CAN THE INDUSTRY TACKLE THE CHALLENGES OF TOMORROW? DR. CRYSTAL CHIANG ASIA DIRECTOR POLYAMIDE PCI WOOD MACKENZIE, TAIWAN

Transcription

1 CAN THE INDUSTRY TACKLE THE CHALLENGES OF TOMORROW? DR. CRYSTAL CHIANG ASIA DIRECTOR POLYAMIDE PCI WOOD MACKENZIE, TAIWAN

2 Contents 1 China s New Environmental Policies 2 The Effect of These Policies On The Polyamide Chain 3 Is China Going To Be Long, Short or Balanced? 4 Margin and Cost 5 Key Messages

3 Contents 1 China s New Environmental Policies 2 The Effect of These Policies On The Polyamide Chain 3 Is China Going To Be Long, Short or Balanced? 4 Margin and Cost 5 Key Messages

4 China s Macro Economy GDP Growth in China GDP Growth in China

5 Clean Waters and Green Mountains Policy

6 Regulations BEIJING Initiator Sept , Guofa (2013) No.7 Air Water Soil April , Guofa (2015) No.17 May , Guofa ( 2016) No.31 HEBEI TIANJIN Goal By 2017 PM10 decrease 10% PM2.5 decrease 15-25% By 2020, goodquality water larger than 70% within the seven major river basins By 2020, about 90% of contaminated farmland should be made safe to use. SHANXI SHANDONG HENAN 2+26 cities: Beijing and Tianjin, surrounding by 26 cities including Shijiazhuang, Tangshan, Langfang, Baoding, Cangzhou, Hengshui, Xingtai, Handan in Hebei province; Taiyuan, Yangquan, Changzhi, Jincheng in Shanxi province; Jinan, Zibo, Ji ning, Dezhou, Bincheng, Binzhou, Heze in Shandong province; Zhengzhou, Kaifeng, Anyang, Hebi, Xinxiang, Jiaozuo, Puyang in Henan province

7 Levies for Pollution in China, by Area (effective 1 January 2018) * 1 Unit (Air) = 16.7 kg of CO2 or 0.95 kg of SO2 Note: Additional levies for Coal waste (RMB 5 / Unit) and Hazardous Waste (RMB 1000 / mt)

8 Contents 1 China s New Environmental Policies 2 The Effect of These Policies On The Polyamide Chain 3 Is China Going To Be Long, Short or Balanced? 4 Margin and Cost 5 Key Messages

9 Major Drivers of Production Losses Environmental Taxes & Penalties Lack of competitiveness Maintenance Shutdown (MSD) Environmental Inspections Mandatory Switch from Coal to Gas Short term shut down (STSD) Ammonium sulphate destination Intermediates Production Losses New Chinese Environmental Policies Safety Risks (plants close to cities) Logistics (Diesel restrictions) Source: PCI Wood Mackenzie

10 Caprolactam Plants in China Existing and new plants Idle plants Black Cat Qinghua Lanhua 100 Risun 100 Yangmei 200 Shijiazhuang 200 Shandong Haili 200 Lubao 100 Luxi 140 Fanming 200 Jiangsu Haili 200 Shenma 100 Fibrant Nanjing 400 Sanning 100 Baling Hengyi 200 Baling 300 Baling Hengyi Huafeng Plant Relocation? Shenyuan 400 Chongjing 200 Tianchen Yaolong 280 Source: PCI Wood Mackenzie

11 China Caprolactam Supply / Demand Source: PCI Wood Mackenzie

12 Cyclohexanone Plants in China Dushanzi 60 Shijiazhuang 260 Liaoyang 110 Lanhua 100 Yangmei 360 Lubao 100 Shenma 355 Sanning 100 Huafeng 120 Baling 240 TongshanChonghao 100 Risun 100 Zhongyi 70 Shandong Haili 480 Luxi 300 Hualu Hengsheng220 HongyeGroup 200 Jiangsu Haili 500 Nanjing Petro 160 Baling Hengyi 200 Dongxin 80 Shenyuan 100 Chongjing 200 Tianchen Yaolong 200 Source: PCI Wood Mackenzie

13 China Cyclohexanone Supply / Demand Source: PCI Wood Mackenzie

14 Adipic Acid Plants in China Dushanzi 75 Liaoyang 140 Yangmei 150 TongshanChonghao 160 Shenma 415 Shandong Haili 300 Hualu Hengsheng160 HongyeGroup 300 Jiangsu Haili 300 Profit? OP Rates? Huafeng 480 Source: PCI Wood Mackenzie

15 China Adipic Acid Supply / Demand Source: PCI Wood Mackenzie

16 Contents 1 China s New Environmental Policies 2 The Effect of These Policies On The Polyamide Chain 3 Is China Going To Be Long, Short or Balanced? 4 Margin and Cost 5 Key Messages

17 Caprolactam Supply / Demand and Trade in China Source: PCI Wood Mackenzie & Global Trade Tracker

18 PA6 Supply / Demand and Trade in China Source: PCI Wood Mackenzie & Global Trade Tracker

19 Composition of PA6 Supply to China Source: PCI Wood Mackenzie & Global Trade Tracker

20 Adipic Acid Supply / Demand and Trade in China Source: PCI Wood Mackenzie & Global Trade Tracker

21 Contents 1 China s New Environmental Policies 2 The Effect of These Policies On The Polyamide Chain 3 Is China Going To Be Long, Short or Balanced? 4 Margin and Cost 5 Key Messages

22 Caprolactam Cash Cost (inc. by-products) Av 2017 June 2018 America Europe China ROA Source: PCI Wood Mackenzie

23 What Determines Competitiveness in CPL? Source: PCI Wood Mackenzie and Fertecon

24 Ammonium Sulphate Regional Prices Source: PCI Wood Mackenzie and Fertecon

25 China Ammonium Sulfate (AS) Exports vs. Production 2020 Source: PCI Wood Mackenzie and Fertecon

26 PA6 Polymer Cash Cost Av 2017 June 2018 America Europe China ROA Source: PCI Wood Mackenzie

27 Adipic Acid Cash Cost Av 2017 June 2018 America Europe China ROA Source: PCI Wood Mackenzie

28 Chinese Intermediates More Margin Oriented? Adipic Acid Prices Adipic Acid Spreads over Benzene in China Source: PCI Wood Mackenzie

29 PA66 Cash Cost Av 2017 June 2018 America Europe China ROA Source: PCI Wood Mackenzie

30 PA6 and PA66 Prices - Asia Source: PCI Wood Mackenzie

31 Adiponitrile (ADN) Realistic Capacity Scenario Source: PCI Wood Mackenzie

32 Substitution Risk Needs to Compensate Lack of Available Capacity? Source: PCI Wood Mackenzie

33 Contents 1 China s New Environmental Policies 2 The Effect of These Policies On The Polyamide Chain 3 Is China Going To Be Long, Short or Balanced? 4 Margin and Cost 5 Key Messages

34 Key Messages The Chinese central government is serious about implementing its environmental policies. Chinese manufacturing will be restricted and / or sacrificed by these environmental policies, especially in 28 major cities. Despite these new environmental policies, we expect PA6 polymer, CPL and Adipic Acid to all be in over-supply in China. Most Chinese producers will become less competitive when they switch from coal to natural gas and pay tax for air and water. The economic disposal of Chinese Ammonium Sulphate will become increasingly challenging in future. PA66 prices are driven by limited raw materials. Source: PCI Wood Mackenzie