global polyolefins market and pricing outlook - · pdf fileglobal polyolefins market and...

Global Polyolefins Market

and Pricing Outlook

Remko Koster, Director Polyolefins

Europe and Africa

March 2014

[email protected]

© 2014, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

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IHS Chemical


Global GDP increasing in 2014

3

-3,0

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

5,0

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17

(Constant 2005 U.S. Dollars)

Forecast

Source: IHS Global Insight

Percent, %


Oil Price Forecast Moving Down in 2014/15

0

20

40

60

80

100

120

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

WTI Brent Dubai

Forecast

US$ / BBL


5

Tight Oil developments have resulted in unprecedented growth in U.S. supplies …

Million Barrels per Day

0

1

2

3

4

5

6

7

8

9

10

1980 1985 1990 1995 2000 2005 2010 2015 2020

Tight Oil Alaska

Gulf of Mexico Other Lower 48


U.S. Natural Gas Has New Life

Sources: IHS CERA, PGC, EIA

0

10

20

30

40

50

60

70

80

2003 2005 2007 2009 2011 2013 2015

Other Supplies Shale Gas & Tight Oil

U.S. Natural Gas Production By Type, BCF/D


Natural Gas

Crude

Oil

From Oil/Gas to Polyolefin

Naphtha

Gas Oil

Condensate

Propane

Ethane

Butane

Pygas Benzene

Toluene/Xylene

Heavy Aromatics

C5/C6 Non Aromatics

Fuel Oil

Ethylene

Unit

Gas Processing

Unit

REFORMER BTX Extraction

Raffinate FCC

Refinery

Steam

Reformer

Methanol

Synthesis

SynGas

Propylene

Ethylene

Butadiene Mixed Butylenes

Methane/Hydrogen

Benzene

Toluene

Xylene

Propylene

Methanol

PP

PP

PE


0%

20%

40%

60%

80%

100%

120%

140%

0

20

40

60

80

100

120

95 97 99 01 03 05 07 09 11 13 15 17

Energy Ratio

Ratio Crude Oil Pipeline Gas TX US

Dollars Per Barrel Oil Equivalent

Brent Crude Oil vs. U.S. Natural Gas


U.S. & West Europe

Integrated Polyethylene Cash Margins

9

0

100

200

300

400

500

600

700

800

900

1000

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

US Ethane to PE Chain Margin W. Europe Naphtha to PE Chain Margin

Dollars per Metric Ton

Forecast


Shale Gas in Europe or Ethane Imports ?

10

Shale gas in Europe is progressing very slowly

• Significant plays in England, Poland, Germany, France

• Resistance in France and Germany

• Composition of the gas is largely unknown

• May only compensate for the loss of gas from conventional fields

There will be no repeat of the shale gas boom in the US

Ethane imports from the US into Europe an alternative

• Ineos imports ethane into Rafnes (Norway) from 2015 onwards

• In spite of transport costs, advantaged position for Norway cracker

• Ineos aims for a repeat in Grangemouth UK

• Coastal competitors Borealis / Versalis / Total studying

Ethane imports a differentiator giving some sites an advantage


High Oil Benefits Middle East Olefins

11

0

250

500

750

1000

1250

1500

1750

janv.-12 juil.-12 janv.-13 juil.-13 janv.-14 juil.-14 janv.-15 juil.-15

Forecast

Dollars Per Metric Ton

Middle East (Saudi Arabia) ethane

cracker compared with a West Europe

typical cost naphtha cracker (both

integrated with HDPE)


CTO in China: An Innovation On Old Ideas

Coal

Gasification Methanol

Synthesis

Sulfur

Recovery

H2+CO

Ethylene

Propylene

MTO

Acid Gas

Removal

MTP


Chinese CTO Is Very Cost Competitive Even

On Global Basis

2012 LLDPE GLOBAL CASH COSTS BY SITE

Integrated, Total Cash Cost Basis (Ethylene: Light Olefins Production Basis)

NEA Avg.

NAM Avg.

SEA Avg.

MDE Avg.

WEP Avg.

10 20 30 40 50 60

CUMULATIVE CAPACITY (Million Metric Tons)

NEA Avg. NAM Avg. SEA Avg. MDE Avg.

Total Cash Cost Inner Mongolia CTO Xinjiang CTO Shandong CTO Shanghai CTO

1st Quartile 2nd Quartile 3rd Quartile 4th Quartile

WEP Avg.


HDPE 17%

LLDPE 12%

LDPE 9%

PP 26%

PS 5%

ABS 3%

PVC 18%

PET 9% PC

2%

2013 World Polymer Demand = 216 Million Metric Tons

PO : 63% of Global Polymer Demand


PO Domestic Demand %AAGR 2013 - 2018

15

0123456789

10

Polyethylene Polypropylene

Average Annual Growth Rate, %


West Europe Polyethylene Closures 2013-15

16

Company Product Location Time Capacity, kta

Dow HDPE Tessenderloo Q1 2013 180 kt

LBI HDPE Wesseling Q3 2013 100 kta

Versalis LLDPE Priolo Q3 2013 180kta

Total HDPE Antwerp 2014 70 kta

Borealis HDPE Burghausen Q4 2014 175 kta

Versalis LDPE Gela Q1 2014 215 kta

Repsol HDPE Puertollano 2014/2015 100 kta

• 1.0 MTA closures in 2013-2015 (7% capacity)

• Mainly HDPE

• Next wave foreseen in 2017-2019

European closures focus on HDPE


North America PE Projects

North America - New Polyethylene Projects

Company Location Country LDPE LLDPE HDPE Resin Type TBA Startup

2012-2013

Equistar LaPorte, TX United States 23 (4) Q4 2012

Equistar Morris, IL United States 45 (4) Q4 2012

2014

Equistar Bay City United States 100 (6) Q2 2014

2015-2016

Ineos Sasol Deer Park, TX United States 475 (7) Q2-Q3 2015

Braskem Idesa Nachital Mexico 300 (2) 750 (6,7) Q3-Q4 2015

Nova Joffre Canada 450 (4) Q1 2016

Equistar * Corpus Christi, TX United States 500 (3) 2016

Dow Freeport, TX United States 400 (2) 650 (5) Q4 2016

2017

ExxonMobil Mont Belvieu, TX United States 650 (4) 710 (4) Q2 2017

Formosa Point Comfort, TX United States 300 (2) Q3 2017

CPChem Sweeny, TX United States 500 (5) 500 (7) Q3 2017

2018-2019

Sasol Lake Charles, LA United States 420 (2) 450 (4) Q3 2018

Nova* Sarnia Canada 430 (3) Q3 2018

Shell* Marcellus United States 500 (3) 1000 (4,7) Q3 2019

Ascent (Braskem)* Marcellus United States 1500 (3) 2019

Totals, 000's MT 1420 3698 3535 2000 10,653

*Reported projects not fully verified or approved and not included in IHS capacity database.

**Processes: (1) Autoclave, (2) Tubular, (3) TBA, (4) Gas Phase, (5) Other, (6) Ziegler, (7) PF Loop


Global PE Capacity Additions

18

-4

-3

-1

1

2

4

5

7

8

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Asia/Pacific Africa/ Middle EastNorth America Central Europe/ CISSouth America West EuropeGlobal Demand Change

Million Metric Tons

Forecast


Global PE Domestic Demand

19

82

83

84

85

86

87

88

89

0

20

40

60

80

100

120

140

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

North America South America West EuropeCentral Europe & CIS Middle East & Africa Indian SubcontinentAsia Total Capacity Capacity (inc Hypo)Operating Rate

Million Metric Tons Operating Rate, Percent

Forecast


All PE Global Net Trade

20

-25

-20

-15

-10

-5

0

5

10

15

20

25

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Asia (ex China) China Europe & CIS N.America Middle East Other

Net trade, Million Metric Tons

Exports

Imports

Forecast

© 2014, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent. 21

-400

-200

0

200

400

600

800

1000

1200

1400

1600

janv.-2009 janv.-2010 janv.-2011 janv.-2012 janv.-2013 janv.-2014

Margin WEP HDPE Blow Moulding Contract

Margins, Euros per Metric Ton

Forecast

HDPE Price and Margin

Contract price, Euros per Metric Ton


New PP Plants in China

22

Fushun PC (300kt)

Datang Int'l Power (500kt)

Sichuan PC (450kt)

Ningxia Refinery (100kt)

SINOPEC Wuhan (400kt)

Shanghai PC (200kt)

Daqing Refinery (300kt)

Hohhot Refining (150kt)

Sinopec BeiHai PC (200kt)

Yulin Energy & Chemical Co. (600kt)

Luoyang PC (140kt)

PuCheng Clean Energy (400kt)

Hebei Haiwei (300kt)

Ningbo Heyuan Chemical (300kt)

Shaanxi Yanchang (250kt)

Yankuang Guohong Chem. (300kt)

Shanxi Coking Corp. (300kt)

Sinopec-KPC PC JV (745kt)

CNOOC & Shell PC (700kt)

Yili Meidianhua (300kt)

Guangzhou PC (200kt)

Maoming PC (200kt)

Qinghai Salt (160kt)

Shenhua Ningmei (500kt)

SINOPEC Zhijin (300kt)

Shenhua Xinjiang (450kt)

2012

2013

2014

2015

2016

2017

Shandong Shenda (200kt)

Huating Coal Group (200kt)

Ningxia Yongda PC (120kt)

Baofeng Energy (300kt)

Jiutai Energy (IM) (300kt)

Sinopec /Wanbei JV (300kt)

Fujian ZhongJiang PC (350kt)

Fujian Zhongjing PC (350kt)

China Coal Crop. Yuheng (300kt)

Qingdao Ref&Chem (350kt)

Zhongtian Hechuang (700kt)

Shenhua Xiwan (380kt)

CPI/Total JV (400kt)

Sinopec Hainan R&C (400kt)

Yangzijang 400 KT


PP Expansions in Middle East and Africa

Company Related to Country Capacity (kt) Timing

Saudi Polymers CPC Saudi Arabia 400 Q1 2013

Borouge Borealis UAE 960 Q3 2014

Total Polypropylene Net Capacity Increase 1360

Middle East Tsunami becomes a Ripple


PP Capacity Build Mainly In China

24

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

-2,0

-1,0

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

North America South America West Europe

Africa/Middle East Indian Sub. Northeast Asia

Southeast Asia Global Demand Growth

Demand, Million Metric Tons Capacity, Million Metric Tons

Forecast


Global PP Domestic Demand

25

79

80

81

82

83

84

85

86

87

0

10

20

30

40

50

60

70

80

90

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

North America South America West Europe

Central Europe & CIS Middle East & Africa Indian Subcontinent

Asia Total Capacity Capacity (inc Hypo)

Operating Rate

Million Metric Tons Operating Rate, Percent

Forecast


All PP Global Net Trade

26

-10

-8

-6

-4

-2

0

2

4

6

8

10

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Asia (ex China) China Europe & CIS N.America Middle East Other

Net trade, Million Metric Tons

Exports

Imports

Forecast


-200

-100

0

100

600

800

1000

1200

1400

1600

1800

janv.-2009 janv.-2010 janv.-2011 janv.-2012 janv.-2013 janv.-2014

WEP Margin WEP PP Contract

27

PP Price and Margin

Contract Price, Euros Per Metric Ton Margin, Euros Per Metric Ton

Forecast


PE

• China adds most PE plants in 2014-2016 → stagnant imports

• NAM (shale) leads expansion 2016-2020 → exports

• Rationalization in Europe – 1 Mta in 2013/14 and in 2016-2019

• Slow down in ME expansions

PP

• China adds even more PP plants in 2014-2016 → less imports

• NAM builds less PP, but no focus on exports

• Rationalization in Europe (but more modest)

• No expansions in ME

Conclusions PE and PP


• Aging asset base – last cracker built in 1994

• Ethane imports from NAM may give some PE producers

some cost advantage

• Shale gas development in Europe: too little too late

But:

• Imports can not serve every segment – slow process

• Increasing import duties for GCC producers 1st Jan 2014

• Improving economy in Europe in 2014

So what about Europe?

Long Term – Gradual Decline

Short Term – Improvement

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