Opportunities in a Globalising World: Strategies for Europe

Transcription

1 Opportunities in a Globalising World: Strategies for Europe IHS Markit WPC Thomas Van De Velde March 21st, 2018

2 Borealis at a glance 2 nd largest polyolefin producer in Europe Head office in Vienna, Austria EUR 1.1 billion 6,600 employees Borouge operates world s largest integrated PO site in Ruwais, UAE Ownership structure Operates in over 120 countries on 5 continents +3,500 in Borouge net profit for 2017 Mubadala, Abu Dhabi OMV, Austria Production and sales of polyolefins, base chemicals and fertilizers EUR 7.6 billion sales revenue in 2017 (>EUR 9 billion with Borouge) 2

3 Borealis foundation for sustainable growth Our key criteria Our unique strengths Access to market Running complex chemical assets safely Access to advantaged feedstock Right technology In combination Broad Technology Suite including Borstar technology Ability to build large complex projects Ability to fund Application focus Fit to Borealis businesses Access to ME & Asia + strong brand name 3

4 Borealis portfolio of leading polyolefin technologies Polyolefin Technologies Borstar PE Bimodal LLD, MD & HDPE Post-Reactor Technologies Daploy HMS PP High melt strength PP Borstar PP Multimodal PP Borealis SIRIUS Catalyst Technology Fibremod Engineered Fibre Compounds Borceed Plastomers and Elastomers Quentys Empowering Solar Borlink Wire & Cable Technology Platform Anteo Borstar Bimodal Terpolymer PE 4

5 Global ethylene capacity and production grows steadily, but with regional differences World United States WE and CE Middle East China Ethylene capacity and production in million metric tons Production Total Capacity Source: IHS Markit - Chemical Supply & Demand (Spring 2017 Update); WE and CE Western and Central Europe according to IHS 5

6 Ethylene growth driven by feedstock advantage propylene is quite different Ethylene capacity additions go where feedstock is advantaged 200 Propylene production Propylene capacity additions go where the market is Methanol, propane, naphtha travel well; terminals and vessels exists Europe is not significantly disadvantaged particularly when feeding existing downstream, especially in the propylene derivatives Borealis considering world scale new PDH in Antwerp Would fill the gap left by refineries and crackers moving to lighter feed Primarily to feed own PP assets (existing and expansions) and 3 rd party monomer demand Capacity Europe US Middle East China RoW On-purpose Conventional Source: IHS Markit Chemical Supply & Demand (Spring 2017 Update); Capacity delta between global production and capacity, Conventional sum of steam crackers, FCC splitters and refinery grade direct 6

7 Bring the feedstock advantage to Europe Key belief is that US natural gas retains its price advantage long term Price advantage directly correlated with oil price: higher the oil higher the benefit Long term point-to-point commitments required for pipelines, terminals and vessels Factors to consider: oil and US ethane price view, value of optionality At oil prices below 50 USD/bbl, ethane has not a great business case rather a hedge for higher prices to come Borealis already moving ethane from North Sea to Sweden and has additionally added ethane from US (invested around MEUR 120) 7

8 Logistics capabilities the key to capture global opportunities Key to be able to source feed globally and serve customers locally Capability to handle VLGC size vessels and large liquid cargoes Import, export capability taking advantage of volatility and seasonality All our coastal locations capable of handling VLGC size vessels Largest propane and butane storage in Europe in Stenungsund with export capability Invested in Porvoo (Finland) a m3 propane /butane cavern Large propylene tank in Antwerp for trading and supply security Contaminants management is in focus; bad past experience has taught us 8

9 Continuous maintenance investments a must to keep business competitive Operability and reliability of aged assets are key to profitability Sustainable asset care increasingly important Energy improvements: good business and authority requirement Balance between ROCE dilutive and accretive to be watched Borealis Stenungsund Cracker Furnace Revamp Programme (MEUR 160) to bring location to the highest currently available standards in process safety, energy efficiency and secure long term sustainability 9

10 Sustainability means finding the right balance between People, Planet and Profit Definition We assess both the positive and negative consequences of our activities on People, Planet and Profit to take responsible decisions. People Our approach We will... support profitable Business Growth enhance the sustainability of our operations and supply chain enhance internal capabilities, communication & stakeholder engagement While focused on: Profit Planet Designed for plastic packaging recycling Efficient and reliable energy transmission Value-adding healthcare solutions 10

11 Social license to operate demanded Borealis TRI frequency Own vs. Contractors Chemical industry under scrutiny from politicians and public We need to be seen to positively contribute to: Energy efficiency Accident free operations Air, water, noise pollution reduction Education and employment Uphill battle which we need to win with facts European industry players working together to minimize waste, littering and improve awareness Borealis chairs Plastics Europe Marine Litter Solutions WG Stopping the Tap on Ocean Plastics (STOP) - A joint initiative by Borealis and Borouge to stop leakage plastics to the ocean 11

12 Circular economy solutions expected Plastics have bad sustainability and circularity reputation Yet our products are recyclable, reusable, durable, non-toxic and light weight Achilles heel is littering and landfill Need to embrace circularity to remain ahead of the game Borealis entered mechanical recycling in 2016 Creation and chairing of EU Polyolefin Circular Economy Platform Member of the New Plastics Economy Initiative led by Ellen MacArthur foundation first prime plastics producer 12

13 Borealis approach to advocacy: from re-active to progressive Advocating what to DO with tangible solutions Stakeholder management Achieved significant external recognition Gained reputation as leader in Circular Economy Trusted as competent dialogue & business partner Shaped policies and regulations Increased visibility and brand value Kicked off development of new innovative PO solutions 13

14 In summary: the US is not the only game in town Europe will continue to thrive Feedstock price based competitiveness particularly in absolute terms volatile and transitional Innovation, workforce quality and capex matters Logistics and energy infrastructure is the backbone High number of integrated chemical clusters and proximity to customers Smart regulation and energy policies needed for competitiveness The region leading in circular economy solutions And finally we Europeans need some luck to remain relevant: low oil, weak euro, global growth, high US ethane to list of few for your evening prayers 14

15 Thank you Unless otherwise specifically stated, this presentation, any part of it, or any information contained herein may only be copied, disclosed or used within the Borealis group of companies. Borealis AG and its affiliates give no warranty and make no representation as to the accuracy, completeness or fitness for any particular use of the information contained herein. 15