Petrochemical Market Outlook What s in store for 2017?

Transcription

1 Petrochemical Market Outlook What s in store for 2017? Malini Hariharan Head of South Asia Markets ICIS 1

2 Agenda Pricing & Margin Trends China & India Outlook 2

3 A strong start. but price corrections have set in Asia IPEX v Brent US$/bbl Brent Crude Oil ($/bbl) Asia IPEX Prices were largely supported by demand and supply issues; Chinese buying But weaker crude oil, destocking and start up of new capacities are setting the tone for Q2 3

4 Olefins (US$/tonne) May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Feb'17 March'17 April'17 May'17 Propylene Ethylene Butadiene Polyolefins (US$/tonne) May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Feb'17 March'17 April'17 May'17 LLDPE PP AromaKcs (US$/tonne) May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Feb'17 March'17 April'17 May'17 Benzene Toluene Fibre Intermediates (US$/tonne) May'16 June'16 July'16 Aug'16 Sep'16 Oct'16 Nov'16 Dec'16 Jan'17 Feb'17 March'17 April'17 May'17 Paraxylene PTA Propylene weighed down by ample supplies in China; weakness in key derivatives Butadiene sharp correction after a 70% jump in prices led by tight availability and strong buying Excess supplies and downstream shutdowns have weighed down PX prices 4

5 But margins remain robust supported by lower oil prices 1000 Cracker Margins (US$/tonne) to date SE Asia naphtha (spot) Europe naphtha (contract) US ethane (contract) 5

6 Gains have extended to PE 1600 PE margins (US$/tonne) US - Contract Margin, Ethane Feed Europe - Contract Margin, Naphtha Feed NE Asia - Spot Margin, Naphtha Feed 6

7 How will China perform this year? Realignment of the economy slower growth a reality But demand for many products showed good growth in 2016 Speculative buying/trading activity helped But indications of tighter credit conditions this year Start up of new capacities CTO/MTO/PDH and wide range of derivatives And rising self sufficiency or excess capacity in some products has opened doors for competitively priced exports and constrained operating rates Polypropylene (m tonnes) % ProducKon Imports Self sufficiency (%) Source: ICIS Supply and Demand Database 7

8 Capacity racing ahead of demand Phenol (m tonnes) Caprolactam (m tonnes) VAM (m tonnes) Capacity Demand Capacity Demand Capacity Demand OperaKng Rate (%) OperaKng Rate (%) OperaKng Rate (%) Source: ICIS Supply and Demand Database 8

9 Constraints setting in Source: ICIS Consulting; 2016 to-date 9

10 Several start-ups have been delayed with the current low oil environment '000 tonnes EsKmated CTO/MTO AddiKons in China (as at mid-2015) 0 Propylene Ethylene '000 tonnes Current EsKmated CTO/MTO AddiKons in China Propylene Ethylene Ethylene via CTO Ethylene via MTO Ethylene via CTO Ethylene via MTO Propylene via CTO Propylene via MTO Propylene via CTO Propylene via MTO Several planned CTO/MTO start-ups have lapsed; expected delay about 1-2 years Further out, development of methanol to olefins is expected to fizzle out, although investments in coal to olefins will remain. Source: ICIS Supply and Demand Database 10

11 Mixed fortunes in India Demonetisation impact temporary growth for key chemicals slower than previous year Medium and long-term prospects remain positive Startup of new capacities Two new crackers in 2017 Temporary surplus for some products Rising import dependency Imports of key chemicals continues to expand 11

12 Long-term prospects intact 12

13 Gearing up for significant ethylene capacity additions 13

14 New US crackers complete, under construction, FID made Company C2 capacity (kt/year) Downstream (kt/year) Location Start-Up OxyChem/Mexichem 544 Feed existing VCM plant of 1,050 Ingleside, Texas Q (done) Dow Chemical 1,500 ExxonMobil Chemical 1,500 Chevron Phillips Chemical 1,500 Formosa Plastics 1,250 ELITE PE (400), LDPE (350), EPDM (200), elastomers (320) mlldpe plus LLDPE (650 x2) at Mont Belvieu Bimodal HDPE (500), mlldpe (500) at Sweeny PE (525), LDPE (625.5), MEG (1,000), plus DEG, TEG, PEG Freeport, Texas Mid-2017 (mech complete Q1) Baytown, Texas End 2017 Cedar Bayou, Texas Q4 2017, PE mid-2017 Point Comfort, Texas H Sasol 1,500 LDPE (450), LLDPE (450), EO/EG (300), ethoxylates, detergent alcohols (300) Lake Charles, Louisiana H LDPE early 2019, Others H Westlake (Axiall)/Lotte 1,000 Shintech 500 MEG (700) by Lotte, feed into existing PVC for Westlake VCM (300), PVC (300), caustic soda (200) St Charles, Louisiana Q Plaquemine, Louisiana 2018 Shell 1,500 HDPE/LLDPE (550 x2), HDPE (500) Monaca, Pennsylvania Early 2020s 9 new crackers = 10.8m tonnes/year Through 2018/2019 = 9.3m tonnes/year 14

15 Expansions of existing US crackers, plus 1 restart Company Capacity (kt/ year) Location Status/Start-Up Dow Chemical 250 Plaquemine, Louisiana Started up Nov/Dec 2016 LyondellBasell 363 Corpus Christi, Texas Westlake Chemical Indorama (restart) Completed Jan 2017 but op issues. End Q2 expected 32 Calvert City, Kentucky H Lake Charles, Louisiana End 2017 LyondellBasell 250 Channelview, Texas Evaluating for 2020s Expansions about 1m tonnes/year + new crackers 9.3m = 10.3m, or 36% of exiskng US capacity by 2018/

16 North America PE expansions Company C2 capacity (kt/year) Downstream (kt/year) Location Start-Up Dow Chemical 750 ELITE PE (400kt), LDPE (350kt) Freeport, Texas Mid-2017 (mech complete Q1) Chevron Phillips Chemical 1,000 Bimodal HDPE (500kt), mlldpe (500kt) Sweeny, Texas Mid-2017 ExxonMobil Chemical 1,300 mlldpe plus LLDPE (2 x 650kt) Mont Belvieu, Texas End 2017 INEOS/Sasol 470 HDPE LaPorte, Texas Q Formosa Plastics 1,150 PE unspec (525kt), LDPE (625.5kt) Point Comfort, Texas H H (LLDPE), 2019 Sasol 890 LLDPE (470kt), LDPE (420kt) Lake Charles, Louisiana (LDPE) LyondellBasell 500 HDPE LaPorte, Texas Mid-2019 Total/Borealis/NOVA* 625 Borstar PE Bayport, Texas End 2020 HDPE/LLDPE (2x 550kt), HDPE Shell 1,600 (500kt) Monaca, Pennsylvania Early 2020s PTT Global Chemicals* 700 HDPE (2x 350kt) Belmont County, Ohio 2021 NOVA Chemicals* 450 LLDPE Sarnia, Canada 2022 SABIC/ExxonMobil* NA PE unspec (2 units) US Gulf Coast NA *No FID yet ** Assuming 1,300kt PE for SABIC/ExxonMobil, start-up by 2022 Through 2019 = 6.1m tonnes/year Through 2022 = 10.7m tonnes/year** 16

17 The US 2 nd wave visibility clearing Company Capacity (kt/year) Downstream (kt/year) Location Start-up Status Total/Borealis/ NOVA 1,000 Borstar PE (625) + existing PE (400) Port Arthur, Texas End 2020 FID end 2017 Shell 1,500 HDPE/LLDPE (2x 550), HDPE (500) Monaca, Pennsylvania Early 2020s Construction late 2017 SABIC/ ExxonMobil 1,800 PE (2 units), MEG Corpus Christi, Texas --- PTT Global Chemicals 1,000 HDPE (700), MEG (500), EO (100) Belmont County, Ohio 2021 Evaluating, FID Q Formosa Plastics Odebrecht/ Braskem 1,200 LDPE, HDPE, EG Louisiana --- Evaluating 1,050 PE (3 units) Wood County, West Virginia --- On hold 17

18 PE 2020 product flow Former USSR 0.2 M tonnes 0.3 North America 5.8 Europe Middle East 15.7 North East Asia S&C America 2.4 North America Exports 2020 vs 2015, 000 tonnes Africa Asia & Pacific Northeast Asia +1,280 Asia & Pacific +827 S&C America +402 Copyright 2016 ICIS Europe +269 Source: ICIS Supply and Demand Database 18

19 Conclusion Slowing Middle East Slower pace of investments Focus on value-added derivatives Resurgent US First wave of cracker expansions heading towards completion Strong interest points to a second wave Trade flows set to change Balancing Asia Low oil prices sustains margin recovery for naphtha crackers China - moving towards increasing self-sufficiency; pace of expansion slows Healthy demand growth across key markets 19

20 THANK YOU Malini Hariharan Mobile:

21 Market intelligence for the energy, chemical and fertilizer industries 21

22 ICIS is part of RELX Group RELX is the world-leading provider of information solutions for professional customers across industries Reed Business Information provides data, analytics and insight that enable customers to evaluate and manage risks, and develop market intelligence, supporting more confident decisions, improved economic outcomes, and enhanced operational efficiency. ICIS is the world's largest petrochemical market information provider, and has fast-growing energy and fertilizer coverage. Its aim is to give companies in global commodities markets a competitive advantage by delivering trusted pricing data, high-value news, analysis and independent consulting. 22

23 Global Presence, Local Insight More than 30 years of industry insight and data Over 100,000 industry customers Customers include virtually every major chemical company Weekly contact with thousands of market par[cipants Over 9,200 price assessments in 1,200 reports covering 180 commodi[es 17,000+ news stories annually 800+ global employees 23

24 Support for Immediate Through Long-Term Decisions Available on Dashboard Near-Term Price Assessments Price reports Margin reports Price alerts Price indices Price histories Market News 24 hour real-[me news Training & conferences Market insight & analysis Plant produc[ons and shutdowns Price Forecasts Supply & Demand Data In-depth Scenario Studies Price forecasts Global/regional trade flows Annual studies Company ownership informa[on Long- Term Long-Term Data-Driven Strategic Planning Supply & demand data historical and forecast data for capaci[es, consump[ons, imports, exports Industry-focused global consultancy 24