Appliances/Housewares

13%

Electronics/Electrical

21%

Medical/Ophthalmic3%

Cons./Sports/Recreation etc.

4%

Packaging5%

Other7%

Demand = 4.1Million Metric Tons © 2018 IHS MarkitSource: IHS Markit

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• Forecasted average annual growth rate to

improve to 3.3% for 2017 – 2022 from 2.2%

in the prior five years.

• Shrinking optical media demand is a large

headwind to polycarbonate growth but more

than offset by strong increases in other

applications

• Asia consumes 63% of global supply.

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Polycarbonate Demand Growth

The Americas

14%

Europe15%

Africa/Middle East3%

Asia63%

Rest of the World

5%

World: 2017 Polycarbonate Demand by Region

Source: IHS

Markit© 2018 IHS Markit

2017 Global Demand = 4.1 Million Metric Tons


China Demand is driving the change

• China grew to 40% of global PC demand

while becoming the ‘workshop of the world’

• China is ⅔ of Asia demand, growing 5%

annually

• China has only 14% of capacity

• New plants announced in China add

significant capacity in 2019 and beyond

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Rest of World China Optical Media Demand

© 2018 IHS Markit

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Source: IHS Markit

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Plant Closures Restore Market Balance for Now

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2012 2013 2014 2015 2016 2017 2018 2019 2020 2021North America South America West Europe Middle East

Northeast Asia Southeast Asia Demand Growth© 2018 IHS Markit

Polycarbonate Capacity Changes

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Source: IHS Markit

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Growth slowed – PC became commodity

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PC Growth % Global GDP Growth %© 2018 IHS Markit

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Source: IHS Markit

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Prospects for Moderate Growth

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Demand Total Capacity Operating Rate

Global Polycarbonate Demand

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© 2018 IHS MarkitSource: IHS Markit

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W. Europe Polycarbonate Supply & Demand

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Domestic Demand Production Total Capacity Operating Rate

© 2018 IHS Markit

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Source: IHS Markit

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N.E. Asia Polycarbonate Supply & Demand

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© 2018 IHS Markit

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Source: IHS Markit

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China Polycarbonate Supply & Demand

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© 2018 IHS Markit

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Source: IHS Markit

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Polycarbonate Regional Net Trade

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N. America S. America Europe CIS & BalticsAfrica/Middle East Indian Subc. NE Asia SE Asia

Net Imports

© 2018 IHS Markit

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Source: IHS Markit

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Optical Media Grade – Lower spread between the regions

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North America West Europe Northeast AsiaSource: IHS Markit © 2018 IHS Markit

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Polycarbonate Margins NE Asia (Optical Media Grade)

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Phenol Contribution Acetone ContributionECU Contribution Conversion Costs (Var. + Fixed)PC Optical Media Market Price PC Optical Media Pre-tax Margin

Source: IHS Markit © 2018 IHS Markit

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Polycarbonate Margins W. Europe (Optical Media Grade)

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Phenol Contribution Acetone ContributionECU Contribution Conversion Costs (Var. + Fixed)PC Optical Media Market Price PC Optical Media Pre-tax Margin

Source: IHS Markit © 2018 IHS Markit

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Strategic Implications Polycarbonate

High operating rates through 2018 amplify interruption risk.

Prices and producer margins will be maintained

Entry of new Chinese companies is a game changing development

Growth in demand forecasted at just above GDP and not all the new capacity required…

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Thank you

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Polycarbonate Market Overview - Media-tech association · Market Overview May 2018 Martin Wiesweg...

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