HOW LONG WILL THE RUBBER OVERSUPPLY LAST?

Transcription

1 1 HOW LONG WILL THE RUBBER OVERSUPPLY LAST? PAUL BRISSON VICE PRESIDENT C4 OLEFINS & DERIVATIVES ARGUS MEDIA, HOUSTON

2 How Long Will the Rubber Oversupply Last APIC, Kuala Lumpur, Malaysia Paul Brisson VP C4 Olefins & Derivatives Houston, Texas, USA 21 August 2018 London Houston Moscow Singapore Dubai New York Beijing Kiev Tokyo Astana Shanghai Rio de Janeiro Washington DC Riga Calgary Brussels Cape Town Mexico City Berlin San Francisco Sydney Market Reporting Consulting Events

3 3 One of the world s leading PRAs, Argus is a team of more than 800 staff members in 21 global offices Publishing more than 11,000 daily spot and forward price assessments, plus market intelligence for world commodities markets Coverage includes: Energy Fertilizers Petrochemicals Metals Services Price reporting and indexation Consulting Conferences Indexation examples US crude oil US and European refined products US and European natural gas NGLs US and European environmental markets The Argus view

4 London Houston Moscow Singapore Dubai New York Beijing Kiev Tokyo Astana Shanghai Rio de Janeiro Washington DC Riga Calgary Brussels Cape Town Mexico City Berlin San Francisco Sydney

5 5 Argus Media group notices The Argus Media group (referred to herein as Argus ) makes no representations or warranties or other assurance, express or implied, about the accuracy or suitability of any information in this presentation and related materials (such as handouts, other presentation documents and recordings and any other materials or information distributed at or in connection with this presentation). The information or opinions contained in this presentation are provided on an as is basis without any warranty, condition or other representation as to its accuracy, completeness, or suitability for any particular purpose and shall not confer rights or remedies upon the recipients of this presentation or any other person. Data and information contained in the presentation come from a variety of sources, some of which are third parties outside Argus control and some of which may not have been verified. All analysis and opinions, data, projections and forecasts provided may be based on assumptions that are not correct or which change, being dependent upon fundamentals and other factors and events subject to change and uncertainty; future results or values could be materially different from any forecast or estimates described in the presentation. To the maximum extent permitted by law, Argus expressly disclaims any and all liability for any direct, indirect or consequential loss or damage, claims, costs and expenses, whether arising in negligence or otherwise, in connection with access to, use or application of these materials or suffered by any person as a result of relying on any information included in, or omission from, this presentation and related materials or otherwise in connection therewith. The information contained in this presentation and related materials is provided for general information purposes only and should not be construed as legal, tax, accounting or investment advice or the rendering of legal, consulting, or other professional services of any kind. Users of these materials should not in any manner rely upon or construe the information or resource materials in these materials as legal, or other professional advice and should not act or fail to act based upon the information in these materials.

6 6 Presentation Topics Why is there so much synthetic rubber capacity in the world? Key events that triggered expansion Rubber expansion Butadiene price volatility Outlook - the next five years

7 7 China and US auto light vehicle sales

8 8 China Radial Tire Output

9 9 Polybutadiene capacity growth

10 SBR capacity growth 10

11 China Synthetic Rubber Production 11

12 12 China butadiene production

13 13 China butadiene supply

14 14 Global butadiene pricing

15 What is the future for China s auto 15 industry? China will remain the largest auto market in the world #1 priority improving air quality in major cities China emits more CO2 than any other country in the world Beijing is the most polluted city in the world Reducing traffic congestion in major cities Developing sustainable transit Promoting conversion to electric vehicles (EV) Light vehicle sales growth must slow down

16 16 China light vehicle sales

17 17 NE Asia drives the global butadiene market

18 NE Asia butadiene capacity vs. demand

19 NE Asia butadiene production vs. consumption 19

20 20 NE Asia butadiene trade

21 NE Asia PBR / SBR Capacity and Production 21

22 NE Asia Synthetic Rubber Polybutadiene NE Asia 51% global capacity NEA Asia 56% global production China 29% global capacity China 32% global consumption Demand growth < 2%/yr Styrene butadiene rubber (SBR) NE Asia 43% global capacity NE Asia 52% global production China 24% global capacity China 25% global production Demand growth esbr 1.5%/yr Demand growth ssbr 4.5%/yr

23 Conclusions There will be adequate capacity to produce PBR and SBR in the coming years. Regional growth will be focused in China. Demand growth along the supply chain of light vehicles, tires, synthetic in China is slowing while China shifts attention to infra structure and environmental issues. NE Asia will remain structurally short of butadiene. NE Asia will remain a significant net importer of butadiene from all other regions in the world, possibly including the US. The oversupply of rubber is a misconception the shortage of butadiene in NE Asia is the real problem.