Methanol Correlation with Coal &

Transcription

1 Methanol Correlation with Coal & Polymers Ken Yin Nov 2, 2016 Singapore 1

2 Competitive landscape: from resource-driven to technology & demand-driven 120 Brent 6.5 Huge cost pressures on integrated oil companies with budgets slashed and capital investments shelved Margins improved for petrochemical producers, but demand is slowing and oversupply looms Gas competitiveness weakened, weakening demand for LNG creates more surplus for spot 0 Jan 2014 Jul 2014 Jan 2015 Jul 2015 Jan 2016 Jul 2016 Source: ICIS 1.5 Producers will be competing hard to find new markets. Buyers have increased negotiating power com 2

3 Reshuffle of the global trading flows Europe European petrochemical producers Long: gasoline Short: diesel, fuel oil, naphtha, LPG, kerosene, HDPE, PP, ethylene, benzene, methanol North America Shale gas revolution in US Long: gasoline, diesel, fuel oil, naphtha, LPG, HDPE, PP, ethylene, methanol Short: kerosene, benzene Asia China economic challenges South America Oil-producing Latin American countries NE Asia Long: gasoline, diesel, kerosene, benzene NE Asia Short: Fuel oil, naphtha, LPG, PP, ethylene, methanol Asia Pacific Long: benzene Asia Pacific Short: gasoline, diesel, fuel oil, naphtha, LPG, kerosene, HDPE, PP, ethylene, methanol Long: fuel oil, naphtha, LPG, kerosene, benzene, methanol Short: diesel, HDPE, PP, ethylene 3 com

4 Inter-regional arbitrage: PE (2012 vs 2018) 000 tonnes Europe USSR N America Europe ME NE Asia 4,090 8,065 N America NE Asia 590 1,771 ME Europe 2,624 3,445 SE Asia NE Asia 2,050 2,057 NE Asia SE A N America Latin America 1,237 2,010 Source: ICIS ME Latin America ME Africa 1,167 1,895 ME SE Asia 2,482 3,

5 Content I. What s the Methanol Price Range in 2017? II. How is the price correlation between Methanol VS Polymers & MTO? III.What s the uncertainty of long-term methanol prices trend? 5

6 What s the Methanol Price Range in 2017? Pricing Model Market Size Product Market Entry Information Price Characteristics of China s methanol market Characteristics of perfectly competitive market A large number of upstream and downstream companies Low industrial concentration Price taker A large number of buyers and sellers Small -scale companies Price taker Small difference in product quality Same product quality Steady flow of labour force Less monopoly Easy inflow and outflow of capital Steady flow of labour force No monopoly Steady flow of capital High symmetry of information Perfect symmetry of information The characteristics of China s methanol market resembles a perfectly competitive market with prices determined by many factors including demand and then settled through mathematical method. The high end of methanol prices is determined by MTO producers affordability for feedstock methanol numbers. Domestic methanol prices are determined by demand. The low end of methanol prices are determined by domestic methanol production costs. Time 6

7 What s the Methanol Price Range in 2017? Coal price increase by 68% from 362CNY/Ton to 610CNY/Ton since Jan to mid Oct, 2016 Methanol price increase by 24% from 205$/Ton to 255$/Ton since Jan to mid Oct, 2016 Regarding with the annual price of feedstock and methanol, coal increased by 10% and methanol cost increase by 7%. 1,200 1, Chinese Coal & Methanol Price, Coal(CNY/ton) Meoh CFR CMP($/ton) Coal (CNY/TON) Growth Rate % Meoh ($/TON) Growth Rate % % % % % % % 7

8 China coal price outlook The main logic of coal price forecasting: the demand of China and revaluation of U.S. dollar 1. The supply-side structural reform supports domestic coal prices increased in short-time. 2. ICIS supposes that coal price may return to down trend in ) The production limitation policy is difficult to continue. 2) China's economy still in the "new normal" in the future 2-3years. 3) The U.S. dollar already raised interest rates from fourth quarter in The coal price may bottoming out in : 1) Some high cost enterprises may weed out market since continuous low-price of coal. 2) The government of China may publish some policy to promote economy. 3) American government may down the interest rate from ) India and Southeast Asia countries may increase coal import from China since economic development. 8

9 China methanol price outlook Methanol prices will be pressured by MTO sector on the back of low oil and naphtha values. Demand for methanol will be slowed down by weak traditional downstream sectors, economic recovery in Europe and the US and sluggish demand for bulk commodity. In the medium-to-long term, economic recovery in Europe and the US and China s One Belt and One Road strategy will promote recovery of traditional downstream sectors further. Methanol prices in will be on the rise if crude oil prices are expected to rise to $90/bbl again and the growth rate of China s GDP will reach 6.3% Long-term forecast of crude, coal, methanol price WTI $/bbl China MEOH $/ton China coal $/ton Source:ICIS China

10 Content I. What s the Methanol Price Range in 2017? II. How is the price correlation between Methanol VS Polymers & MTO? III.What s the uncertainty of long-term methanol prices trend? 10

11 How about the correlation of Methanol price and polymers & MTO? The influence of crude oil/ olefin/ polymers The price curve of Crude oil, ethylene, propylene, methanol Dolor/ton; dolor/ barrel 1,800 1,600 1,400 1,200 1, Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 Oct-11 Dec-11 Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 ethylene CFR Northeast Asia propylene CFR China Brent oil price Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug Brent($/Bal) Growth Rate % C2 ($/TON) Growth Rate % C3 ($/TON) Growth Rate % Meoh ($/TON) Growth PE Rate % ($/TON) Growth PP Rate % ($/TON) Growth Rate % % % % % % % % % % % % % % % % % % % Source:ICIS 11

12 How about the correlation of Methanol price and polymers & MTO? The influence of crude oil/ olefin/ polymers Temporary maintenance in frequency and the effective capacity estimated to be more than 3mil. $/ton; 2,000 1,500 1, C2 Cap loss in Asia & Middle east VS Price trend ton; 月 2 月 3 月 4 月 5 月 6 月 7 月 8 月 9 月 10 月 11 月 12 月 1 月 2 月 3 月 4 月 5 月 6 月 7 月 8 月 9 月 10 月 11 月 12 月 Cap loss in Asia & Middle east Ethylene CFR NE.A Propylene CFR NE.A Source:ICIS 12

13 How about the correlation of Methanol price and polymers & MTO? The influence of crude oil/ olefin/ polymers Northeast Asian naphtha to ethylene profits record high at $827 / ton in late march Test Source:ICIS 13

14 Margin compare by different feedstock Cost comparison of different feedstock PP Average Margin by different feedstock in Crude oil price ($/bbl ) Coal price ($/tonn e) Methanol price Propane price Oil-based polyolefin ($/tonne) ($/tonne) cost($/tonne) $/ton Naphtha cracking PDH MTO CTO PP Average margin Source: ICIS China

15 How about the correlation of Methanol price and polymers & MTO? The influence of crude oil/ olefin/ polymers C2 expansion in is 9.27mil, MTO & CTO account 46% C3 expansion in is 14.43mil, MTO & CTO account 51%;PDH account 23% 2005/2010/2015/2020 C2 supply structure by feedstock /2010/2015/2020 C3 supply structure by feedstock Cracker CTO MTO Others Cracker CTO MTO Others PDH Source: ICIS China

16 How about the correlation of Methanol price and polymers & MTO? The influence of crude oil/ olefin/ polymers Ethylene chain scale expansion Propylene chain scale expansion VAM 30% Octanol 40% MEG 10% PVC Acetone 20% PP EVA -10% SM Crylic acid 0% CAN Ethylene PE PO Butanol Proplene 数据来源 : 安迅思

17 How about the correlation of Methanol price and polymers & MTO? The influence of crude oil/ olefin/ polymers MTO & CTO account 27% of olefin capacity in 2020; Polymers price can be the reference of methanol price trend in long term; 美元 / 吨 ; 美元 / 桶 1,800 Polymers & Methanol Price trend 1,600 1,400 1,200 1, Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Apr-19 Apr-20 MEOH CFR China LLDPE CFR CMP PP CFR CMP 数据来源 : 安迅思 17

18 How about the correlation of Methanol price and polymers & MTO? The correlation of different products Methanol price has weak correlation with MTO operating rate and MTO profit. MTO economy has negative correlation with methanol price. When MTO loss to a certain value, it may reduces the operating rate. As a result, Methanol price is affected. MTO operating ratevs Methanol price CTO/MTO operating ratevs Methanol price Correlation analysis with MTO correlation coefficient degree of correlation (0.07) weak or no correlation (0.23) weak correlation MTO profitsvsmethanol price 0.46 moderatecorrelation Ex-tank price in East of China Economy of MTO

19 How about the correlation of Methanol price and polymers & MTO? The correlation of different products Methanol price has significant correlation with crude oil price and plastic price What are the direct factors affect the price of methanol? Correlation analysis with methanol price and plastic price correlation coefficient degree of correlation Crude oil price VSMethanol price 0.88 significant correlation EthylenepriceVSMethanol price 0.77 correlation PropylenepriceVS Methanol price 0.89 significant correlation PPpriceVS Methanol price 0.87 significant correlation PE pricevs Methanol price 0.88 significant correlation

20 Bottom MEOH Price relate to Methanol Cost, Ceiling Price relate to MTO Margin Profits margin of the industry focus on the methanol producer MTO margin negative, polymers margin shrink even to negative; There s ceiling price considering the down streams affordability 140% Methanol producer s & MTO profit rate, % 100% 80% 60% 40% 20% 0% -20% Methanol profit rate MTO profit rate MEG profit rate -40% Take methanol enterprises in East China for example. Profits of coal enterprises in China are generally better than those in East China, profits are based on market prices 20

21 Price Trend relate to S/D balance & Inventory More imports needed in coastal area,imports even flows to inland regions High possibility that supply tight happen in 1H2017 CNY/tonne Methanol monthly supply balance vs price, Kt 4, , ,000 2, , , Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Balance EXT Jiangsu Total Inventory Available inventory Import Volume Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 21

22 The correlation of Spots & Futures Market sentiment and money boost become the main driving force of futures prices Polymers 1705 foreword discount; Methanol 1705 forward premium (200) (400) (600) 500 Methanol futures- Methanol 0 (500) (1,000) (1,500) (2,000) Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 1,000 PP futues-pp E.C (500) (1,000) (1,500) (2,000) 数据来源 : 安迅思 LLDPE futures -LLDPE E.C 22

23 2000 The correlation of Spots & Futures Structure: PP foreword discount; Methanol forward premium Spot:Methanol & PP price spreads reasonable Futures: 2500 PP forward price seems underrate & Methanol overrate Chemical Composite Index Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Organic Index Rubber Index Composite Index WTI Price WTI 1 WTI 2 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct MEOH PP LLDPE End Oct Spot Price Future price Future price 数据来源 : 安迅思 23

24 Content I. What s the Methanol Price Range in 2016? II. How is the price correlation between Methanol VS Polymers & MTO? III.What s the uncertainty of long-term methanol prices trend? 24

25 Energy price- basic assumption of all chemicals Long-term forecast of crude price Real $/mmbtu Real $/bbl( Crude ) The crude oil price may not prolonged under $30-$40/bbl The supply and demand will balanced in But inventory may drop and supply may tight until the end of Shale oil may return to market, unless crude oil price rises to $ Almost three hundred billion dolor crude oil development plan were canceled. If the crude oil price back to $75-85, other high cost oil will return to market for a long-term. The risk of crude oil price rise Capital costs were canceled (almost three hundred billion dolor) Inventory fall and geopolitical supply shortage (Syria, Yemen, Libya and so on) OPEC to cut production The risk of crude oil price down Weakeningeconomy/China (increase 400mb/d per year) Iran's output was increased (increased 700mb/d during ) The US supply is more elastic

26 The Uncertainty of CTO/MTO Extension plan The global ethylene cost curve flattening at low crude price. Average ethylene cost in 2015 fell by 30% compared with that of MTO cost ranking the first and followed by CTO as the second highest among the cost curve structure. Eg. CTO cost is 1.5 times that of the Asian naphtha cracking; MTO cost is 3 times of naphtha cracking in Asia. CTO: The completed projects can afford certain oil price fluctuation. The new CTO projects can sustain the oil price at $70~80 /barrel. The completed MTO projects can sustain the oil price at $50-55/barrel, and the new CTO projects can sustain the oil price at $75-85/barrel. Because the investment of coal chemical industry projects is huge, so they need large-scale fund-raising. Bank loans are even account for about 70% of the total investment. If oil prices stay low for a long time, coal chemical industries will loss. The old loans unable to repay and new loans are difficult to approval, as a result the capital chain may disruption. New expansion projects focus on before 2019 for a long time.

27 2015launched project 2016launched project 2017 to be launched project Gansu Huating CTP : 200KTA Query on Stable Demand Zhongtian Hechuang CTO : 650KTA Shenhua Xinjiang CTO : 680KTA Datang International Power Generation CTP : 460KTA Inner-Mongolia Mengda New Energy Chemical CTO : 600KTA Shenyang Chemical Group MTO: 120KTA Ningxia Baofeng CTP : 600KTA Shenhua Baotou CTO : 600KTA Shenhua Ningxia Coal Group CTP : 500KTA; MTP : 500KTA Qinghai Salt Lake Industry CTO : 330KTA China Shenhua Coal to Liquid and Chemical Yulin Chemical MTO: 600KTA Zhongmei Shaanxi Yulin Energy and Chemical CTO : 600KTA Shaanxi Yanchang China Coal Yulin Energy and Chemical CTO : 600KTA 数据来源 : 安迅思 TongmeiGuangfa CTO: 600KTA Shaanxi Pucheng Clean Energy Chemical CTO : 700KTA Shandong Luqing MTO: 200KTA Zhongyuan Petrochemical MTO : 200KTA Shandong Shenda Chemical MTO: 340KTA Shandong Yangmei Hengtong Chemical MTO:.300KTA Shandong Longgang Chemical MTO:.60KTA Wison (Nanjing) Chemical MTO : 295KTA Ningbo Heyuan Chemical MTO : 600KTA Zhejiang Xingxing Energy MTO : 690KTA Shandong Huabin MTO:.200KTA Shandong Ruichang petrochemical MTO:.200KTA Fude(Changzhou) Energy Chemical MTO : 330KTA Jiangsu Shenghong Group MTO : 830KTA 27

28 Uncertainty of new CTO/MTO plant start-up time Coal-to-Olefin New plant Capacity (One million tons/yr) Methanol-to-Olefin New plant Capacity (One million tons/yr)

29 2017 China Methanol New Expansion Project Project Meoh Capacity (mil tons/yr) Derivative Derivative Capacity (mil tons/yr) Commission Inner-Mongolia Zhuozheng Coal Chemical 1.2 N/A 2017 Longmei Hangtian Coal & chemical Co.,Ltd.-Shuangyashan Huaneng Group Manzhouli Coal Chemical Co., Ltd Shangdong Jiutai Energy Group(Shandong Jiutai Chemical Technology Holding Co.,Ltd)-4 Inner-Mongolia Erdos Jinchengtai Chemical Co.,Ltd XinAo Inner Mogolia XinNeng Chemical Co.,Ltd N/A CTO/Pending N/A N/A DME/TBC China Oceanwide Holding Group Co.,Ltd. 0.6 CTO/Pending Qinghai Salt Lake 1.8 CTO Tongmei GuangFa Coal Co.Ltd. 1.8 CTO

30 Global Additional Output Possibility that new Iran's expansion projects in 2017 will be slightly delay Unit: kt Effective Capacity Increase 105,000 90,000 75,000 60,000 45,000 30,000 15,000 0 NORTH AMERICA China EUROPE FORMER USSR AFRICA MIDDLE EAST ASIA AND PACIFIC SOUTH & CENTRAL AMERICA Country Company/place Capacity (time of putting into operation) OJSC Navoiyazot 300 (2018) Iran Bushehrr 1650(2018) Iran Marjan Petrochemical 1650(2017) Iran Kaveh mega 2000 (2017) 数据来源 : 安迅思 China ( ) USA Yuhuang 1700 (2019) USA Celanese/Mitsui 1300 (2015) USA Methanex 1000 (early 2015 ) 1000 (end 2015) USA South Lousiana Methanol 1900 (2019) USA OCI 175(2017) USA G2X 1400(2018) 30

31 13th Five Year Plan China's nature gas prices NG price reform is based on International crude oil price of $55-65/bbl at the beginning of 13th Five Year Plan, For long-term, NG pricing mechanisms target is market fix price National average station price Stock:2.09 Increment: The management changed from exfactory price to station price. The stock gas increased no more than 0.4 Yuan/square. National average station price Stock:2.49 Increment: The price of stock gas for non-resident increased 0.4 Yuan/square. National average station price The highest station price of incremental gas decreased 0.44 Yuan/square. The highest station price of stock gas increased 0.04 Yuan/square. National average station price Nature gas price The gas for nonresident decreased 0.7Yuan/square. The management of gas for non-resident changed from highest station price to standard station price. 31

32 Chinese Additional Output NG based methanol o/r estimated to increase in 2017 Coal based methanol o/r remain at around 80% 100% Monthly operation rate of 40 key methanol enterprises, % 80% 70% 60% 50% 40% 30% 20% 10% 0% Natural Gas Coal Delivery to Coastal 40 samples of enterprise Operating rates 32

33 The influence of carbon tax and wastewater treatment to coal chemical projects Carbon dioxide emissions of mt/yr CTO project is 10.8 ton/tons. If the carbon tax is collected on the base of 10 Yuan/ton, total tax of the project is 64.8 million RMB. The investment of wastewater treatment is high. The total cost of wastewater treatment is CNY /tonne, if salt impurities are considered as waste, the cost will gain CNY10-15 /tonne. Unit standard coal consumption ton coal/ton production The unit standard coal CO2 emissions ton CO2/ ton unit coal Coal to olefin

34 Conclusion Q1-3 China price fluctuate narrowly, and price volatility in 2017 based on supply tension 2. Methanol price has weak correlation with MTO operating rate and MTO profit. MTO economy has negative correlation with methanol price. When MTO loss to a certain value, it may reduces the operating rate. As a result, Methanol price is affected. 3. Methanol price has significant correlation with crude oil price and plastic price. Bottom Price relate to methanol Cost; Ceiling price relate to MTO margin. 4. Regarding with the price changing, demand should be taken in to consideration with the real consumption and speculative demand. The latter became strong enough, sometimes even surprising. Understanding the speculative demand is easier to understand medium-term price fluctuations. 5. The global ethylene cost curve flattening at low crude price. Average ethylene cost in 2015 fell by 30% compared with that of MTO cost ranking the first and followed by CTO as the second highest among the cost curve structure. Eg. CTO cost is 1.5 times that of the Asian naphtha cracking; MTO cost is 3times of naphtha cracking in Asia. 6. The new CTO projects can sustain the oil price at $70~80 /barrel. The completed MTO projects can sustain the oil price at $50-55/barrel, and the new CTO projects can sustain the oil price at $75-85/barrel. 7. In the long run, the natural gas price reform, a carbon tax, wastewater treatment cost do remarkable effect on coal chemical industry.

35 Solution: News + research + consulting Short-term Available on Dashboard The market real-time tracking price report Checking the market Warning of inflection point Price Index Long-term Policy interpretation for market and industry Checking the market news Professional point and analysis Training for industry, value chain and supply chain Trend prediction for industrial demand and supply The chain analysis about history and future Accumulation of historical data Trend analysis of supply and demand Long term strategic planning Customized consulting services and solutions for personality needs 35

36 Powerful database & operations consulting model design IT development /service Expert services Model encapsulate and publishing Data interface Web Service/FTP System access Application and development Application design Inquiry function Analysis functions Monitoring /warning Decision support Data model Demand-supply model Price forecasting model Forecasting model (price/supply &demand) Return on investment model Data analysis Data source ICIS China ICD database ICIS global S&DD database External data integration Third-party data Customer data 36

37 Global perspective, local wisdom More than 30 years experience in the global energy and chemical industry More than 100 thousand industry customers Covered multinational energy and chemical magnate as well as different levels of market participants Keep In close touch with active market participants around the world Covered more than 180 kinds of commodities and 9200 different price report Providing more than 1200 kinds of report More than kinds of professional news report every year More than 700 employees worldwide Houston New York Washingto n Bogota London Dusseldorf Beijing Milan Toky Guangzho o u Shanghai Mumbai Singapore Perth Brisbane Melbourne 37

38 Thank you! 殷晨洁 Ken Yin 电话 (Tel): +86 (0) 邮箱 38