Polyethylene & PET Outlook

Transcription

1 Polyethylene & PET Outlook Howard Rappaport Senior Director, Chemicals IHS Global Insight Price & Purchasing October, th Annual Blow Molding Conference

2 IHS A leading information provider We are over 5,600 people, in 40 countries, speaking 50 languages all working each day to: Serve businesses and all levels of governments worldwide Ranging from 80% of Global Fortune 500 to small businesses Customers in 180 countries Provide comprehensive content, software and expert analysis and forecasts Helping our customers drive critical processes and make high-impact decisions with speed and confidence 2

3 IHS Capabilities Bringing content and expertise in pivotal areas that shape today s business landscape Areas of Expertise & Content 3

4 IHS has brought together four strategic brands to create an unrivalled chemical industry offering... IHS Chemical CMAI + SRIC + HARRIMAN + CHEMICAL WEEK

5 IHS Chemical Capabilities Power & Utilities Transportation Government Healthcare Energy Oil & Gas Aerospace & Defense Electronics & Telecom Consumer & Retail IHS IHS Chemical Military & Security Automotive Construction Metals & Mining Agriculture Financial Shipping

6 The IHS Chemical Portfolio News & Events Market Services Planning & Company Services Technology Services Consulting Services Chemical Week Magazine Aromatics & Fibers Olefins & Derivatives Chemical Economics Handbook Specialty Chemicals Process Economics Program Strategy Commercial Analysis Chemicals Events Daily News & Information Services Chlor-Alkali & Vinyls Plastics & Polymers Methanol & Derivatives World Analysis Directory of Chemical Producers China Report Special Studies Carbon Footprint Special Studies Transaction Technology Renewables Legal Services

7 Basic Chemicals & Plastics Demand Distribution is Shifting Economic Expansion: Basic demand to fast growth emerging economies is evident Investment Decisions: Two Options: Produce in demand centers or leverage a clear cost advantage Tomorrow s Market: Sustainability includes a systematic addition of performance products 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Distribution of Global Demand Basic Chemicals and Plastics All Others W. Europe N. America Middle East Other Asia China Center of the industry has shifted to Asia

8 Crude Oil & Natural Gas Building Blocks for the Industry Crude Oil Natural Gas Naphtha Gas Oil Ethane Propane Butane Refinery Gas Separation Unit Methanol Butane Hydrogen Reformer Reformate Steam Cracker BTX Pygas BTX Extraction Raffinate Propylene Ethylene Butadiene SBR / PBR XYLENES TOLUENE BENZENE o-xylene m-xylene p-xylene PTA/DMT PIA PET ETHYLBENZENE/ STYRENE PAN/DOP/Plasticizers POLYETHYLENE POLYPROPYLENE ETHYLENE DICHLORIDE / PVC EO/EG ETHANOL EP RUBBER

9 North America Energy Price Trends Dollars Per MMBtu Gas as a% of Crude, BTU Basis Crude (WTI) Natural Gas Gas as % of Crude 60% 50% 40% 30% 20% 10% 0%

10 U.S. Natural Gas Liquids Price Gas Liquids, Cents Per Gallon 200 Natural Gas, $/MMbtu Natural Gas Ethane Propane N-Butane 0

11 2012 Ethylene Cost Curve (Dollars per Ton) WTI Crude $94/Barrel Nat Gas $3.16/MMBtu Ethane 35.3 cpg SE Asia Avg. West Europe Avg. NE Asia Avg MDE Ethane MDE Avg. Alberta Ethane U.S. Average U.S. Ethane CUMULATIVE ETHYLENE CAPACITY (million tons)

12 What Does Shale Gas Development Do? Increasing NGL supplies within North America Barrels Per Day 3,500 3,000 2,500 2,000 Ethane 1,500 Propane 1,000 n-butane 500 i-butane Natural Gasoline

13 North American Feedslate Becoming Lighter Wt% Produced From Feedstock 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Monthly Ethylene Production By Feedstock 0% Given its high selectivity to ethylene & relative cost position to other feeds, ethane is consistently the most favored feed Once oil & gas began to diverge, producers have been shifting feedslates lighter to capitalize on the advantage Ethane Propane Butane Naphtha Gas Oil 13

14 2012 U.S. Ethylene Production Losses (With Forecast) Million Pounds, Monthly Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Unconfirmed Unplanned** '11 Cumulative Production Loss Forecast '13 Cumulative Production Loss Series4 * Includes both confirmed and unconfirmed outages **Forecast period assumes a forecast of unplanned outages Million Pounds, Cumulative

15 Ethylene Market View North American Capacity Additions Leverage Ethane Announced (-000- MT) Future BASF/Fina (Port Arthur) 180 Chevron Phillips (Cedar Bayou) 1500 Dow (Taft / Freeport) * Equistar (All locations) Exxon (Baytown) 1500 Formosa (Point Comfort) 800 Ineos (Chocolate Bayou) Oxy (Ingleside) 550* Sasol (Lake Charles) 1400 Shell (Northeast) 1000* Westlake (Lake Charles) Williams (Geismar) Nova (Sarnia) 250* Braskem/Idesa (Mexico) 1000 Unidentified Total Cumulative Total ,269 * Dow, Shell, NOVA, and Oxy capacity additions shown are IHS estimates Dow, 15Shell, NOVA, and Oxy capacity additions shown are CMAI estimates

16 Global Annual Feedstock Cash Margins Dollars Per Metric Ton 1, U.S. Ethane U.S. Integrated Lt. Naphtha WEP Naphtha Discounted Price SEA Naphtha U.S. Weighted Average 16

17 Ethylene Market View Global Net Ethylene Capacity Million Tons, Ethylene Capacity Growth (Bars) or Demand Growth (Line) Americas Europes/CIS/Baltics Middle East/Africa Asia Change in World Demand 17

18 Ethylene Market View Development of two low production cost regions * Shale development has enabled the North American producer to become one of the lowest cost producers in the world Combined with the Middle East, over 40% of the global ethylene capacity is now cost advantaged Other cracking capacity likely to trend towards increased LPG consumption in order to try and remain competitive Higher cost countries may respond with protectionist measures *

19 Polyethylene

20 Domestic Demand by Region NEA EUR NAM 2.4% 2.7% 6.2% AFR/MDE SEA SAM 5.0% 4.9% 6.0% Average Annual Growth Rate, Total Demand: 4.7% ISC 8.5% %: Average Annual Growth Rate Demand by Region, Million Metric Tons

21 Global Production Capacity Growth 2007 Total: 77.8 AAGR LDPE = +17.8% LLDPE = +34.2% HDPE = +27.4% 2012 Total: Total: Capacity, Million Metric Tons LDPE LLDPE HDPE

22 World Consumption by End Use Other Raffia 4.5% 2.6% Fiber 6.0% Rotomolding 5.0% Wire & Cable Blow Molding Extrusion Coating 3.4% 3.0% 4.6% Average Annual Growth Rate, Total Demand: 4.7% Pipe & Profile 5.7% Injection Molding 5.0% Film & Sheet 5.0% %: Average Annual Growth Rate

23 North America New PE Projects Company Location Country LDPE LLDPE HDPE Startup Type Equistar LaPorte, TX United States 300 Q Hypo (1) Equistar Morris, IL United States 50 Q Hypo (1) Nova Sarnia Canada 100 Q Hypo 2016 Braskem Idesa Coatzacoalcos Mexico Q (1) Nova Joffre Canada 250 Q Hypo (1) Formosa Point Comfort, TX United States 300 Q (1) ExxonMobil Mont Belvieu, TX United States Q (1) 2017 Dow Gulf Coast United States Q Hypo CPChem Sweeny, TX United States Q (1) Nova Sarnia Canada 350 Q Hypo (1) Sasol Gulf Coast United States Q Hypo Shell Marcellus, United States Q Hypo Totals, 000's MT Notes: (1): Announced projects included in our capacity database; (2): Announced expansions with IHS estimate of product and size, also not included in database; Hypo (1): reported projects not fully verified or approved and not included in the database; Hypo: IHS estimates of product and size for announced ethylene crackers - PE not in database. 23

24 Global Polyethylene Capacity Additions Capacity, Million Metric Tons Global Capacity AAGR 12-17: 4.9% Global Demand AAGR 12-17: 4.7% Asia/Pacific Africa/ Middle East North America South America Central Europe/ CIS West Europe Global Demand Change

25 PE: North America Current Situation Domestic demand is positive by 2.6% through August Export volumes are negative by 3.5% YTD. Total demand is higher versus 2011 YTD by 1.2% Domestic / total demand has been trending higher since April low point due to increased production capacity, lower prices, and restocking. Export volumes averaging about 700 million pounds per month = 22% of total through August. Exports as a % of production about 5% below 2011 level, and avg monthly shipments are about 25 million pounds lower than 2011 YTD. We expect demand to continue on the recent track and forecast total 2012 demand to approximate 2011 levels growth slightly below GDP levels

26 PE Demand: U.S. and Canada Million Metric Tons Total Demand = 37.4 MMT Total Demand = 38.2 MMT YTD Demand = 25.7 MMT Annualized = 38.6 MMT = 37.4 MMT = 38.2 MMT = 25.7 MMT = 38.6 MMT 0.0 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 TotPE Domestic Demand TotPE Exports 26

27 U.S. & Canada PE Resin Producer Inventory Million Pounds Days Inventory Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Daily Demand Days Inventory 0 27

28 Regional LLDPE Butene Prices Cents Per Pound Jan-07 Nov-07 Sep-08 Jul-09 May-10 Mar-11 Jan-12 Nov-12 Sep-13 NAM Cash Cost, Integrated NAM LLDPE WEP LLDPE CHINA LLDPE (Spot) 28

29 Polyethylene Chain Margins Cents Per Pound, Polyethylene 40 Dollars Per Metric Ton PE Margin - Contract HDPE Blow Molding Non-Int. Including Discounts Ethylene Margin - Average Acquisition Ethylene Price Minus Ethane Cracking Costs 29

30 PE Summary Global demand growth exceeds GDP growth with particular strength in Asia and Latin America Domestic demand growth in developed economies continues to lag GDP Significant capacity additions forthcoming in North America as producers leverage shale based economics Primary threats to margin growth are continued weakness in the global economy and longer term the start up of new capacity in U.S. and MDE Environmental issues curtail growth for HDPE HMW applications but green PE demand growth remains attractive. M LLDPE resins represent superior demand and margin growth opportunities 30

31 Polyester Chain Market Review

32 Global Demand By Region Global Polyester Demand 55.6 Million Metric Tons Fiber 34.5 Million Metric Tons PET 17.4 Million Metric Tons China Non-China Asia Southeast Asia Indian Sub Cont. MDE/AFR Europe South America North America 32

33 World Polyester Demand Growth By Product Thousand Metric Tons 6,000 5,000 4,000 3,000 2,000 1, ,000-2,000-3, Filament Staple Fiber PET Packaging 33

34 World Polyester Demand Growth By Region Million Metric Tons China ISC Rest of World 34

35 Polyester Raw Materials 35

36 Refineries Are Built to Make Fuel! PET Must Buy Away Its Feedstocks Gasoline Crude Oil Naphtha Gas Oil Ethane Propane Butane Refinery Butane Hydrogen Reformer Reformate Steam Cracker BTX BTX Extraction XYLENES TOLUENE BENZENE Propylene/PP o-xylene m-xylene p-xylene PTA/DMT PIA ETHYLBENZENE/ STYRENE PET POLYETHYLENES Natural Gas Gas Separation Unit Methane Ethylene Heating Fuel ETHYLENE DICHLORIDE/ PVC ETHYLENE GLYCOL 36

37 Raw Material Utilization Per Unit of PET 0.22 Ethylene 0.58 Paraxylene (PX) + O 2 Acetic Acid Ethylene + O 2 Oxide +H 2 O (EO) 0.86 Terephthalic Acid (PTA) + Ethylene Glycol (MEG or EG) 0.36 Naphtha Crude Oil Polyethylene Terephthalate (PET) +H 2 O Isophthalic Acid 37

38 Global PX Capacity Growth Million Metric Tons Operating Rate, Percent Asia Americas Excess Capacity Europe, Middle East, Africa Global Demand Growth Operating Rate 38

39 Global MEG Capacity Growth Million Metric Tons Percent Operating Asia Americas Excess Capacity Europe, Middle East, Africa Global Demand Growth Operating Rate 39

40 Global PTA Capacity Growth Million Metric Tons Operating Rate, Percent Americas Europe, Middle East, Africa Asia Global Demand Growth Excess Capacity Operating Rate 40

41 Global PET Capacity Growth Million Metric Tons Percent Operating Rate Americas Asia Excess Capacity Europe, Middle East, Africa Global Demand Growth Total Operating Rate 41

42 North America PET Demand Million Metric Tons Percent Operating Rate U.S. Mexico Canada Net Exports Capacity Op. Rate 30

43 North American PET Consolidation 14% 14% 2010/2011 Pre-Consolidation 15% 19% 9% 3% 17% 9% DAK Indorama M&G Nan Ya Selenis Wellman Invista Eastman Total Capacity = 4635 Million Metric Tons

44 2014 North American PET Capacity 33% 7% 2% 26% 32% DAK Indorama M&G Nan Ya Selenis

45 PET U.S. Component Costs Net Costs Total Equals PET Price Cents Per Pound Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Crude PX Comp PTA Comp MEG Comp PET Spread R/C Frt

46