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Styrene Market in Asia

Masayoshi AkiyamaSM Business Department NIHON OXIRANE CO.,LTD.

The 3rd Asian Aromatics & Derivatives ConferenceSINGAPORE JUNE 28th-29th 2007

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NIHON OXIRANE

Incorporated : August 25,1972

Shareholders : Sumitomo chem 60%

Lyondell 40%

Capacity : SM 425 kt/Y ( CSM 110／270 kt/Y )

PO 181 kt/Y (Sumitomo 200 kt/Y )

PG 100 kt/Y

Employees : 80 people

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Today’s Agenda

Asian Styrene Market　

　Overview

　Review

　Forecast

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2006 SM Demand by Region

10%20%

30%

18%

22%

China

N.E.Asia

N.America

W.Europe

Others

2006 SM World Demand = 25mil

28%

24%31%

4% 13%

1997 = 18mil

+ 7 mil (+ 39%)

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G/R of SM Demand by Region

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

World N.America W.Europe N.E.Asia

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2006 SM World Trade

EuropeNE　ASIA

SE　ASIA

India

M.EAST

USA

Middle & South

AMERICA

290kt

530kt

830kt

290kt

230kt170kt

400kt50kt

CANADA

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SM Demand in China

0

1000

2000

3000

4000

5000

6000

7000

8000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

KT/Y

Production SM Import PS Import ABS Import EPS Import

1st stage 2nd stage 3rd stage

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SM ＆ Derivatives Capacity in China

　　　　　　　　1999　　　　2004 　 2006SM 675 974　　　 2469PS 986 1556 2091EPS 677 1987 2420ABS 285 1185 1380UPR 674 868 1018SB LATX 93 182 341SBR 370 475 613

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Chinese SM Demand by Derivatives

29%23%

17%

31%

PS

EPS

ABS

others26%

15%

16%

43%

China

World

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Overview - ConclusionSM in Asia has occupied an important position in the World. Asia has absorbed the excess production in US & M.E.Asia.

Asia,especially China, has been the engine of growth.

EPS is key industry for Chinese SM biz.China has just entered into 3rd stage.

1st stage : 　　　～2000　import polymers　 2nd stage : 2001～2005　import monomer　 3rd stage : 2006～　　　　stand on own production

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Today’s Agenda

Asian Styrene Market　

　Overview

　Review

　Forecast

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SM Spot Price in Asia (CFR Taiwan)

528.2

933.2

1193.5

0

200

400

600

800

1000

1200

1400

1600

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

$/T

SM CFR TWN 5 years average year average

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Crude (WTI) & Naphtha (MOPJ)

0

10

20

30

40

50

60

70

80

90

100

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Crude ($/bbl)

0

100

200

300

400

500

600

700

Naphtha ($/T)

Naphtha WTI

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Price Spread between SM & Bz

0

200

400

600

800

1000

1200

1400

1600

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

$/T

SM-BZ SM CFR TWN BZ CFR TWN 10 years average

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Margins of SM Chain in Asia

0

100

200

300

400

500

600

700

800

900

10001Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

$/T

Ethylene Benzene Styrene Polystyrene

Ethylene = (C2 - MOPJ)*0.3Benzene = (Bz - MOPJ)*0.8SM = SM- Ethylene - BenzenePS = PS - SM

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PS Price & RMM in Asia

0

200

400

600

800

1000

1200

1400

16001Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

PS CFR F.E.Asia($/T)

0

50

100

150

200

250

300

350

400

PS RMM ($/T)

PS RMM PS

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World Incremental Demand by Derivatives

-500

0

500

1000

1500

2000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

KT/Y

PS EPS ABS others

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Polymer Price in Asia

400

600

800

1000

1200

1400

1600

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

$/T

PS PE PP PVC

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Review - ConclusionThe long range view;

　 　 ～1999　PS enjoyed the good margins

2000～2003　Expansion of SM derivatives in China

boosted SM margin

2004～ High raw materials have squeezed

the margins of SM chain

PS is still important industry for SM,

however, no growth and no margin.

Weak PS has set ceiling for SM.

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Today’s Agenda

Asian Styrene Market　

　Overview

　Review

　Forecast

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Frequent Questions

Is China able to continue their growth ?

Will the balance of SM be long ?

Will POSM’s competitiveness continue?

Who is able to survive ?

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Is China able to continue their growth ? →　Yes，however…

SM G/R in China

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006

G/R (%)

0

200

400

600

800

1000

1200

IncrementalDemand (KT/Y)

Incremental demand SM G/R GDP

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Will the balance of SM be long ?　→　Yes !

0

500

1000

1500

2000

2500

3000

2006 2007 2008 2009 2010

KT/Y

Incremenatl Capacity Incremental Demand (+5.0%)

Incremental Demand (+9%)

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SM Expansion Plan in Asia

2007 Garson Hainan China Jan 80Samsung-Total Korea Jun 200FCFC Taiwan Feb 600CP-Chem S.Arabia end 777Pars Iran end 600

2008 Shuanliang China 1st Q'ter 210Sichuan Meifang China Mid 200TSMC China Mid 350SECCO China Mid 150Lotte korea Mid 150Kuwait SM Kuwait 4th Q'ter 450

2009 Dushanzi China 320Jilin China 210Qatar PC Qatar 600

2010 ZRCC China 620

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Will POSM’s competitiveness continue?→ No.

0

100

200

300

400

500

600

2007 2008 2009 2010 2011

KT/Y

Incremenatl Capacity Incremental Demand

SKC +100Rabigh +200

ZRCC +285DOW +390

2005 Demand in Asia = 2.4mil G/R = +8%PO balance in Asia will be stable till 2009, but…

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Who is able to survive ? 　→　Integrated producer

0

200

400

600

800

1000

1200

1400

1600

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

$/T

SM CFR TWN SM RMM(C2/BZ) SM-NAP

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Forecast - Conclusion

The growth will continue in China,

however, the G/R will decrease.

SM balance will be long, and some producers,

especially non-integrated, will face difficulties.

After 2010, POSM’s competitiveness will

be tested.

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Thank you