Moving from Irrational Exuberance to a New Normal in the Polyester & PET Value Chain

Transcription

1 Moving from Irrational Exuberance to a New Normal in the Polyester & PET Value Chain JENNY YI SENIOR ANALYST ANALYTICS & CONSULTING, ICIS, ASIA 1

2 Corporate Structure ICIS is an independent data and analytics provider focusing on global energy, petrochemical and fertilizer markets. More than 35 years in petrochemical benchmarks 2

3 Global Presence, Local Insight More than 35 years of industry insight and data Over 100,000 industry customers Robust methodologies and editorial standards in compliance with IOSCO Over 9,200 price assessments in 1,200 reports covering 180 commodities Primary sourced from thousands of market participants 27,000+ annual news stories Unique news stories Leading benchmarks provider 600+ global employees and over 350 journalists engaged in reporting market prices and news 3

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6 ICIS Supply & Demand Database The ICIS Supply & Demand Database delivers ICIS an end-to-end perspective Data of the global petrochemicals market, covering 160 countries and over 100 products. Data includes: Historical and forecast data ( ) Petrochemical trade flows and patterns Import, export and consumption volumes Plant capacity, production and operating status Upcoming plants, including speculative and announced projects Data breakdown by country, region, product or product family Key information on over 12,000 refinery units, and 18,500 petrochemicals plants GDP, population, and consumer price index by country 6

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8 Agenda PET Value Chain Review Global PET Market Outlook Macroeconomic Trend for PET Global PET Supply and Demand balance

9 PET Value Chain Review 9

10 Polyester fibre and PET resins are key consumers of PET melt with a combined market share of >90% 28m tonnes (2017) MEG (Mono Ethylene Glycol) CF % Polyester Film Polymer Demand Avg. Annual growth % Polymer Demand Avg. Annual growth % Paraxylene 42m tonnes (2017) CF 0.67 PTA (Purified Terephthalic Acid) 62m tonnes (2017) CF 0.86 PET Melt Melt phase 86m tonnes (2017) 66% Polyester Fibre 5.8% 5.2% 5.1% 5.1% CF - conversion factor 28% PET Resin 4.1% 5.4% Market Share (2017) Source: ICIS Supply & Demand Database 10

11 AAGR, % Global PET melt demand maintained rapid growth and outpaced GDP growth rate Global PET Melt Demand Growth Rate 12% 10% 8% 6% 4% 2% 0% -2% -4% PET Growth Rate GDP Growth Rate Global PET melt demand growth trend tracks GDP growth movements The average PET melt demand growth rate was at 7% in , while the average of GDP growth rate was at 2.6% Population growth and better quality living continue to drive PET melt demand growth Source: ICIS Supply & Demand Database 11

12 Million Tonnes Million Tonnes Million Tonnes Driven by demand, capacity growth of PET value chain outpaced GDP growth rate as well Global PET Melt Capacity Growth Rate 5.5% 7.6% 16% 12% 8% 4% 0% Global PET capacity growth drives the development of raw materials PTA and PX CAGR PET Melt: 6.5% PTA: 6.1% Capacity Growth Rate PX: 5.3% Global PTA Capacity Growth Rate 5.4% 6.8% 16% 12% 8% 4% 0% -4% Global PX Capacity Growth Rate 5.3% 5.1% 16% 12% 8% 4% 0% -4% Capacity Growth Rate Capacity Growth Rate Source: ICIS Supply & Demand Database 12

13 PET value chain prices were at historically high levels during the rapid development of the markets PET Value Chain Prices 13

14 Global PET Market Outlook 14

15 Synthetic fibres lead the fibres market while polyester leads the synthetic fibres market Global Fibres consumption in 2017 Other natural fibers, 4% Wool, 1% Total Fibre Demand (million tonnes) Cotton, 24% Synthetic fibers, 64% Wood-based cellulose fibers, 6% 105m tonnes Source: Lenzing, Textile World Driven by rapid demand growth, polyester fibres now take up not only the largest share in synthetic fibres, but also the biggest portion in the global fibres market The demand for polyester fibres will be growing fastest among all fibres, followed by cotton 15

16 $/tonne PET fibres is preferred relative to cotton due to lower cost and predictable availability Cotton VS PET Fibres Cotton and PET fibres can replace each other in applications Cotton is more susceptible to natural factors due to long growth cycle Polyester fibres have a price advantage over cotton PET Fibre Grade FOB NEA Cotton "A Index" Source: ICIS & National Cotton Council or America Note: "A" Index-is a proxy for the world price of cotton. 16

17 share of global pack mix PET bottle leads the packaged beverage business, primarily driven by awareness for healthy living Pack mix of beverages worldwide in 2017, by packaging type 40% 35% 35% 30% 25% 20% 24% 19% 15% 10% 11% 11% 5% 0% PET Class bottles Cans Cartons Other Source: Statista 2018 PET bottle is the largest packaging type in the world thanks to its many advantages Concerns over ground water contamination and quality of tap water drives consumption of bottled water Concerns over sugar intake drives consumption of smaller soft drinks packaging 17

18 PET resins consumption per capita in Asia is below global average and presents an opportunity for further growth GDP (K$/capita) GDP (K$/capita) Bubble size refers to populations Source: ICIS Supply & Demand Database The average consumption per capita of global PET resins was approximately 3kg in The consumption level at Asia stood lower than the global average, which indicates growth potential in the future. Bubble size refers to populations The average consumption per capita of global PET fibres was approximately 6.5 kg in The consumption level at Asia was higher than the global average level as China is the world's largest textile exporter. 18

19 Million Tonnes AAGR Million Tonnes AAGR Global PET melt demand forecast growth continues to outpace global GDP growth driven by consumption into PET fibres and PET resins PET Melt Phase Demand Growth PET Melt Phase Demand Growth ( ) 35 6% 25 6% % 4% % 4% 3% 2% 1% % 0 PET Fibre PET Resins PET Film 0% Incremental AAGR Incremental Demand AAGR Source: ICIS Supply & Demand Database The growth rate of PET melt demand is expected to be stable from , although still higher than global GDP growth The increase in demand for PET melt is mainly attributed to demand growth in PET fibres and PET resins, with fibres accounting for the largest share, while resins growth will be the highest 19

20 Million Tonnes PET melt phase consumption is led by Asia, especially China, and is expected to remain the same in the forecast period Middle East 2% Europe 6% PET Melt Phase Consumption by Region (2017) Others 3% Asia 81% China 58% the rest of Asia 23% Incremental Demand by Key Region ( ) China ASIA (Excl China) North America EUROPE Middle East North America 8% Source: ICIS Supply & Demand Database 86m tonnes PET RESINS POLYESTER FIBRES POLYESTER FILM PES RESINS Asia has the largest consumption area in the world, accounting for 81% of the global total, largely driven by intake from China China is expected to remain as the major PET melt consumer in , predominantly in Polyester fibres Potential shift in PET fibre demand to low cost manufacturing countries due to R-PET ban in China 20

21 Million Tonnes PET melt phase supply by region is very similar to demand PET Melt Phase Capacity by Region (2017) 10 Incremental Capacity by Key Region ( ) Others 3% Middle East 3% Europe 6% North America 7% Asia 81% China 59% the rest of Asia 22% 113m tonnes China ASIA (Excl China) North America Incremental Capacity EUROPE Middle East Source: ICIS Supply & Demand Database Most PET melt phase capacities are forward integrated with PET resins, PET fibres and PET film manufacturing Asia is the largest production base, particularly in China 21

22 Million Tonnes Recycled PET capacity in 2017 was dominated by China PET Melt Phase Supply Recycled PET Melt Phase Capacity (2017) Others 4% India 5% ASIA ( Excl China & India ) 6% EUROPE 8% North America 8% 0 Recycled Capacity Virgin Capacity China 69% 20m tonnes Source: ICIS Supply & Demand Database Global recycled PET capacity has enjoyed a stable growth in the past 10 years and more China is also taking a lead in the global recycled PET capacity, followed by Europe and North America Recycled PET can save resources and reduce environmental pollution, but the lack of advanced technology may lead to secondary pollution 22

23 Thousand Tonnes China s R-PET Import Ban will boost virgin PET demand In 2018, China banned the import of post-consumer plastics and restricted the import of postindustrial plastics, which will be prohibited from 2019 In 2018, as China s R-PET imports fell sharply, demand shifted to virgin PET, which will push up operating rates of virgin PET and raw materials China's import ban on waste plastics Improved domestic recycling systems and strengthened recycling of domestic recycled PET Source: China Customs Waste PET Waste PE Waste other plastic Accelerated the survival of the fittest among domestic recycled PET companies Polyester manufacturing may shift to other emerging countries in Asia, which allow for the import of R-PET 23

24 % integrated capacity Lower integration in the mid-stream is likely to result in heavy influence of supply-demand fundamentals on the mid-stream price spread 100% Naphtha PX PTA PET Melt PET Resins, Fib, Film 80% 60% Lower integration in mid stream in the PET chain 40% 20% 0% Naphtha-PX PX-PTA PTA-PET Melt MEG-PET Melt PET Melt- Source: ICIS Supply & Demand Database PET,Fib,Film Naphtha-PX, PET melt-pet fibres/resins/film are highly integrated, while integration level is lower in the mid-stream sectors The supply-demand fundamentals in the mid-stream sectors have heavy influence on price spreads Some major PET producers will begin to extend into the upstream to cover the entire industry chain 24

25 PET net trade flows from Asia to rest of the world; China is also the biggest exporter North America PET Net Surplus / Deficit by Key regions (thousand tonnes) (2017 VS 2023) South & Central America +940 Europe Africa Middle East CIS China Asia (excl China) Surplus PET Fibres Deficit PET Fibres Surplus PET Resins Deficit PET Resins Source: ICIS Supply & Demand Database 25

26 China is the world s largest PX importer, with cargoes coming from Asia and Middle East, while PTA is roughly balanced in China PX/PTA Net Surplus / Deficit by Key regions (thousand tonnes) (2017 VS 2023) Europe CIS China North America Middle East Africa Asia (excl China) South & Central America Surplus PX Deficit PX Surplus PTA Deficit PTA Source: ICIS Supply & Demand Database 26

27 Trade War between China and the US may affect the textile and apparel industry and upstream PET; However, SE Asia may see some gains China Textiles and Apparel Exports Value 2017 US Textiles and Apparel Imports Value 2017 Rest of world, 62% United States, 17% Vietnam, 5% Rest of world, 35% China, 37% Japan, 8% 269b dollars China PET fibers(polyester filament) Exports in 2017 United States, 2% Vietnam, 10% Hong Kong Special Administrative Region, 5% United Kingdom, 4% Bangladesh, 5% India, 7% Rest of world, 52% Vietnam, 11% 106b dollars Indonesia, 4% China PET fibers(polyester staple fiber) Exports in 2017 United States, 17% Vietnam, 8% Rest of world, 40% Turkey, 17% Indonesia, 10% 1.5m tonnes Pakistan, 8% Egypt, 14% 1m tonnes South Korea, 8% Source: OTEXA, China Customs India, 6% Pakistan, 8% 27

28 Summary The PET value chain has maintained rapid growth in the past 10 years and more, especially before the 2008 economic crisis Under the new normal mode, global PET demand and capacity growth is expected to be flat Global PET melt phase forecast growth continues to be driven by population growth, increasing income, higher standards of healthy living Global PET melt demand forecast growth continues to outpace global GDP growth driven by consumption into PET fibres and PET resins Asia is the largest consumption and supply area in the world, predominantly driven by China, and is expected to remain the same in the forecast period China s R-PET Import Ban will boost virgin PET demand 28

29 Jenny Yi Senior Analyst, ICIS Analytics & Consulting Powered by Data. Driven by Insight.