Global Petrochemical Market Outlook Planning For Growth Given Heightened Uncertainty In Market Fundamentals

ASIA CHEMICAL CONFERENCE Presentation Global Petrochemical Market Outlook Planning For Growth Given Heightened Uncertainty In Market Fundamentals November 2016, Singapore ihsmarkit.com Mark Eramo, VP Global Business Development Chemicals Houston, TX mark.eramo@ihsmarkit.com

GLOBAL CHEMICAL INDUSTRY. ENABLING MODERN LIVING NATURAL RESOURCES Base Chemicals CHEMICAL INDUSTRY VALUE CHAIN Chemical Intermediates Formulated products / performance materials CUSTOMERS Mining, drilling, refining, gas processing Oil Gas Coal Minerals Renewables Olefins (Ethylene, propylene, butylene) Aromatics (benzene, toluene, xylenes) Chlor-akali (chorine, caustic soda) Others (ammonia, phosphorous) Commodities Differentiated commodities Technical specialties Plastics and engineering resins Extruded films, pipe, profiles, coatings, sheet, foams Blow-molded parts Composites Synthetic fibers Rubber products Paints and coatings Adhesives and sealants Lubricants Water treatment products Cleaning products Industrial chemicals Flame retardants Others Automotive / transportation Consumer products Packaging Building / construction Recreation / sport Industrial Medical Pharmaceutical Personal care Textiles Electrical / electronics Aircraft / aerospace Business equipment 2

Global Petrochemical Outlook / November 2016 Planning For Growth Given Heightened Uncertainty AGENDA Impact of Energy on Chemical Investment Decisions. Where are the major investments in new capacity? Energy extremes enabling non-conventional capacity. Declining CAPEX and rising Mergers & Acquisitions Strategic Considerations 3

Global Petrochemical Outlook / November 2016 Energy & Economic Fundamentals Impact Investment Decisions Energy trends impact regional competitiveness and profitability Advantaged investments in North America and China, see lower margins in low crude oil market. Economy and energy assumptions drive key decisions of location, feedstock, technology, scale Uncertainty results in delayed approvals; when combined with steady growth leads to tighter market conditions in basic chemical value-chains Crude oil (energy) at the extremes impacts demand for chemicals and plastics. On the high end, it can destroy demand and on the low end it can stimulate demand. 4

$/ MMBtu, Natural Gas $/Barrel, Crude BASE CASE PLANNING SCENARIO: Steady Increase In Crude Oil Price; Stable/Low Natural Gas In North America; Moderate Global Economic Growth Global Crude Oil Crude vs. USGC Oil vs. Natural Gas Gas 20 120 % Change, GDP 2014 2015 2016 2017 2018 15 10 5 0 Source: IHS 90 60 $43.5/bbl 30 0 10 11 12 13 14 15 16 17 18 19 20 21 22 Natural Gas WTI Brent 2016 IHS World 2.7 2.7 2.4 2.8 3.1 United States 2.4 2.6 1.4 2.2 2.2 Canada 2.5 1.1 1.2 2.2 2.3 Eurozone 1.1 1.9 1.6 1.4 1.6 United Kingdom 3.1 2.2 2.0 1.0 1.3 China 7.3 6.9 6.6 6.3 6.4 Japan -0.1 0.6 0.6 0.7 1.0 India 7.2 7.5 7.5 7.4 7.7 Brazil 0.1-3.9-3.2 0.6 2.2 Russia 0.7-3.7-0.7 0.8 1.6 5

Gas-to-Crude Global Petrochemical Outlook / November 2016 Gas-to-Crude Ratio Favors North America Investments Since 2010 USGC Natural Gas Versus WTI Crude Oil Pricing (US$ / MM BTU) 18.0 15.0 12.0 9.0 6.0 3.0 0.0 Source: IHS 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 Crude (WTI) Natural Gas Gas-to-Crude Ratio 120% 100% 80% 60% 40% 20% 0% 6

Million Metric Tons Gas-to-Crude Oil BTU Ratio, % Global Petrochemical Outlook / November 2016 Impact of Changing Energy Dynamics On Regional Chemical Capacity Additions Annual Change - Total Basic Chemicals Capacity: Ethylene, Propylene, Methanol, Benzene, Paraxylene, Chlorine 40 120% 30 20 10 0-10 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 China Asia Less China (with India) Middle East North America West Europe Gas-To-Crude BTU Ratio, % 90% 60% 30% 0% -30% 7

GLOBAL BASE CHEMICAL ASSETS BY LOCATION Benzene Chlorine Ethylene Methanol Paraxylene Propylene PG 580 MM metric tons in 2015 12

Global Petrochemical Outlook / November 2016 Investment Decisions Must Evaluate Many Factors Beyond Energy & Economy Braskem-Idesa Ethylene/PE Plant Nanchital, Veracruz, Mexico Start-Up: June 2016 Investment Assumptions: Global crude oil price scenarios Global economic growth outlook Geo-political considerations North American energy market Current state of the profit cycle China structural changes Non-conventional technology Sustainability Levels of integration Regional CAPEX differentials Logistics investments 13

Million Metric Tons Global Petrochemical Outlook / November 2016 Base Chemical Capacity To Exceed 750 MM Metric Tons By 2025 Chemical Investment Drivers Secure an energy & feedstock advantage. Base Chemicals Total Capacity By Region Ethylene, Propylene, Methanol, Benzene, Paraxylene, Chlorine 900 750 Leverage current technology and build world-scale. Invest with proximity to local markets and/or access to trade routes. Build to leverage an upstream and/or downstream integrated position. 600 450 300 150 0 Source: IHS 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 China Asia Less China (with India) North America Middle East + Africa Europe South America 2016 IHS 14

Global Petrochemical Outlook / November 2016 Beyond 2020 Where Will The Next Wave Of Capacity Be Built? Total Basic Chemical* Capacity (Million Metric Tons) Region 2015 2025 Delta North America 90 137 47 South America 24 26 2 Europe 89 101 12 Middle East / Africa 77 119 42 Asia/India (less China) 130 163 33 China 172 241 69 Total 582 787 205 * Ethylene, Propylene, Methanol, Benzene, Paraxylene, Chlorine 15

Global Petrochemical Outlook / November 2016 China: Slower Pace Of New Capacity & Increased Focus On: > Industry Competitiveness > Safety & Pollution control > Segment Consolidation China 13 th Five Year Plan Tighten pollution control; industry safety performance; rationalize inefficient/noncompetitive assets. Develop modern coal chemicals asset base. Consolidation of 100+ chemical industry parks into seven national chemical industrial zones. Rapid growth in private investment potentially changes future behavior. Overseas investment activity. 16

Million Metric Tons Global Petrochemical Outlook / November 2016 China 13 th 5-Year Plan Slows Pace Of Investment; Focus On Competitive Position, Safety & Pollution, Consolidation China - Base Chemical Total Capacity 250 200 Basic chemicals expansions of 200 MM metric tons over two decades (2005 2025). 150 Self-sufficiency in propylene 85+% by 2020; ethylene remains near 60%. 100 50 0 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 Propylene (PG/CG) Ethylene Paraxylene Benzene Methanol Chlorine Source: IHS 2016 IHS 17

Global Petrochemical Outlook / November 2016 Middle East Rate Of Investment Slows; > Adding Diverse Feedstocks; > Focused On Operational Efficiencies Ethane prices in Saudi Arabia raised to reflect transition in strategy for future investments. Low crude prices sharpen focus on operational costs. Sadara project in Saudi Arabia represents measured approach to diversify businesses. Lifting of nuclear sanctions on Iran has re-opened plans to expand the chemical space. Significant dependence on exports continues well into the future. 18

Million Metric Tons Middle East Focus Shifting To Feed-slate Diversity And Improving Operational Efficiencies Middle East Base Chemical Capacity 120 100 80 60 40 20 Global Petrochemical Outlook / November 2016 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Propylene (PG/CG) Ethylene Paraxylene Benzene Methanol Chlorine 19

Global Petrochemical Outlook / November 2016 North America: An Attractive Place For Chemicals Investments Once Again Low cost energy and natural gas liquids provide sustainable advantage. Advantaged feedstock will enable an additional wave beyond 2020, assuming crude oil price recovery (near $80/bbl) and low natural gas pricing (near $4/MM BTU). Domestic and International companies seek to invest; leveraging the low-cost opportunities. New entrants to create increased competition in domestic markets Logistics & port infrastructure investment needed to support higher level of exports. 20

Million Metric Tons North America Low Cost Brings Back Base Chemical & Associated Derivative Investments North America - Base Chemical Total Capacity 150 130 110 90 70 50 30 10-10 Global Petrochemical Outlook / November 2016 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 Ethylene Propylene (PG/CG) Methanol Chlorine Benzene Paraxylene Source: IHS 2016 IHS 21

Global Petrochemical Outlook / November 2016 Energy At The Extremes Has Catalyzed A New Era In Light Olefins Production Ethylene CTO = Coal to Olefins MTO = Methanol to Olefins GTO = Natural gas to Olefins OCM = Oxidative Coupling of methane For decades, light olefins supply based on refinery & naphtha cracker integrated sites Ethane crackers emerged where ethane was advantaged; USGC, Mexico, Alberta, Middle East; other areas where liquids rich gas was trapped. PDH = Propane Dehydro CTP = Coal to Propylene MTP = Methanol to Propylene GTP = Natural gas to Propylene Propylene Propylene was a byproduct of refining and heavy or flexible steam cracking. Today light olefins are being made on purpose via a variety of technologies beyond refining and steam cracking: PDH, CTO/P, MTO/P, Metathesis, GTO/P, OCM 23

Constant 2014$ Per MMBtu Global Petrochemical Outlook / November 2016 Energy & Feedstocks Influence Location & Technology For New Capacity Decisions Energy and feedstock deltas emerged in 2009 as part of the North America shale developments. These spreads supported on-purpose capacity to be viable as an incremental supply option. The spreads remained high through 2014, attracting a new investment wave. 2015 collapse in crude pricing has created a pause in new approvals. Crude Oil vs Natural Gas & NGLs 25 20 15 10 5 0 2000 2003 2006 2009 2012 2015 2018 2021 2024 Brent Crude Henry Hub Gas USGC Ethane USGC Propane NEA Naphtha China Coal Notes: China Coal is on a 6000kcal/kg basis, Qinhuangdao FOB Source: IHS 2016 IHS 24

Non-conventional Technology Providing Options For Future Investments In Olefins Production Conventional Light Olefins Cash Cost Global Petrochemical Outlook / November 2016 Non-Conventional Light Olefins Cash Cost 1400 1200 1000 800 600 400 200 2011 2013 2015 US$ / Metric Ton US$ / Metric Ton 0 US Ethane US PDH NEA PDH NEA Naphtha WEP Naphtha US GTP US GTO NEA CTO NEA MTO PDH = Propane Dehydro; GTP = Gas to Propylene; GTO = Gas to Olefins; CTO = Coal to Olefins; MTO = Methanol to Olefins

$B (2014$) Value, $B EBITA Multiple Global Petrochemical Outlook / November 2016 As CAPEX Declines, M&A Activity Increases As Means To Achieve Growth Global Chemical Capital Expenditures 140 120 100 80 60 40 20 0 Source: IHS 2001 2004 2007 2010 2013 2016 2019 Americas Europe Middle East Asia Pacific ROW Annual M&A Value and EBITA Multiples 140 $ Value Multiple 120 100 80 60 40 20 0 14 12 10 8 6 4 2 0 27

Global Petrochemical Outlook / November 2016 Planning For Growth Given Uncertain Fundamentals Strategic Implications Higher level of uncertainty (in market fundamentals) presents difficulty in planning best options for future growth. Board level decisions delayed; nonconventional technology being considered; higher CAPEX; higher risk premiums; increased M&A Investment decisions delays in 2015/16 could lead to supply limitations in the 2020+. On-purpose supply options are viable given extreme energy ; will be key drivers of market dynamics in the future. 28