Witte - Swca 2013
Transcript of Witte - Swca 2013
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Agenda
Intro to IHS
Economic Outlook
Energy Drivers &Backdrop
Chemicals Overview
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Agenda
Intro to IHS
Economic Outlook
Energy Drivers &Backdrop
Chemicals Overview
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
IHS: A leading Information & Insight Provider
We are 6,500+people, in 30countries, speaking 50 languagesall working each day to:
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Provide comprehensive content, softwareand expert analysis and forecasts
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
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Chemical Week and Harriman to create the most comprehensiveset of chemical information and insights in the world
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Agenda
Intro to IHS
Economic Outlook
Energy Drivers &Backdrop
Chemicals Overview
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Peak
Q3
2008
Trough Q1 2009
Back to
Previou s Peak
Q2 2010
77
05 06 07 08 09 10 11 12
Quarterly Annualized ValueConstant 2005 U.S. DollarsTri l l ions
Source: IHS Global Insight
Global Economy
was off the growthcurve for sevenquarters
Pace of Expansionslowed to less than3 percent per year(`12-`13)due to EU& confidence loss
but is accelerating
Taking much longerto regain trend lineperformance
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Slower Pace of Economic Recovery
China Grows at about 7.9% per year and
Global rates are close to 3.5%
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
The sovereign debt crisis has abated somewhat, but most Eurozoneeconomies will struggle through 2013.
US growth will remain sluggish through 2013, then pick up in 2014-15.
Chinas growth pace is stabilizing near 7.5%, but a strong rebound is
unlikely, and government policies will remain cautious.
Emerging markets still offer the best growth prospects.
Risks to the outlook:
Eurozone debt crisis US sequestration Iran-related oil price shock China hard landing
The Global Economy: Policy Uncertainties in theU.S., Eurozone, and China Impede Growth
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The Eurozone will struggle with weak growth and sovereign debt problems;necessary reforms will take years to work. Signposts: sovereign bond yields, credit availability, ECB liquidity injections,
confidence indexes, PMIs, exchange rates, fiscal balances
The US expansion will continue at a modest pace, restrained by fiscal tightening
and supported by housing market recoveries. Signposts: job growth, housing permits, capital goods orders, solution tosequestration and budget
Chinas slowdown is both cyclical and structural. Signposts: exports, property transactions, home prices, electricity use,
industrial production, credit growth
Asia will lead global growth; Latin America and Africa will do well by historicalstandards. Signposts: world trade flows, commodity prices, PMIs, retail sales
Summary and Signposts
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Agenda
Intro to IHS
Economic Outlook
Energy Drivers &Backdrop
Chemicals Overview
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
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40%
50%
60%
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Crude (WTI) Natural Gas Gas as % of Crude
Dollars Per MMBtu Gas as a % of Crude, BTU Basis
North America Energy Price Trends
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Snapshot of US Energy Landscape
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Unconventional oil sources have
increased oil production by 25% from2008.
Twelve years ago, shale gas productionwas only 2% of total US natural gasproduction, today it represents 37%.
The increase in US natural gas productionfrom shale gas and tight gas plays ismaking it possible that the United Stateswill become a net exporter of gas by the
end of this decade
Employment in the unconventionalupstream sector will account for morethan 1.7 million jobs in 2012.
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From 2012 to 2035 the Employment Contribution of theUnconventional Oil and Gas Industry will Double
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500
1,000
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2,000
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3,000
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4,000
2012 2015 2020 2025 2030 2035
Employment Contributions ofUnconventional Oil and Gas Activity
(thousands of workers)
Induced
Indirect
Direct
The greatest future job growth will occur between 2012 and 20203 million jobs by 2020.
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Agenda
Intro to IHS
Economic Outlook
Energy Drivers &Backdrop
Chemical Overview
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Chemical SectorDrivers and Trends?
International TradePattern Changing?
Investmentsubstantialplans change USlandscape
A Perspective on the Future
Gl b l M t d C t A d B d
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Global Megatrends Center Around BroadFundamental Value Creation Drivers
Demographic
Rapid population in thedeveloping world withincreased ageing in thedeveloped world shift
demand profile
EconomicStandard of Living rises
rapidly, merging developingcountry standards with that of
the developed world andleading to rapid technology
take-up
Sustainability
Growing populations andeconomies create needs forinnovative solutions; market
drivers will be likelysupplemented by policy
DemographicRapid population growth inthe developing world withincreased ageing in thedeveloped world shift
demand profile
EconomicStandard of Living risesrapidly, merging developingcountry standards with thatof the developed world andleading to rapid technology
take-up
SustainabilityGrowing populations and
economies create needs forinnovative solutions; marketdrivers will be supplemented
by policy initiatives
Create opportunities and threats for chemical producers
New geographic & end-use markets (products, logistics & channels)
Minimum operational footprint and maximum resource efficiency(energy value creation & environmental excellence)
Linkages to fast growth markets (BRICS), coupled with an expandedfocus on the frontiers (e.g. Africa)
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Changing Demographics Impact Chemical Demand.Advanced Economies Age-Emerging Markets Grow
Chemical Impact
Population driven demand will be centered in the emerging markets
Access to qualified technical, experienced human resources will be a challenge for thechemical industry, especially in the advanced economies Changing age profiles will likely change the end-use buying patterns (related to factors such
as household creation, technology adaptation etc.)
Associated impact on chemical business footprint (location, logistics, portfolio)
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Developing Countries
Emerging Markets
Advanced Economies
(Population by age segment, compoundannual growth rate, 2000-2020)
Age 65+ Age 15-64 Age 0-14
(200) - 200 400 600 800 1,000
Developing Countries
Emerging Markets
Advanced Economies
Age 65+ Age 15-65
Population Growth by Age Segment, 2000 - 2020
Millions of People
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More Disposable Income Impacts the Applicationand Type of Chemical Products Demanded
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Brazil Russia India China U.S.
2000 2020
(Food consumption share of total consumption)
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Brazil Russia India China U.S.
Cars, units sold (thousands)
2000 2020
Source: IHS Global Insight, IHS Automotive
Consumer market & income growthtrends
The U.S. will remain the largestconsumer market while the shareof European countries willstagnate or decline
Diversity of spending patternsexist as economies are at
different stages of growth. Food and other necessity
spend tends to be higher witheconomies in earlydevelopment.
Necessity goods/services still
dominate but gradual shifttowards discretionary items.
As incomes rise, spending shiftsto towards households goods,communication, leisure,education, and upgrade to higher-value goods.
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(35% of Globe)
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MDE Canada-------- Ethane ---------
U.S. U.S.Naphtha
MDELPG
MDENaphtha
Europe AsiaLPG
NEA SEANaphtha
Ethylene Cash Cost Comparison
U.S. Dollars Per Metric Ton2012
Feedstock Costs are Key to Earnings andIncreasing Supply/Demand Dislocation
Differences in
cost positionremain verysubstantial
Condensates
even favor U.S.vs. naphtha usedelsewhere
Margins remain
very wide forethane based orclose-to-zero foroil based
Price
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Cents Per Pound o f Polyethylene
U.S. Ethane to PolyethyleneChain Margin Distribution
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Ethylene
Ethane
Polyethylene
High Oil Prices Mean Profits for Ethane Chain
Incentives remainhigh regardinginvestment inIntegration
U.S. Ethane to PE
producers enjoythe benefits of avery advantagedgas-oil price ratio
Feedstock andethylene marginssupport increase innet export activity
1990 1995 2000 2005 2010 2015 2020
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North America Net ExportsMil l ion Metr ic Tons
Naphtha crackingeconomics remain inplace as the GlobalPrice Maker
Business Plans for
new capacity willinclude a significantexport presence
Exports could
represent 50% offuture productionmethane & ethanecost position critical
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Polyethylene
Polypropylene
Vinyls
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Percent of Production
Trade Connects Advantaged Hydrocarbons toHigh Demand Growth Markets
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2012 IHS No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.
Methanol Benefiting Strongly from Shale Gas
Low priced methane in the U.S. asa result of shale gas is providing alow cost feedstock for methanolproduction.
Methanol capacity in the U.S. willgrow ~5 fold from 2010 to 2017.
Capacity additions exceed USdemand for growth
US will switch from a net importerto an exporter
The U.S. will transition from beingthe highest priced country tosecond lowest globally.
New end uses for methanol in theregion such as methanol-to-chemicals, gasoline as well asdirect blending into gasoline couldhelp accelerate demand growth.
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Billions of Dollarsrequired to fundchemical plantcapital plansattributable to theshale gale
IHS estimates$95B to be spentover this timeframe
Generating jobgrowth & CAPEXrisk in constructionto operations
North American Capital Spend
Billions
Other Chemicals
Propylene Chain
Ethylene Chain
Methane Chain
Chlorine Chain
Capital Build will Challenge ResourceAvailability
C ti S d T d V l Ri i D i b
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Caustic Soda Trade Volumes Rising; Driven byExport Co-product PVC Demand
High Cash Costs in most ofthe world
Global price set by high costregions tied together viashipping costs
Low USA Cash costs Higher production in USA
Higher net exports of causticfrom USA
Lower imports of caustic soda
into USA
Global traded volume ofcaustic soda increases
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Imports Exports Net Exports as % of Total Demand
Million Metric Tons Percentage
US Trade Outlook for Caustic Soda
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Shales Impact on Aromatics is More Indirect
Demand pulled by Asian appetite for
PS, nylon, PC, polyester fibers and PETwith solvents being relatively small
Benzene production diminished withshift of crackers to light feeds andlightening crude feed slate pushing upBZ prices.
Toluene and xylene blend values rise ashigh octane components are driven upby the same shift.
Despite expensive benzene, styreneexports up 10-15% driven by low
ethylene and competitive productioncosts pull benzene imports
2014 will provide some modest relief inBTX with improving capacity in Asia.
BENZENE
TOLUENE
CH3
para - XYLENE
CH3
CH3
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Visit www.ihsglobalevents.com/WPC2013for complete agenda and to register.
Nariman BehraveshChief EconomistIHS
Bill SandersonVice President,Downstream Researchand Consulting - EnergyInsightIHS
Gary AdamsChief Advisor, ChemicalIHS
Dave WitteSenior Vice President &General Manager,ChemicalsIHS
Stephen D. PryorPresidentExxonMobil Chemical
Company
Moayyed Al QurtasVice Chairman & CEOTasnee
Graeme BurnettSenior Vice PresidentRefining & Chemicals
Americas
Total SA
Jos Luis UriegasCEOGrupo IDESA
Susan EssermanChair of the InternationalDepartment; formerDeputy US TradeRepresentativeSteptoe & Johnson LLP
Zbyszko TabernackiVice President,Economics & Country RiskIHS
Richard MeseroleVice President ofOperations and GeneralManager
Fluor
Mark EramoChemical Industry InsightsIHS
Charles T. DrevnaPresidentAmerican Fuel &
Petrochemical
Manufacturers (AFPM)
Arnaud FrancoSenior AnalystGraphic PapersPulp and Paper
Products Council
http://www.ihsglobalevents.com/WPC2013http://ihsglobalevents.com/wpc2013/speaker/nariman-behravesh/http://ihsglobalevents.com/wpc2013/speaker/bill-sanderson/http://ihsglobalevents.com/wpc2013/speaker/gary-adams/http://ihsglobalevents.com/wpc2013/speaker/dave-witte/http://ihsglobalevents.com/wpc2013/speaker/stephen-d-pryor-2/http://ihsglobalevents.com/wpc2013/speaker/moayyed-al-qurtas/http://ihsglobalevents.com/wpc2013/speaker/graeme-burnett/http://ihsglobalevents.com/wpc2013/speaker/jose-luis-uriegas/http://ihsglobalevents.com/wpc2013/speaker/zbyszko-tabernacki/http://ihsglobalevents.com/wpc2013/speaker/richard-meserole/http://ihsglobalevents.com/wpc2013/speaker/mark-eramo/http://ihsglobalevents.com/wpc2013/speaker/charles-t-drevna/http://ihsglobalevents.com/wpc2013/speaker/arnaud-franco/http://ihsglobalevents.com/wpc2013/speaker/arnaud-franco/http://ihsglobalevents.com/wpc2013/speaker/charles-t-drevna/http://ihsglobalevents.com/wpc2013/speaker/mark-eramo/http://ihsglobalevents.com/wpc2013/speaker/richard-meserole/http://ihsglobalevents.com/wpc2013/speaker/zbyszko-tabernacki/http://ihsglobalevents.com/wpc2013/speaker/jose-luis-uriegas/http://ihsglobalevents.com/wpc2013/speaker/jose-luis-uriegas/http://ihsglobalevents.com/wpc2013/speaker/graeme-burnett/http://ihsglobalevents.com/wpc2013/speaker/moayyed-al-qurtas/http://ihsglobalevents.com/wpc2013/speaker/stephen-d-pryor-2/http://ihsglobalevents.com/wpc2013/speaker/dave-witte/http://ihsglobalevents.com/wpc2013/speaker/dave-witte/http://ihsglobalevents.com/wpc2013/speaker/gary-adams/http://ihsglobalevents.com/wpc2013/speaker/gary-adams/http://ihsglobalevents.com/wpc2013/speaker/bill-sanderson/http://ihsglobalevents.com/wpc2013/speaker/bill-sanderson/http://ihsglobalevents.com/wpc2013/speaker/nariman-behravesh/http://www.ihsglobalevents.com/WPC2013 -
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