Outlook, challenges and opportunities for Styrene Monomer

Transcription

1 Outlook, challenges and opportunities for Styrene Monomer Platts Aromatics Conference 18 Sep 2014, Seoul Rahul Malhotra General Manager Global Styrene Monomer Shell Chemicals

2 Legal Disclaimer This presentation was prepared by Shell Eastern Trading (Pte) Ltd for information purposes of the Platts Aromatics Conference in Seoul, September 2014 only. The information contained in the presentation has been prepared on the basis of information available from public sources or which was provided to us, all of which has not been independently verified by Shell and is not guaranteed, to be reliable, accurate and complete. Neither Shell nor its employees are making any representations, warranties, or guarantees with respect to the information contained herein. Any opinion, estimate or projection herein constitutes a judgment as of the date of this presentation, and there can be no assurance that future results or events will be consistent with any such opinion, estimate or projection. Shell accepts no liability whatsoever for any loss (whether direct, indirect, consequential or punitive), howsoever arising from any use or reliance on this presentation or its contents or otherwise arising in connection therewith. This presentation may not be distributed, shared, or in any other manner disseminated without prior consent from Shell Eastern Trading (Pte) Ltd. Copyright of Shell Eastern Trading (Pte) Ltd. 2

3 Shell s Styrene Monomer Business Amsterdam The Netherlands 3

4 HSSE MOMENT 4

5 LONG TERM OPPORTUNITIES 5

6 mln tonnes p.a. Chemical demand growth to 2030 Chemical growth expected to double in 20 years : 490 mln : 246 mln Others Asia M.East Europe S.America N.America Source: Using IHS data 6

7 PS &EPS Consumption per Capita kg) Plastics Consumption per capita (kg) Strong long term growth from developing countries Population 1bn JAPAN EU US Brazil India China Africa Population 5.5bn GDP per Capita ($) World PS and EPS Consumption China, India, Brazil, Mexico Source: Internal estimates / IHS ,000 20,000 30,000 40,000 50,000 60,000 70,000 GDP per Capita 7

8 Waves of the Future? 3-D Printing (3 min video by Huffington Post) Source: Johnbiehler.com Lost Foam Source: 8

9 SUBSTITUTION RISKS? PS vs. PP PET vs. PS HIPS vs. ABS FACTORS Propane/Propylene supply balance given propane cracking, PDH unit timings and PO demand. Gas pricing in the US BD pricing and crude C4 availability Capital availability & willingness to convert by PS molders Line speed, yield & other benefits of PS vs. PP SM pricing Copyright of Shell Eastern Trading (Pte) Ltd. 9

10 Ethylene production by feedstock (%) Globally the shift from liquid to gas crackers is expected to continue in next few years, but no further change % Ethylene production by feedstock 80% Liquid crackers (24% benzene/t ethylene) 60% 40% 20% Gas crackers (5% benzene/t ethylene) 0% Source: Parpinelli Tecnon Copyright of Shell Eastern Trading (Pte) Ltd. 10

11 LONGER TERM BENZENE BALANCE 70,000 Global Benzene +2.1% pa Capacity 60,000 50,000 Demand 40, % pa 30,000 20,000 10, Copyright of Shell Eastern Trading (Pte) Ltd. IHS October 2013 (World benzene 2014 update.xls) 11

12 Combination of crude price volatility and lack of onpurpose benzene capacity has impacted benzene volatility Crude Oil Brent Jan-1990 Jan-2000 Jan-2010 HDA supply share 100% 80% 60% 40% 20% 0% Copyright of Shell Eastern Trading (Pte) Ltd. 140% 120% 100% 80% 60% 40% 20% 0% 90 day moving average volatility Volatility calculated using Black-Scholes formula Source: IHS 12

13 CURRENT MARKET ENVIRONMENT 13

14 2013 SM Global picture 14

15 A. CHINA DEMAND 15

16 Modest growth of China economy with GDP expansion of 7.5% in Q2, accelerating slightly from Q1 Mln Tons Raw Steel Production and Growth Rate 1H 2014 GDP Contribution by Use % 12% 10% 8% 6% 4% 2% 0% 54.4% 48.5% -2.9% Raw Steel Production YOY Growth Final consumption Investment Net export GDP quarterly growth % 30% 20% 10% 0% 0.7% Production of refrigeration: Y-o-Y growth 1.2% 1.0% 0.3% 0.7% -10% -20% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Copyright of Shell Eastern Trading (Pte) Ltd Source: NBS 16

17 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 China PMI inching up but need to watch; Exports also picking up though lower than some expectations China Monthly PMI 52.0% 47.0% Official PMI HSBC PMI 50% watershed Bln USD Monthly Import and Export 40% 30% 20% 10% 0% -10% -20% Export Volume Import Volume Export Growth Import Growth Copyright of Shell Eastern Trading (Pte) Ltd. Source: PBoc / China Customs data 17

18 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 China liquidity is expected to gradually improve in the second half of the year China Interbank Rates Bln Yuan 7-day repo Overnight repo Total Social Financing (TSF) % 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% -20% Copyright of Shell Eastern Trading (Pte) Ltd. RMB loans Foreign currency-denominated loans Others YTD growth Source: PBoC, NBS, CEIC 18

19 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Mar-14 May-14 CHINA - REAL ESTATE ADJUSTMENT & OVERCAPACITY Property activity stayed weak in Q2 although the decline was less sharp than in Q1. New sales and property investment both slid, the former into deeper contraction and the latter to a 20-month low growth rate. Some cities have loosened property purchase rules since July. Housing prices declined for the first time in two years from May, but the likelihood of housing price collapse remains small. The oversupply seems to have spread from the coastal region to inland China Yuan/Sqm 11,500 11,000 10,500 10,000 9,500 9,000 8, cities Average Property Price Bln yuan Real Estate Investment 40% 35% 30% 25% 20% 15% 10% 5% 0% China Property Sales 100% 80% 60% 40% 20% 0% -20% -40% Floor Space Sold (Mln Sqm) Sales Volume(Bln Yuan) Monthly investment YTD Growth YTD Floor Space Growth YTD Sales Volume Growth 19 Source: NBS, JPM, Soufun

20 HOWEVER, IMPORTS SHOT UP EXCESSIVELY DURING Q1 / Q2 Source: Shell internal analysis / Chemease 20

21 B. HIGH FEEDSTOCK COSTS 21

22 FEEDSTOCK PRICES AFFECTED INDUSTRY Source: Using IHS data 22

23 C. IMPACT ON STYRENE MARKET IN

24 CHINA DEMAND, FEEDSTOCK COSTS, EXCESSIVE IMPORTS Source: Using IHS data 24

25 CHINA STYRENE & IMPACT OF INTEGRATION Source: IHS data 25

26 SIGNIFICANT CHALLENGE TO INDUSTRY 26

27 GRASSROOTS ATTACKS 27

28 MANY US CITIES JUMPING ON THE BANNED WAGON 28

29 PRODUCT DE-SELECTION 29

30 STYRENE HEALTH CLASSIFICATIONS The health effects of styrene continue to generate differences of opinion among regulatory authorities globally. In the US, styrene has been classified by The National Toxicology Program as "reasonably anticipated to be a human carcinogen but the American Congress of Governmental Industrial Hygienists have determined it is not classifiable as human carcinogen. The EU does not classify styrene as a carcinogen. The European Chemical Agency has classified styrene as Suspected of damaging the unborn child, a Category 2 reproductive toxicant. The US National Toxicology Program determined that there is negligible concern for adverse developmental and reproductive effects resulting from styrene exposures in humans. 30

31 DID YOU KNOW? Source: Styrene Information and Research Center 31

32 STYRENE DERIVATIVES APPROVED FOR FOOD CONTACT 32

33 THE SMART, SUSTAINABLE SOLUTION Makes Environmental Sense An Emerging Market: Polystyrene Recycling The Landfill Myth An Excellent Energy Source Contributes LESS Greenhouse Gases Source: American Chemistry Council 33

34 BETTER SOLUTION FOR B2B & INSTITUTIONAL CUSTOMERS Focus on Fresh Ingredients, Not Packaging Greater Convenience for Customers Better Packaging Equals Less Packaging Source: American Chemistry Council 34

35 NEW TECHNOLOGIES Emerging conversion technologies designed to convert plastics into fuels or raw materials offer environmental benefits and cost savings compared with landfill disposal. Close to being commercially viable (within the decade) In US, several demo and commercial plants in operation From Plastics News, published August 6,

36 WHAT IS INDUSTRY DOING NOW? EU: Utilising CEFIC communications pack on reprotox classification, Plastics Europe s benefits of plastics brochure. Upgrading website FAQs and education all members of associations BIG MESSAGE: Styrene and its derivatives are safe and effective NA: Supporting efforts to drive recycling or reuse as alternatives to bans and demonstrating these alternatives one city at a time BIG MESSAGE: Litter is a people or an infrastructure problem not a product problem; learn how to effectively recycle and/or reuse PS Globally: Ensuring styrenics industry groups around the world have access to scientific studies and effective communication materials AND promoting Responsible Stewardship down the supply chain DO THE RIGHT THING!! 36

37 WHAT CAN THE ASIAN INDUSTRY DO TODAY? Support sound science Promote the benefits of styrenics Practice & advocate responsible stewardship & HSSE Partner with groups with similar objectives 37

38 ONE OF THE WORLDS LARGEST & WIDELY USED CHEMICALS 38

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