12th March 2019PX team, Aromatic Chemicals Dept. Mitsubishi Corporation

PX Market Presentation

Outlook - Polyester Market & Trails of growth

2

Source︓IMF

Proprietary and Confidential

Population of China & developing Asian countries is more than 50% in World.Especially, China impact is still big and Growth will keep 1% every year.

Population Growth

Population Growth

Unit︓Millions

3Proprietary and Confidential

Yearly Growth FY‘91〜’18 FY’19〜’27Forecast

World 1.5 % 3.8%Emerging and

developing Asia 1.3 % 0.9%

China 0.7 % 1.1%

Source︓IMF

Proprietary and Confidential

GDP Growth of China & developing Asian countries is higher than World Average.In Future, the trend is also same and GDP growth will keep high level.

GDP Growth

GDP GrowthUnit︓Billions

4Proprietary and Confidential

Yearly Growth FY‘91〜’18 FY’19〜’27Forecast

World 3.6 % 3.8%Emerging and

developing Asia 7.6 % 6.4%

China 9.5 % 6.1%

Source︓Japan Chemical Fibers Association、PCI Wood Mackenzie、IHS

Proprietary and Confidential

Growth of Cotton has limitation due to limited cropland and weather effect.Polyester is grown by covered demand of fiber, then Polyester made higher growth among all fiber.

World Fiber Production

World Fiber Production

Polyester

Cotton

ForecastUnit︓KT

5Proprietary and Confidential

YearlyGrowth FY‘91〜’18 FY’19〜’27

ForecastAll Fiber 3.3 % 4.5%Polyester 6.8 % 5.7%Cotton 1.2 % 0.9%

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Production of Polyester Fiber by country

Japan

China

Korea

Taiwan

ASEAN

India

West Europe

USA

6

With the rising of the labor cost in the past, fiber industries had changed a manufacturing base from Europe, Japan, Korea and Taiwan to China. And China had developed domestic and external demand with their competitive labor power.

Production of Polyester Fiber by country

Proprietary and Confidential

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Production of Polyester Fiber by Country except PR.China

Japan

Korea

Taiwan

ASEAN

India

West Europe

USA

Unit: KT Source︓PCI

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Production of PET by countryexcept PR.China, Europe & North America

Japan

Korea

Taiwan

ASEAN

India

South America

Middle East

7

Production of PET by country China and India which has a huge domestic demand are developing dramatically in PET industry which is capital intensive and isn’t influenced the difference of labor cost so much.

Proprietary and Confidential

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Production of PET by country

Japan

China

Korea

Taiwan

ASEAN

India

South America

Europe Union

North America

Middle East

Unit: KT

Source :PCI

China Polyester Fiber and PET Production

8

[UNIT: KTA]China Polyester Production surged drastically from 2017 due to “Good real estate sales”, ”Expansion of apparel sales through online shopping” , “Ban of wasted plastic impact”.

■Polyester Fiber

■PET (KT)

Source: CCFEI

(KT)

China Export Amount (Mil USD)

2015 2016 Growth 2017 Growth 2018 Growth

Fiber&Textile 108,954 104,599 -4.0% 109,215 4.4% 119,098 9.05%

Apparel 174,631 158,178 -9.4% 157,490 -0.4% 157,663 0.11%

2015 2016 Growth 2017 Growth 2018 GrowthQ1 6,682 6,507 -2.6% 7,903 21.5% 8,689 9.9%Q2 7,483 7,978 6.6% 8,405 5.4% 9,936 18.2%Q3 7,293 7,464 2.3% 8,731 17.0% 9,910 13.5%Q4 7,383 8,240 11.6% 9,275 12.6% 9,560 3.1%

Total 28,841 30,189 4.7% 34,314 13.7% 38,095 11.0%

2015 2016 Growth 2017 Growth 2018 GrowthQ1 1,455 1,569 7.8% 1,496 -4.7% 1,740 16.3%Q2 1,565 1,659 6.0% 1,706 2.8% 1,922 12.7%Q3 1,403 1,605 14.4% 1,864 16.1% 1,902 2.1%Q4 1,294 1,456 12.5% 1,720 18.1% 1,950 13.4%

Total 5,717 6,289 10.0% 6,786 7.9% 7,515 10.7%

Proprietary and Confidential

Spread = Polyester Price (CCF) - Raw Material Cost ( PTA x 0.865+ MEG x 0.345) – Conversion Cost

■ PTA/ MEG Price AssumptionPTA : CCF/CCFEI/ Chemease Avg. + SHIBOR+1% ( p.a.)MEG : SINOPEC x 99.2% ( estimated discount )

■Conversion Cost ( Min. Spread RMB/MT)FDY・POY = 1,000RMB/MT, PSF = 800RMB/MT PET = 600RMB/MT

Proprietary and Confidential

Polyester Economics in China

9

Polyester enjoyed profit from end of 2016, it encourage more polyester expansion in PR.China now.

Sudden CrudePrice Drop

10

Source:Mitsubishi Corporation

Proprietary and Confidential

Polyester Expansion Project Plan UpdateThere are several Polyester Expansions mainly in China.

Polyester Filament Yarn Unit : KMTA Polyester Staple Fiber Unit : KMTA

Year Company Location TimingExpansion

Remark Year Company Location TimingExpansion

RemarkCapacity 2018 2019 2020 2021 Capacity 2018 2019 2020 2021

2018 Xinfengming(Zhongshi) China Mar 300 200 100 2018 Yida (旧翔盛) China Apr 400 267 133 Restart

Bhilosa India Mar 160 120 40 Huaxi Group Bao Chang China May 100 67 33

Tongkun China May 600 400 200 Huahong (華宏) China Jun 150 75 75

Bhilosa India May 365 213 152 Bhilosa India Jul 146 73 73

Jiangsu Silk China Jun 100 50 50 Huaxi Group Bao Chang China Q4 100 8 92

Rongsheng(旧賜富) China Jun 300 150 150 Restart 2019 Yizheng(Sinopec) China Q1 100 75 25

Zhejiang Yijing(旧紅山) China Q2 650 325 325 Restart Jiangsu BluePeacock China Q1 60 45 15

Xinfengming(Zhongshi) China Jul 300 150 150 HUVIS China Q1 60 45 15

Fujian Shanli China Jul 250 125 125 Zhejiang Ningbo Dafa China Q3 80 40 40

浙江物産(旧翔盛) China Aug 360 150 210 Restart 2020Fujian Yimian (Hengyi

Group)China End 500 0 500

Shenghong China Sep 250 83 167 Chengxing China ? 1,200 600 600

Fujian Jingwei China Q3 250 63 188 Yisheng Dalian China ? 600 300 300

Xinfengming(Zhongxin) China Q4 300 25 275 Delay World (New Capacity) 490 611 995 1,400 3,496

2019 Jiangsu Lixin China Q2 80 60 20

Filatex India Q2 210 158 53 PET Unit : KMTA

Tongkun China June 1,000 175 825

Year Company Location TimingExpansion

RemarkTongkun China Aug 300 125 175 Capacity 2018 2019 2020 2021

Wuxi Huaya China Q3 200 67 133 2018 Neo Lithania May 200 117 83

Changle Lifeng Textile China Q3 200 67 133 Chengxing China May 600 350 250

Xinxin China Q1 180 135 45 FET Vietnam #1 Vietnam Sep 400 133 267

Hengli China June 1,000 500 500 EIPET Egypt Oct 540 135 405

2020 SASA Turkey Q3 200 100 100 Leading Vietnam Oct 70 18 53

Baihon Vietnam Q3 250 125 125 2019 Yisheng Dalian China Aug 600 250 350

Hengli China Q3 1,000 500 500 Baihon Vietnam Q3 250 83 167

Tianyuan (Kings Grp) China Q3 500 250 250 2020 FET Vietnam #2 Vietnam ? 400 200 200

Hailida China Q3 200 100 100 Ex-M&G at Corpus Christi,

TXUSA ? 1,100 550 550

World (New Capacity) 2,054 3,417 2,959 1,075 9,505 World (New Capacity) 753 1,391 1,267 750 4,160

Summerization Unit : KMTA

2018 2019 2020 2021 TOTALFilament 2,054 3,417 2,959 1,075 9,505

Staple 490 611 995 1,400 3,496

PET 753 1,391 1,267 750 4,160

TOTAL 3,296 5,419 5,221 3,225 17,161

PTA Expansion Project Plan Update

11

Many PTA expansions are scheduled from 2018-2020. Then PX demand would keep to increase continuously.

ExpansionCapacity 2018 2019 2020 2021 2022 2023

2016 BP Geel Belgium Q1 100 Effective Capacity IncreasedHangbang #2 China Apr 2,200 Invista, PET1,200KTA

2017 Indorama Netherland Q2 375 94 De-Bottle (250→625)Shenda (Petro China) China Q3 1,200 600 Status UnclearOPTC (L3) Taiwan Q4 1,500 1,125 PET400KTA in Vietnam (2H 2018)OPTC(T9) Taiwan Q4 -400 -300 Fuhua (ex. Xianglu) China Q4 2,250 1,688 Half line re-started Tongkun #2 China end Dec 2,200 2,017 Invista

2018 Indorama Portugal Jul 750 375 375 Re-Started (Ex Artland)2019 Fuhua (ex. Xianglu) China Jan 2,250 2,063 188 Re-Start Target

Xinfengming #1 China Oct 2,500 625 1,875 BP licenseHengli #4 China Q1 2,500 1,875 625 Invista. Same timing as Refinery?Yisheng (Zhejiang) China mid 5,500 2,750 2,750 Location is next to Zhongjin Petro.ex-JBF India mid? 1,200 300 300 BP (ISOX2) / start up timing is unclearBillion #1 China End 2,500 200 2,300 Pipeline connected with FREPXinfengming #2 China End 2,500 200 2,300

2021 Corpus Christi Polymer USA 2H 1,300 650 650 Corpus Christi, TX / PET1,100KTA2022 TONGKUN China 2,400 2,400 FDY:90万/ POY:150万2023 BP & SOCAR Turkey 1,250 625 PX:840KT

Unknown Tongkun #3 China 5,000 Rudong in Jiangsu ProvinceXinjiang Zhongtai China 1,200FENC/Sinopec Yizheng China 1,300Shenghong#3 China 2,500 BP Tech?Rongsheng(Ningbo)#2 China 2,500Hengli #5 China 2,500 InvistaFCFC (Ningbo) #2 China mid 1,500 750 750Baihong China 2,400Huabin China 2,200MCPI #3 India 1,200Oman Oil Oman 1,100 BP license

5,598 3,063 7,388 9,675 3,800 625as PX 3,695 2,021 4,876 6,386 2,508 413

Remark

World Total

Year Company Country TimingYearly Increment of Effective Capacity

2020

Big Change to PX market from PR.China

12

PX Expansion Project Plan Update

13

[UNIT: KTA]There are many PX expansion plans in the world, especially in China. However more details of these projects will be required to clarify starting timing ( ex. Government approval, Finance, Feed, Technology etc.)

[Unit : KT]

ExpansionCapacity 2018 2019 2020 2021 2022 2023

2017 Reliance #4 India Q2 2,250 563 CDU integrated

Hanwha Total Korea Q2 200 100 Expansion of Reformer

2018 Petro Rabigh Saudi Arabia end Mar 1,300 975 325 CDU integrated

Nghi Son Refinery Vietnam end Jun 700 350 350 CDU integrated

Dragon Aromatics China Dec 1,600 67 1,533 Re-Starting target

Atyrau Oil Kazakhstan Dec 470 470 Status Unclear

2019 Hengli Petrochemical (Dalian) China 1H 4,300 2,150 2,150 Official Start-up Timing is the End of 2018.

Hainan (Sinopec) #2 China Jul 1,000 500 500 No CDU expansion.

Zhejiang PC (Zhoushan) #1 China 2H 4,000 1,000 3,000 CDU Integrated(400KBD). Official Start-up Timing is Oct 2018.

2020 Hengyi Brunei Brunei 1H 1,500 1,500 CDU integrated (160KBD). Official Start-up Timing is Apr 2019.

Aramco / Jizan Saudi Arabia Q2 1,000 500 500 CDU integrated (240KBD). Official Start-up Timing is Q2 2019.

2021 Sinochem Quanzhou China 1H 800 400 400 CDU (240KBD+ Add. 60KBD(2018))

2022 Motiva USA 2H 2,000 1,000 1,000 Aramco

2023 BP & SOCAR Turkey 840 420

Shenghong China 2,800 1,400

Unknown Sinochem Hongrun China 1,000 Construction was supended due to no NDRC approval.

KIPIC Kuwait 1,400 Al Zoor Refinery (600KBA) Aroma#2

Zhongjin Petrochemical #2 China 2,000 No NDRC approval yet.

Aramco/China North Industries China 1,600 No NDRC approval yet.

CNOOC Ningbo Daxie China 1,600 No NDRC approval yet.

CNOOC-Kings Huizhou China 960 No NDRC approval yet.

IRPC Thailand 900 Under feasibility study. Target is 2H 2022?

Zhejiang PC (Zhoushan) #2 China 4,000 Rongshen51%/Tongkun20%/Zhejiang Province29%

PDVSA/CNPC China 2,600 CDU integrated (240KBD)

IOC Paradip India 1,200

Noga(Aroma Production Complex) Bahrain 1,400

ADNOC/Takreer UAE 1,400

Dongyin Lianhe Petro. China 2,000 No NDRC approval yet.

Fujia Gulei China 4,000 No NDRC approval yet.

Xuyang Group China 2,000 No NDRC approval yet.

Hebei Yihong Petro. China 3,000 No NDRC approval yet.

Hebei Xinhua Lianhua Petro. China 4,000 No NDRC approval yet.

2,054 6,828 6,150 1,500 1,400 3,220

Remark

World Total

Year Company Country Timing Yearly Increment of Effective Capacity

14

China Refinery and PX Expansion ProjectsAlthough many projects is announced, limited projects are permitted by NDRC (National Development and Reform Commission) as of now due to the severe restrictions on PX projects. There is also petroleum products demand bottleneck.(KT)# Project Place NDRC Remarks Timing CDU Gasoline Diesel PX1 SINOPEC Luoyang Luoyang, Hebei 〇 Under Construction 2019 1H 2,000 418 576 02 Zhejiang Petro.#1 Zhoushan, Zhejiang 〇 Under Construction 2019 2H 20,000 3,500 2,500 4,0003 Hengli Petro. Dalian, Liaoning 〇 Under Construction 2019 2H 20,000 4,600 1,610 4,5004 SINOPEC Hainan#2 Haikou, Hainan 〇 Under Construction 2019 2H 8,000 1,672 2,304 1,0005 SINOPEC Zhongke Zhanjiang, Guangdong 〇 Under Construction 2019 2H 10,000 2,090 2,880 06 SINOCHEM Quanzhou Quanzhou, Fujian 〇 Purchased Equipments. 2022 2H 3,000 627 864 8007 Shenghong Petro. Lianyungang, Jiangsu × Trying to get NDRC approval by Oct.'18. 2022- 16,000 2,700 2,550 2,8008 Zhejiang Petro.#2 Zhoushan, Zhejiang ? 2022- 20,000 3,500 2,500 4,0009 Zhongjin Petro.#2 Ningbo, Zhejiang × Lack of CO2 emission allowances. 2022- 0 0 0 2,000

10 Aramco/China North IndustriesPangjing, Liaoning × MOU concluded in Mar '17 when Saudi King visited China. 2022- 15,000 3,135 4,320 1,60011 SINOCHEM Hongrun Dongying, Shandong × Construction suspended due to lack of NDRC approval. 2022- 0 0 0 1,00012 CNOOC Daxie Petro. Daxie, Zhejiang × Negotiating with NDRC. 2022- 0 0 0 1,60013 CNOOC Huizhou#2 PX Huizhou, Guangdong × Under Study. 2022- 0 0 0 1,50014 PDVSA/CNPC Jieyang, Guangdong 〇 2022- 20,000 4,180 5,760 2,60015 Dongying Lianhe Petro. Dongying, Shandong × Negotiating with NDRC. 2025- 0 0 0 2,00016 SINOPEC ZRCC#2 Ningbo, Zhejiang × 2025- 12,000 2,508 3,456 1,00017 SINOPEC Yanzi#2 Nanjing, Jiangsu × 2025- 14,500 3,031 4,176 018 SINOPEC Shanghai#3 Pinghu, Zhejiang × 2025- 0 0 0 019 Fujia Gulei Gulei, Fujian × 2025- 20,000 4,180 5,760 4,00020 Xuyang Group Caofeidian, Hebei × Negotiating with NDRC. 2025- 20,000 4,180 5,760 021 Hebei Yihong Petro. Caofeidian, Hebei × 2025- 15,000 3,135 4,320 3,00022 Middle East Gulf Investment Caofeidian, Hebei × 2025- 15,000 3,135 4,320 023 Hebei Xinhua Lianhua Petro. Caofeidian, Hebei × 2025- 20,000 4,180 5,760 4,000

Total 250,500 50,771 59,416 41,400

Probability Gasoline Diesel PXHigh 15,607 13,284 13,100

Middle 6,635 6,820 11,700Low 28,529 39,312 16,600

Change of PX Feedstock

15

[UNIT: KTA]

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1990 1995 2000 2005 2010 2015 2020(Capacity)

Crude Oil Condensate HVN MX Fuel Oil Gas Oil

Strong Polyester demand encourage to produce more PX, but production cost & investment cost is changed with different feedstock.

48%

40%

26% 16%

12%

5%

< Other factors > ■ Demand of Petroleum Products ( ex. Gasoline , Diesel etc. ) ■ IMO regulations ■ Requirement for Environmental measures

Challenged by ProjectsIn PR. China

Ex.) Configuration of Chinese Project

400,000 B/D

20,000KTA

Reformer 9,600KTA

Diesel HydrocrackingUnit 6,000KTA

Heavy OilHydrocracking Unit 11,500KTA

Paraxylene 4,300KTA

PX / Crude % 22%

CDU Capacity

16Proprietary and Confidential

China PX Supply/Demand Case 1 ( Short Term )

Premise:1. Additional PX capacity comes on stream as per the table below.2. Demand growth is 6.0%.

(14,438)

(15,900)

(13,724)(11,715)

(13,529)

(20,000)

(10,000)

0

10,000

20,000

30,000

40,000

2017 2018 2019 2020 2021

S/D Balance PX Production PX DemandKTA

Project PX Capacity TimingDragon 1,600 2018 EndSINOPEC Hainan#2 1,000 2019 2HZhejiang Petro.#1 4,000 2019 2HHengli Petro. 4,300 2019 2HSINOCHEM Quanzhou 0 2022 2HTotal 9,300

17

Premise:1. Additional PX capacity comes on stream as per the table below.2. Demand growth is 6.0%.

China PX Supply/Demand Case 2 ( Short Term )

Proprietary and Confidential

Project PX Capacity TimingDragon 1,600 2018 EndSINOPEC Hainan#2 1,000 2019 2HZhejiang Petro.#1 4,000 2020 1HHengli Petro. 4,300 2020 1HSINOCHEM Quanzhou 800 2022 2HTotal 10,100

(14,438)

(15,900) (17,044)

(11,715)(13,529)

(20,000)

(10,000)

0

10,000

20,000

30,000

40,000

2017 2018 2019 2020 2021

S/D Balance PX Production PX DemandKTA

18

Even in the worst case, China PX import volume will maintain above 10mil MT.China PX Supply/Demand Case 1 ( Middle Term )

Premise:1. Additional PX capacity comes on stream as per the table below.2. Demand growth is 6.0% on the assumption that that China keep taking 90% of the world demand growth.

(14,438)(15,900)

(11,715)

(23,78B)

11,009

21,480

30,3B0

2B,909

3B,010

54,14B

(30,000)

(20,000)

(10,000)

0

10,000

20,000

30,000

40,000

50,000

B0,000

S/D Balance PX Production PX DemandKTA

Project PX Capacity TimingDragon 1,600 2018 EndSINOPEC Hainan#2 1,000 2019 2HZhejiang Petro.#1 4,000 2019 2HHengli Petro. 4,300 2019 2HSINOCHEM Quanzhou 800 2022 2HShenghong Petro. 2,800 2023 2HZhongjin Petro.#2 2,000 2023 2HSINOCHEM Hongrun 1,000 2023 2HZhejiang Petro.#2 4,000 2025 2HAramco/China North Industries 1,600 2026 2HCNOOC Daxie Petro. 1,600 2028 2HCNOOC Huizhou#2 PX 1,000 2029 2HTotal 25,700

Thank you

19