© 2014 Platts, McGraw Hill Financial. All rights reserved.

Asia SM outlook in Q2-Q3 2015: Will Bullish SM Market Continue?

Michelle Kim, Senior Editor, Platts Petrochemical Bao Ying Ng, Managing Editor, Platts Petrochemical May 8, 2015, Friday APIC conference, Seoul, Korea

1

© 2014 Platts, McGraw Hill Financial. All rights reserved.

Asia SM outlook in Q2-Q3 2015: Will Bullish SM Market Continue?

Michelle Kim, Senior Editor, Platts Petrochemical

May 8, 2015, Friday

APIC conference, Seoul, Korea

2

Asia SM Price Review

Supply Drivers

Feedstock Drivers

Demand Drivers

Macro-Economic Drivers

Conclusion: Q2-Q3 2015 Asian SM Outlook

3

Agenda 1

4

SM rallied the most in all aromatics

400

600

800

1000

1200

1400

1600

1/2/2015 2/2/2015 3/2/2015 4/2/2015

Styrene FOB Korea Marker

Benzene FOB Korea Marker

Ethylene CFR NE Asia

54%

43%

23%

As of Apr 30 2015

Source: Platts

5

Q1: SM bottoms out on Massive turnarounds, recovering crude

Quarter Q1

Situation Rising

Demand (Bull)

①EPS peak season in Spring ②Rising ABS OR ③Relatively low SM inventory in China ④Steady demand from ABS/HIPS

Supply (Bull)

①Massive TA in S. Korea ②Tight EU market(Asia->EU arb workable) ③Delays in new SM SU ④Credit concerns in China tightens USD SM offers

Feedstock (Bull)

①Steady & recovering BZ and C2

Demand (Bear)

①Inactive stockpiling during LNY

Supply (Bear)

①US-Asia arbitrage opens Jan-Feb short period ②Good EBSM margin generates more SM

700

900

1,100

1,300

1/2/2015 2/2/2015 3/2/2015

Styrene CFR China Marker

Styrene FOB Korea Marker

Linear (Styrene CFR China Marker)

$/MT SM Prices in Q1 2015

Flips to BW Feb 27

Massive TA in Mar-

May supported SM

Falls hit by weaker

crude again

Source: Platts

Hit 6-year low

6

Early Q2: SM firms up on Bullish China domestic SM on low inventory, Rising EPS OR amid Massive turnarounds, firm feedstock, tight US SM supply

Quarter Early Q2

Situation Sharply Rising

Demand (Bull)

①Improving EPS OR in peak spring season ②Worse than expected China GDP ③Low SM inventory in China ④Restocking demand in China

Supply (Bull)

①Massive TA in S. Korea ②Tight US SM supply on firm EU SM ③TA in Japan, permanent SD NO

Feedstock (Bull)

①BZ arbitrage open Asia-US ②Bullish ethylene

Demand (Bear)

①Weak demand from GPPS/HIPS/ABS

Supply (Bear)

①Good EBSM margin can generate more output 1,100

1,300

Styrene CFR China Marker

Styrene FOB Korea Marker

Linear (Styrene CFR China Marker)

$/MT SM Prices in Early Q2 2015

Bullish China domestic SM,

Rising EPS OR, Recovering

crude, and lack of US SM on

firm US SM market amid

massive TA season

supported SM

Source: Platts

7

Asia SM closely couples with crude market

500

700

900

1100

1300

1500

1700

1900

30

50

70

90

110

130

150

170

190

210

1/4/2014 2/4/2014 3/4/2014 4/4/2014 5/4/2014 6/4/2014 7/4/2014 8/4/2014 9/4/2014 10/4/2014 11/4/2014 12/4/2014 1/4/2015 2/4/2015 3/4/2015

Front month ICE Brent at Singapore

Styrene CFR China Marker

Linear (Styrene CFR China Marker)

$/MT

Decoupling on firm benzene, stockpiling ahead of new year

Decoupling on massive TA, relatively low inventory and recovering demand

Coefficient of Correlation: 0.86 Source: Platts

8

Relatively low SM inventory in China supported SM over Feb-Mar in 2015

Source: Platts

500

600

700

800

900

1000

1100

1200

1300

1400

0.00

50000.00

100000.00

150000.00

200000.00

250000.00

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

SM inventory in E. China 2011

2012

2013

2014

2015

5-Year Average

SM CFR China Monthly Average

9

Firm domestic SM market widens spread of RMB/USD SM prices

Source: Platts

700

800

900

1000

1100

1200

1300

1400

1500

1600

1/2/2015 2/2/2015 3/2/2015 4/2/2015

Styrene CFR China Marker

China Domestic ImportParity

Spread was $104.95/mt Jan 15 2015

10

Massive Turnarounds in Mar-May in S. Korea supported SM in Q1

Company Location Capacity (kt/year)

Timing Estimated Loss(kt)

Lotte Chemical Daesan 580 Mar 20, 3 weeks 36.24

LG Chem Yeosu 500 Apr, 1 month 41.66

LG Chem Daesan 180 Mar-Apr, 1 month 15

Samsung Total Daesan 650 Apr, 30-45 days 54.16~81.14

Samsung Total Daesan 280 Apr, 30-45 days 23.3~34.95

YNCC Yeosu 290 May, 1 month 24.1

SKGC Ulsan 420 No TA 0

SKGC Ulsan 350 Idled since 2014 29.16

Total Estimated Loss

Almost 76% of total annual capacity in S. Korea affected

223.62~262.25 kt

Source: Platts

11

Bullish Feedstock BZ/Ethylene Supports SM

400

600

800

1000

1200

1400

1600

1/2/2015 2/2/2015 3/2/2015 4/2/2015

Styrene FOB Korea Marker

Benzene FOB Korea Marker

Ethylene CFR NE Asia

54%

43%

23%

As of Apr 30 2015

Source: Platts

12

SM Price Drivers-EPS, GPPS, BZ, HIPS and TL affect the most

Source: Platts

EPS FR, 0.98 GPPS , 0.97

Benzene, 0.96

HIPS, 0.95

Toluene, 0.90

ICE Brent Future, 0.86

Naphtha CIF Japan, 0.85

Ethylene, 0.85

Paraxylene, 0.75

ABS, 0.71

0.50

0.60

0.70

0.80

0.90

1.00

1.10Coefficient of correlation

Asia SM Price Review

Supply Drivers

Feedstock Drivers

Demand Drivers

Macro-Economic Drivers

Conclusion: Q2-Q3 2015 Asian SM Outlook

13

Agenda 2

14

Lagging Styrene Global Capacity Expansion

Source: KPIA

0

5000

10000

15000

20000

25000

30000

35000

40000

2011 2012 2013 2014 2015 2016 2017

North America Middle East Europe Asia Total

Region North America Middle East Europe Asia Total

Average Growth Rate (Y-o-Y) (2011-2017)

0% 0% -1% 1.9% 1.1%

New SM startups ease supply tightness?

15

Country Company Location

SU 2015 2016 2017

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

China

Dongfang CNOOC-Shell

Hainan Q1-2 120

Shandong Yuhuang Shandong Q1-2 200

Sinopec Hainan Q1 160

Abel Taxing Jiangsu H2 500

Jinmen Hubei 2015 80

Ningbo Keyuan 2015 100

Ningbo Daxie Zhejiang 2016 280

Tianjing Chem Tianjin 2016 100

Ningbo Keyuan Zhejiang 2016 100

China Total 1160 480

Total 1160 480

Total SM start up in 2015: 1160 Kt

But, many plans delayed

Source: Platts

Lagging Downstream PS/ABS SU plan in 2015: 650 kt/year SM long

16

Country Company Location SU 2015 2016 2017

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

China

Jinchen Jiangsu 2015 80

Zhenjiang Chimei Jiangsu H1 150

Yashide Jiangsu Jun-Jul 60

Saibaolong Jiangsu 2015 100

LG Huizhou 2016 150

China Total 210 330

Total 210 330

Total PS start up in 2015: 210 Kt

Total SM start up in 2015: 1160 Kt

-Estimated SM requirement:210 kt

=950 kt long in SM

Source: Platts

ABS

PS

China imports S. Korea-origin SM the most in 2014

Source: China Customs, Korea Customs

Unit: mt

38% China’s SM Imports

S. Korea 1,415,022

Taiwan 468,557

Japan 465,913

Saudi Arabia 444,304

Iran 285,054

Kuwait 208,206

US 152,262

Total 3,676,954

25%

4%

S. Korea SM exports in 2014: 97% went to China

Source: China Customs, Korea Customs

Unit: mt

97%

S. Korea’s SM Exports

China 1,422,440

Hong Kong 25,880

Taiwan 24,932

Total 1,473,655

18%

S. Korea’s SM Imports

Japan 565,085

US 151,656

Saudi Arabia 72,092

Total 842,793

9%

67%

Tight US SM supply to Asia

Source: Platts

-300

-200

-100

0

100

200

300

400

500

600

0

200

400

600

800

1000

1200

1400

1600

1800

1/22/2009 1/22/2010 1/22/2011 1/22/2012 1/22/2013 1/22/2014 1/22/2015

Styrene FOB Korea Marker US-Asia SM arbitrage window

20

Firm Europe SM hampers US SM to come to Asia

-300

-200

-100

0

100

200

300

400

500

600

0

200

400

600

800

1000

1200

1400

1600

1800

2000

1/2/2009 1/2/2010 1/2/2011 1/2/2012 1/2/2013 1/2/2014 1/2/2015

Styrene FOB ARA US-Europe SM arbitrage window

Source: Platts

Annual China SM Imports by Region

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

2010 2011 2012 2013 2014 2015

Korea

US

Saudi Arabia

Kuwait

Iran

Source: China Customs, Korea Customs

52.0 46.0 48.0 49.0 56.0 56.6

5.5 5.7 7.6 9.3

6.1 3.4

25.7 24.4

26.3 19.2 17.7 22.0

8.4 7.3

5.5 7.6 8.3 12.3 7.8

16.4 12.5 15.1 11.4 5.8

0%

20%

40%

60%

80%

100%

2010 2011 2012 2013 2014 2015

Korea

US

Saudi Arabia

Kuwait

Iran

US-origin decreasing, Korea Kuwait origin increasing

22

Will good EBSM margin add downward pressure?

Source: Platts

-300

-200

-100

0

100

200

300

400

500

600

700

0

200

400

600

800

1000

1200

1400

1600

1800

2000

1/4/2010 1/4/2011 1/4/2012 1/4/2013 1/4/2014 1/4/2015

Styrene FOB Korea Marker EBSM margin

Asia SM Price Review

Supply Drivers

Feedstock Drivers

Demand Drivers

Macro-Economic Drivers

Conclusion: Q2-Q3 2015 Asian SM Outlook

23

Agenda 3

© 2014 Platts, McGraw Hill Financial. All rights reserved.

Feedstock drivers: Asian benzene market update

Ng Baoying, Managing Editor, Platts

May 8, 2015, Friday

APIC conference, Seoul, Korea

24

• Introduction to Platts

• Benzene, PX price volatility end-2014 to 2015

• Paraxylene fundamentals and outlook

• Benzene fundamentals and outlook

25

Agenda

26

Introducing Platts

Platts is a commodity information and data provider founded by Warren Platt over 100 years ago, and owned by McGraw Hill Financial, a leading provider of ratings, benchmarks and analytics.

Price Reporting Assessments

Market Reports Breaking News

$

!

• Platts is completely independent

• Our processes are open and transparent

27

What kind of companies subscribe to Platts?

A diverse range of companies

• Majors like BP, Shell, ExxonMobil and Chevron

• Oil trading houses like Glencore, Vitol, Cargill

• State-owned companies Sinopec, Petronas, ADNOC

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Singapore

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AUS

28 > 900 staff around the world

29

Platts Market On Close (MOC) is not an average

116

117

118

119

120

121

122

Market on close

assessment

Average

Time

30

How does Platts engage the market?

Phone calls IM: Yahoo/QQ

Electronic mails

HEARDS: PCA 005

Platts Market on Close Process

Market on Close assessment process

31

Part of the price discovery process at Platts is the Market on Close assessment process.

At 3:30-4:00 pm Singapore time daily, Platts invites firm bids and offers from approved market participants.

During 4:00-4:30 pm Singapore time, participants are allowed to increase or decrease their bids and offers.

These price movements are tested by the market as they are open bids and offers.

After 4:30 pm Singapore time, no new information will be accepted and the numbers on the MOC process will form an important basis for the final assessment of the day.

04/27/2015 PC0005 Heard 280: Benzene bid/offer summary ON CLOSE: No bids/No offers

04/27/2015 PC0005 Heard 276: Benzene [NON MOC]: June/July spread offer at minus $13/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 270: Benzene [NON MOC]: June/July spread bid at minus $17/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 269: Benzene [NON MOC]: H2 May/June spread bid at minus $23/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 268: Benzene [NON MOC]: July offer at $888/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 267: Benzene [NON MOC]: June offer at $875/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 266: Benzene [NON MOC]: H1 June offer at $873/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 234: Benzene bid/offer summary: No bids/No offers

04/27/2015 PC0005 Heard 218: Benzene: H1 Jun FOB SEA pegged at FOB Korea minus $11/mt

04/27/2015 PC0005 Heard 216: Benzene: H2 May FOB SEA pegged at FOB Korea minus $11/mt

04/27/2015 PC0005 Heard 214: Benzene: H1 May FOB SEA pegged at FOB Korea minus $11/mt

04/27/2015 PC0005 Heard 213: Benzene: H2 Jul pegged at $888/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 212: Benzene: H1 Jul pegged at $885/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 211: Benzene: H2 Jun pegged at $876/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 210: Benzene: H1 Jun pegged at $874/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 209: Benzene: H2 May pegged at $863/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 208: Benzene: H1 May pegged at $861/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 206: Benzene: June/July spread offer at minus $12/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 205: Benzene: June/July spread bid at minus $17/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 204: Benzene: H2 May/June spread bid at minus $23/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 203: Benzene: July offer at $895/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 202: Benzene: July bid at $880/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 201: Benzene: June offer at $883/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 200: Benzene: June bid at $865/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 199: Benzene: H1 June offer at $876/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 97: Benzene: H1 Jun FOB SEA pegged at FOB Korea minus $11/mt

04/27/2015 PC0005 Heard 96: Benzene: H2 May FOB SEA pegged at FOB Korea minus $11/mt

04/27/2015 PC0005 Heard 95: Benzene: H1 May FOB SEA pegged at FOB Korea minus $11/mt

04/27/2015 PC0005 Heard 94: Benzene: H2 Jul pegged at $888/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 93: Benzene: H1 Jul pegged at $885/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 92: Benzene: H2 Jun pegged at $876/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 91: Benzene: H1 Jun pegged at $874/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 90: Benzene: H2 May pegged at $863/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 89: Benzene: H1 May pegged at $861/mt FOB Korea 3kt

04/27/2015 PC0005 Heard 81: Benzene: June bid at $883/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 80: Benzene: June bid at $860/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 78: Benzene: June/July spread bid at minus $17/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 77: Benzene: H2 May/June spread bid at minus $25/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 76: Benzene: H1 June/July spread bid at minus $18/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 75: Benzene: H1 June/H2 June spread bid at minus $5/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 74: Benzene: July bid at $875/mt FOB Korea 3kt bb YOU

04/27/2015 PC0005 Heard 73: Benzene: June bid at $857/mt FOB Korea 3kt bb YOU

“Heards” propel market interface

PX: Bid July at $1,220/mt, CFR nb/tw/dl, Asia origin,

origin excluding all ME, India and China, T/T 30 days

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

PX:Jun/Jul bid heard at $13/mt CFR TND, Asia origin

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

PX: Offer Any July at $1,238/mt, CFR nb/tw/dl, Asia origin,

origin excluding all ME, India and China, L/C 30 days, valid for 5 min

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

---------after MOC peg

PX: Offer Any July at $1,240/mt, CFR nb/tw/dl, Asia origin,

origin excluding all ME, India and China, L/C 30 days, valid for 5 min

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

PX: Bid 1H July at $1,220/mt, CFR nb/tw/dl, Asia origin,

origin excluding all ME, India and China, L/C 30 days

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

---------after morning peg

PX: Jul bid heard at $1,215/mt CFR TND, Asia origin, T/T 30 days

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

PX: Bid 1H July at $1,210/mt, CFR nb/tw/dl, Asia origin,

origin excluding all ME, India and China, L/C 30 days

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

PX: H2 Jun bid heard at $1,225/mt CFR TND, Asia origin, 5kt

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

PX: H1 Jun offer heard at $1,238/mt CFR Ningbo, Asia origin, if form e, +1.75% return

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

PX: H1 Jul bid heard at $1,220/mt CFR Ningbo/Dalian/Jiangyin, Asia origin(exluding India/China/ME and Iran), L/C 30 days

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

PX: H2 Jun bid heard at $1,225/mt CFR TND, Asia origin, 5kt

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

PX : 1h June offer at 1236 cfr NB, asia, if form e, +1.75% return

(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;

yahoo IM: platts_asia_px)

Platts benzene assessments

33

Daily: FOB Korea, FOB SEA

Weekly: CFR Taiwan

Prices based on latest information sourced from the market, up to the close of the assessment window at 4:30 pm Singapore time.

More information can be found on the Platts Petrochemicals Methodology Guide http://www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/asian-petrochemicals-methodology.pdf

Platts PX assessments

34

Daily: FOB Korea, CFR Taiwan/China

Weekly: CFR Southeast Asia

Prices based on latest information sourced from the market, up to the close of the assessment window at 4:30 pm Singapore time.

More information can be found on the Platts Petrochemicals Methodology Guide http://www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/asian-petrochemicals-methodology.pdf

© 2014 Platts, McGraw Hill Financial. All rights reserved.

Benzene, paraxylene price volatility

35

36

Crude prices sink in 2015

Front month ICE Brent crude futures relatively

stable in 2013

Brent tumbles in H2 2014

Brent begins recovery in

2015

$/b

0

20

40

60

80

100

120

140

ICE Brent Settlement Mo01

37

China’s annual GDP % growth seen slowing in the coming years

0

2

4

6

8

10

12

00-10 (a) 2011 2012 2013 2014e 2015f 2016f 2017f

GDP % growth, annual

Source: World Bank Notes: e-estimate, f-forecast

38

Asia benzene volatility returns

Asian benzene fluctuates within

$1,100-1,500/mt range in 2013

Range widens to $600-1,450/mt in

2014.

2015 benzene ranges from $500-870/mt

$/mt

13 Jan’15: $544/mt

0

200

400

600

800

1000

1200

1400

1600

Benzene FOB Korea marker

39

Asia PX rising from 6-year lows?

$/mt

600

800

1000

1200

1400

1600

1800

Paraxylene FOB Korea Marker

Asian Contract Price reached major settlement only two times in 2014: March and October • Major settlement also reached for February 2015 at $710/mt CFR Asia.

• Increased price/market volatility main reason for lack of settlements.

Term contract premiums flipped to discount for 2015 on increased supply/price fluctuations • Term discounts for PX Asian Contract Price participating buyers were set

at $4/mt on a CFR basis, while discounts for non-ACP buyers were agreed at $2/mt, CFR.

• In comparison, cash differentials for term year 2014 ranged from parity to a premium of $2/mt.

40

Volatile PX prices: ACP non-settlements and decreasing term contract premiums

© 2014 Platts, McGraw Hill Financial. All rights reserved.

Paraxylene: A rebound from six-year lows

41

42

PX-MX margins shrinking

Source: Platts data

0

200

400

600

800

1000

1200

1400

1600

1800

PX-MX spread

Paraxylene FOB Korea Marker

Isomer-MX FOB Korea Marker

0

200

400

600

800

1000

1200

1400

1600

1800

PX-naphtha spread

Paraxylene FOB Korea Marker

Naphtha C+F Japan Cargo

43

PX-naphtha spread rebounds

Source: Platts data

44

PX-toluene spread

Source: Platts data

0

200

400

600

800

1000

1200

1400

1600

1800

PX-toluene spread

Toluene FOB KoreaMarker

45

PX plant start-ups over 2014-2017

Country Company Location Quarter 2014 2015 2016 2017

BZ PX BZ PX BZ PX BZ PX

China Sinopec Hainan Q1 600

Ningbo Zhongjin Ningbo Q1 <200 1600

PetroChina Pengzhou H1 680

Sinopec Zhenhai - 1600

China Total 0 2880 200 1600 0 0 0 0

S.Korea SK Innovation (July) Incheon Q3 450 1300

SK Global Chemical/JX Nippon Oil (June)

Ulsan Q3 300 1000

Samsung Total (June) Daesan Q3 420 1000

GS Caltex/Taiyo Oil/Showa Shell

Yeosu - 400 1000

S. Korea Total 1170 3300 400 1000

India ONGC (Aug/Sep) Mangalore Q3 270 900

Reliance Dahej, Gujarat Q1 500 2200

Indian Oil Group Vadodara, Gujarat

Q1 400

India Total 270 900 500 2200

SEA Jurong Aromatics (Q3) Singapore Q2 400 800

PetroViet Vietnam Q2 240 700

PTT Global Chemicals Thailand

SEA Total 400 800 240 700

Total PX start up in 2015: 3.8 million mt

46

New PTA plant start ups Country Company Location 2013 2014 2015 2016

Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

China Xianglu Zhangzhou. Gulei 3,000 1,500

Shenghong Jiangsu, Lianyungang

1,500

Yisheng No. 4 Ningbo, Zhejiang 2,200

BP No. 3 Zhuhai, Guangdong 1,250

Hengli No. 3 Dalian, Liaoning 2,200

Sanfangxiang No. 2 Jiangyin, Jiangsu 1,200

Chengda Chendu, Sichuan 1,200

Yisheng No. 2 Yangpu, Hainan 2,200

China Prosperity No. 2 Jiangyin, Jiangsu 2,200

Jiaxing Petrochemical No. 2

Jiaxing, Zhejiang 1,500?

Formosa No. 2 Ningbo, Zhejiang 1,500

Mitsubishi No. 2 Ningbo, Zhejiang 1,200

Sinopec Yizheng 2,000

Shaoxing Yuandong Shaoxing

China Total 10,600 5,650 8,400

India Reliance Dahej, Gujarat 1,200 1,200

JBF Mangalore 1,250

Indorama Ventures Tamil Nadu 1,000

Taiwan OPTC No. 3 Kuan Yin, Taoyuan 1,500

Total 10,600 10,800 9,400

Total PTA start up in 2015 10.8 mil mt

47

PTA prices fell steadily since 2011, only to rebound recently

Source: Platts data

400

500

600

700

800

900

1000

1100

1200

1300

PTA CFR China

48

China PX imports increasing

Source: Chinese Customs

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

China PX imports 2013-2014

49

US-to-China PX shipments

Source: Chinese Customs:

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Jan

-12

Feb

-12

Mar

-12

Ap

r-1

2

May

-12

Jun

-12

Jul-

12

Au

g-1

2

Sep

-12

Oct

-12

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Mar

-13

Ap

r-1

3

May

-13

Jun

-13

Jul-

13

Au

g-1

3

Sep

-13

Oct

-13

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

De

c-1

4

Jan

-15

Feb

-15

China imports of US origin PX (mt)

• New PTA capacity outstrips rise in PX

• Operating rates at existing and new downstream purified terephthalic acid plants sail up as one of key factors for paraxylene demand in Asia this year, given the addition of over 13 million mt/year of PTA capacity.

• New PTA capacity outstrips rise in PX capacity

• Heavy PX turnarounds to support Q2

• Slower Chinese economic growth lends uncertainties to PTA, PET runs

• New PTA capacity may not necessarily equate to a sharp overall increase in PX demand across Asia, as outlook for global demand and operating rates at downstream polyester and PET remains uncertain amid a slowdown in China's economic growth

50

PX market outlook

© 2014 Platts, McGraw Hill Financial. All rights reserved.

Benzene: Is the price rebound here to stay?

51

0

200

400

600

800

1000

1200

1400

1600

Benzene FOB Korea marker

52

Asia benzene volatility returns

Asian benzene fluctuates within

$1,100-1,500/mt range in 2013

Range widens to $600-1,450/mt in

2014.

2015 benzene ranges from $500-870/mt

$/mt

13 Jan’15: $544/mt

53

Benzene-SM spread falls from mid-2014 highs

$/mt

0

200

400

600

800

1000

1200

1400

1600

1800

2000

12/1/2008 12/1/2009 12/1/2010 12/1/2011 12/1/2012 12/1/2013 12/1/2014

Styrene-benzene spread

Benzene FOB Korea Marker

Styrene FOB Korea Marker

54

Downstream view: Benzene-phenol spread struggles to pull itself into breakeven territory

-200

300

800

1300

1800

2300

2800

3300

3800

-200

300

800

1300

1800

2300

1/3/2007 1/3/2008 1/3/2009 1/3/2010 1/3/2011 1/3/2012 1/3/2013 1/3/2014 1/3/2015

Benzene FOB Korea

Phenol CFR China weekly

Phenol-benzene spread

Breakeven

55

Downstream view: Benzene-caprolactam spread in the red

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

0

500

1000

1500

2000

2500

3000

3500

Benzene FOB Korea marker

Caprolactam CFR Far East Asia weekly

Caprolactam-benzene spread

56

Upstream view: Benzene-toluene spread narrows

-200

-100

0

100

200

300

400

500

600

700

0

200

400

600

800

1000

1200

1400

1600

Benzene-Toluene spread

Benzene FOB Korea Marker

Toluene FOB Korea Marker

-200

0

200

400

600

800

1000

1200

1400

1600

1/3/2007 1/3/2008 1/3/2009 1/3/2010 1/3/2011 1/3/2012 1/3/2013 1/3/2014 1/3/2015

Benzene-naphtha spread

Benzene FOB Korea Marker

Naphtha C+F Japan Cargo

57

Upstream view: Benzene-naphtha spread

58

US-Asia benzene spread narrows

-200

0

200

400

600

800

1000

1200

1400

1600

1800

1/2/2009 1/2/2010 1/2/2011 1/2/2012 1/2/2013 1/2/2014 1/2/2015

Benzene FOB Korea Marker $/mt

Benzene FOB USG Mo02 $/mt

US-Asia spread $/mt

Korea-USG 10 kt

59

US-Asia benzene margin falls below freight

-100

-50

0

50

100

150

200

250

300

350

400

1/2/2009 1/2/2010 1/2/2011 1/2/2012 1/2/2013 1/2/2014 1/2/2015

US-Asia spread $/mt

Korea-USG 10 kt

60

S. Korea exports to US steady S. Korea exports to China begin to rise

-350,000

-300,000

-250,000

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

Jan

-12

Feb

-12

Mar

-12

Ap

r-1

2

May

-12

Jun

-12

Jul-

12

Au

g-1

2

Sep

-12

Oct

-12

No

v-1

2

De

c-1

2

Jan

-13

Feb

-13

Mar

-13

Ap

r-1

3

May

-13

Jun

-13

Jul-

13

Au

g-1

3

Sep

-13

Oct

-13

No

v-1

3

De

c-1

3

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

De

c-1

4

Jan

-15

South Korea exports to US

South Korea exports to China

South Korea exports to US

South Korea exports to China

61

Benzene plant start-ups over 2014-2017

Country Company Location Quarter 2014 2015 2016 2017

BZ PX BZ PX BZ PX BZ PX

China Sinopec Hainan Q1 600

Ningbo Zhongjin Ningbo Q1 <200 1600

PetroChina Pengzhou H1 680

Sinopec Zhenhai - 1600

China Total 0 2880 200 1600 0 0 0 0

S.Korea SK Innovation (July) Incheon Q3 450 1300

SK Global Chemical/JX Nippon Oil (June)

Ulsan Q3 300 1000

Samsung Total (June) Daesan Q3 420 1000

GS Caltex/Taiyo Oil/Showa Shell

Yeosu - 400 1000

S. Korea Total 1170 3300 400 1000

India ONGC (Aug/Sep) Mangalore Q3 270 900

Reliance Dahej, Gujarat Q1 500 2200

Indian Oil Group Vadodara, Gujarat

Q1 400

India Total 270 900 500 2200

SEA Jurong Aromatics (Q3) Singapore Q2 400 800

PetroViet Vietnam Q2 240 700

PTT Global Chemicals Thailand

SEA Total 400 800 240 700

Total BZ start up in 2015: 700,000 mt

US Shifts To Light Feeds

62

• Pygas to decrease 40%

• Crude C4 to decrease 20%

• Propylene to decrease 20%

• 69% growth in ethane based output

• 32% decrease in naphtha based

output

Source: Platts Petrochemical Analytics

Yields From Steam Crackers Vary With The Feedstock

63

US Benzene Production At Cracker

64

US Benzene Demand Will Outpace Supply, Increasing Volatility & Dependence On Imports

65 Source: Platts Petrochemical

• Benzene supply in Asia to lengthen as more new plants start up

• Asia to take up some of the demand with new downstream plants, like in phenol.

• US expected to buy Asian benzene to fulfill its needs in the long run

66

Benzene outlook

Asia SM Price Review

Supply Drivers

Feedstock Drivers

Demand Drivers

Macro-Economic Drivers

Conclusion: Q2-Q3 2015 Asian SM Outlook

67

Agenda 4

68

Northeast Asia EPS is a major epicenter of SM demand

53%

7%

11%

6%

2%

18%

3%

Global SM Demand by Region in 2015

NEA SEA NA SA

ME Europe Others

31%

25%

18%

8%

18%

Asia SM Demand by Derivatives

EPS ABS

GPPS/HIPS SBR

Others

Source: KPIA, Platts

69

Will China buy more SM in Q2-Q3 2015? -Monthly China imports, Korea exports to China: Stable

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

S. Korea Monthly SM Exports to China

2011

2012

2013

2014

2015

Average

Source: China Customs, Korea Customs

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

China Monthly SM Imports: Jan Mar above 5-year average

2011

2012

2013

2014

2015

Average

70

EPS: China Monthly OR and Exports -Stable to higher in Q1

0

10

20

30

40

50

60

70

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

China Monthly EPS OR

2013 2014 2015 3-Year AverageSource: Market

0

5000

10000

15000

20000

25000

30000

35000

40000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

China Monthly EPS Exports

2012

2013

2014

2015

3-year average

Source: China Customs, Korea Customs

Coefficient of Correlation:0.98

71

PS: Monthly China GPPS/HIPS Imports -GPPS: Weak but improving, HIPS: High

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

China Monthly HIPS Imports

2010

2011

2012

2013

2014

2015

5-year average

Coefficient of Correlation:0.95

Source: China Customs, Korea Customs

0

20,000

40,000

60,000

80,000

100,000

120,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

China Monthly GPPS Imports

2010

2011

2012

2013

2014

2015

5-year average

Coefficient of Correlation:0.97

72

ABS: Monthly China ABS Imports -Jan: Higher than 5-yr avg, Mar: Higher than 2014

0

50,000

100,000

150,000

200,000

250,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

China Monthly ABS Imports

2010

2011

2012

2013

2014

2015

5-year average

Source: China Customs, Korea Customs

73

EPS: Monthly China Real Estate Investment –Increasing but slowing down growth

Source: China National Bureau of Statistics

-5

0

5

10

15

20

25

30

0

2000

4000

6000

8000

10000

12000

Jan/Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2013 Real Estate Investment(100 mil Yuan) 2014 Real Estate Investment(100 mil Yuan)

2015 Real Estate Investment(100 mil Yuan) 2013 Growth Rate(Y-o-Y %)

2014 Growth Rate(Y-o-Y %) 2015 Growth Rate(Y-o-Y %)

+10% +6%

74

EPS: Sales of Cement sharply declined in Q4 2014

-3

-1

1

3

5

7

9

11

13

15

0

10000

20000

30000

40000

50000

60000

70000

80000

Q1 Q2 Q3 Q4

2012 Sales of Cement(10000 tons) 2013 Sales of Cement(10000 tons)

2014 Sales of Cement(10000 tons) 2012 Growth Rate(Y-o-Y %)

2013 Growth Rate(Y-o-Y %) 2014 Growth Rate(Y-o-Y %)

-2.3% Source: China National Bureau of Statistics

75

ABS/HIPS: China refrigerator output stable

-30

-10

10

30

50

70

90

110

130

150

0

200

400

600

800

1000

1200

1400

Jan/Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2013 Output of Home Refrigerators(10000 sets) 2014 Output of Home Refrigerators(10000 sets)

2015 Output of Home Refrigerators(10000 sets) 2013 Growth Rate(Y-o-Y %)

2014 Growth Rate(Y-o-Y %) 2015 Growth Rate(Y-o-Y %)

-0.008% Source: China National Bureau of Statistics

76

ABS/HIPS: China air-conditioner output declined, growth rates slowing down

-40

-20

0

20

40

60

80

100

120

0

500

1000

1500

2000

2500

Jan/Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2013 Output of Home Refrigerators(10000 sets) 2014 Output of Home Refrigerators(10000 sets)

2015 Output of Home Refrigerators(10000 sets) 2013 Growth Rate(Y-o-Y %)

2014 Growth Rate(Y-o-Y %) 2015 Growth Rate(Y-o-Y %)

Source: China National Bureau of Statistics -7%

Asia SM Price Review

Supply Drivers

Demand Drivers

Feedstock Drivers

Macro-Economic Drivers

Conclusion: Q2-Q3 2015 Asian SM Outlook

77

Agenda 5

China: Tight credit market will curb purchasing power in property market?

Source: China National Interbank Funding Center

4.6000

4.6500

4.7000

4.7500

4.8000

4.8500

4.9000

4.9500

5.0000

1/4/2015 1/11/2015 1/18/2015 1/25/2015 2/1/2015 2/8/2015 2/15/2015 2/22/2015 3/1/2015 3/8/2015 3/15/2015 3/22/2015 3/29/2015

Rising Shibor Rates in China

3M 6M 9M 1Y

79

China: Slowing China GDP growth rate & PMI limits SM demand

-1.00%

4.00%

9.00%

14.00%

19.00%

24.00%

0

2,000

4,000

6,000

8,000

10,000

kt

China SM Demand(kt)

China GDP Growth Rate(%)

China SM Demand Growth Rates(%)

Source: World Bank, HSBC, Markit, KPIA

41.0

43.0

45.0

47.0

49.0

51.0

53.0

55.0

57.0

Jan

09

Jun

09

No

v 0

9

Ap

r 1

0

Sep

10

Feb

11

Jul 1

1

Dec

11

May

12

Oct

12

Mar

13

Au

g 1

3

Jan

14

Jun

14

No

v 1

4

Ap

r 1

5

China Monthly PMI

PMI Index

Linear (PMIIndex)

80

Global: Strong USD on tapering QE in US weakens Global Commodities Market Prices(CRB)

Yuan/USD exchange rates in 2014 Commodity CRB Index in 2014

Source: Bloomberg

‘Super Dollar’ trend may continue throughout 2015

Strong USD may press down global commodity market

prices in 2015

81

Energy: US Shale Gas Boom Triggers Output Competition between US and ME which pulls down crude prices

2009 2010 2011 2020 2025 2030 2035 2040

Total World 72.9 74.9 75 82.7 85.5 89.9 94.3 99.1

ME(OECD) 20.8 21.7 23 23.8 25.2 28.4 31.5 34.5

US 5.5 5.6 5.8 9.8 9.3 8.6 8.2 7.8

North America(OECD) 10.8 11.2 11.5 16.8 17 17.1 17.2 17.2

0

5

10

15

20

25

30

35

40

0

20

40

60

80

100

120

Increasing Crude & Condensate Production on shale gas revolution

*Crude and lease condensate includes tight oil, shale oil, extra-heavy oil, field condensate etc.

Source: U.S. Energy Information Administration(EIA)

Unit: million

barrels/day

Asia SM Price Review

Supply Drivers

Demand Drivers

Feedstock Drivers

Macro-Economic Drivers

Conclusion: Q2-Q3 2015 Asian SM Outlook

82

Agenda 6

83

SM Outlook in Q2-Q3 2015: Will Bullish SM market continue?

Period Q2-Q3 2015

Outlook Q2: Steady to Weak Q3: Firm to Stable

Bullish Factors Supply • Tight US-Asia SM supply • Permanent SD of NOC • Japan SM TA in Q2 • Taiwan SM TA in Q3 • Tight credit in China

Demand • Low inventory in China, short-covering • Steady to firm ABS import from China • High ABS OR • Steady to firm HIPS import from China • Increase China EPS exports • Solid refrigerator manufacturing • Steady real estate investment • Seasonal demand from ABS/PS in Q3

Feedstock • Firm ethylene • Stable to firm BZ

Macro-economy • Rebounding crude oil

Bearish Factors Supply • S. Korea SM TA ends • US-Asia SM arbitrage reopens(Asia>EU SM) • Good EBSM margin • Long SM SU balance

Demand • Weak air-conditioner manufacturing • Lackluster GPPS demand • Declining sales of cement

Feedstock n/a

Macro-economy • Tight credit limits purchasing power • Strong Dollar • Lower PMI & GDP growth rate • Output competition between US&ME

But, SM market can be bearish, IF • SM makers

increase OR on better margin

• Crude & Naphtha prices fall sharply

• US SM supply increases

• Global macro-economy weakens

• China’s economy contracts

• Sluggish downstream demand worsen

© 2014 Platts, McGraw Hill Financial. All rights reserved.

Thank you very much! 감사합니다!

Michelle Kim

Senior Editor (SM, ABS, EPS, HIPS, GPPS)

Platts, McGraw-Hill Financial

12 Marina Boulevard 23rd Floor Marina Bay Financial Centre Tower 3 Singapore 018982

Tel: +65-6530 6425 Fax: +65-6532 2700 Yahoo ID: platts_asia_sm

Email: mihee.kim@platts.com website: www.platts.com

84

Ng Bao Ying

Managing Editor(BZ)

Platts, McGraw-Hill Financial

12 Marina Boulevard 23rd Floor Marina Bay Financial Centre Tower 3 Singapore 018982

Tel: +65-6530 6588 Fax: +65-6532 2700 Yahoo ID: benzene_platts

Email: bao.ying.ng@platts.com website: www.platts.com