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Polyamide & Intermediates Markets
(Grace) Shen Hong
Synthetic Fibres Raw Materials Committee Meeting at APIC 2013
Taipei, 10 May 2013
APIC 2013
AGENDA
Polyamide 6 Intermediates
• World Caprolactam Supply and Demand
• Polyamide 6 Demand
• Economic Analysis
• Conclusion
Polyamide 66 Intermediates
• World Adipic Acid Supply and Demand
• World Adiponitrile Supply and Demand
• Polyamide 66 Demand
• Conclusion
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
1984 1988 1992 1996 2000 2004 2008 2012 2016 2020
Growth 3.4% p.a.
Capability to produce
Growth 3.0% p.a.
Growth 2.7% p.a.
Caprolactam Consumption
Including uncertain plants
Including highly probable new plants
Effect of unscheduledplant downtime 2010-2011
Oversupply
Forecast Growth 3.0%
p.a.
Source: Tecnon OrbiChem
APIC 2013
WORLD CAPROLACTAM CAPABILITY vs DEMAND
1,000 Metric Tons
BA
SF
DSM
Ube
Hone
ywel
l
CPD
C
Capro
Corp
Lanx
ess
Sum
itom
o
Dom
o
C.I.
S
Pola
nd
India
Oth
ers
Sin
opec
Bohu
i
Sha
ndong
Hong
ye
Zhe
jiang
Juh
ua
Sha
ndong
Lux
i
Hub
ei S
ann
ing
Fujian
Lihe
ng
Fujian
Tianc
hen-200
0
200
400
600
800
1,000
1,200
Hengyi
Baling
Uncertain New Projects In China
2011
Closure2014
Additions 2012
Additions 2014
Additions 2015-2016
Additions Uncertain
Additions 2013
Fujian
Guangdong
China
China
China
APIC 2013
CAPROLACTAM CAPACITY 2011– 2016
1,000 Metric Tons
Source: Tecnon OrbiChem
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Source: Tecnon OrbiChem
APIC 2013
WORLD CAPROLACTAM CAPABILITY vs DEMAND
Rest of the World Caprolactam Consumption
Capability to produce
World Growth 2.7% p.a.
ChinaConsumption
1,000 Metric TonsIncluding uncertain plants
Including highly probable new plants
World Growth 2013-2020 3.0% p.a.
Growth 2013-20208.4% p.a.
1,000 Metric Tons
Source: Tecnon OrbiChem
APIC 2013
WORLD CAPROLACTAM REGIONAL NET TRADE
-800
-700
-600
-500
-400
-300
-200
-100
0
100
200
300
400 S &
SE A
sia
E E
uro
pe
W E
uro
pe
N A
merica
S A
merica
ME &
Africa
Taiw
an &
S K
ore
a
Chin
a2005
2004
2006
2007
2008
2009
2010
Japan
2011
2012
2004
2012
1,000 Metric Tons
Source: Tecnon OrbiChem
APIC 2013
WORLD CAPROLACTAM REGIONAL NET TRADE TRENDS TO 2020
S &
SE A
sia
E E
uro
pe
W E
uro
pe
N A
merica
S A
merica
ME &
Africa
Taiw
an &
S K
ore
a
Chin
a
Japan
Forecast Trend to 2020
-800
-700
-600
-500
-400
-300
-200
-100
0
100
200
300
400
APIC 2013
WORLD POLYAMIDE 6 CONSUMPTION BY END-USE
Source: Tecnon OrbiChem
1,000 Metric Tons
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Textile Fibre
Bulked Carpet
High Ten Yarn
Staple
PA6 Resin
3.1%
1.8%
4.1%
Growth 2012 - 2020
-2.5%
APIC 2013
WORLD POLYAMIDE 6 DEMAND BY REGION
Source: Tecnon OrbiChem
1,000 Metric Tons
2005
2012
2005
2012
2005
2012
2005
2012
2005
2012
2005
2012
2005
2012
2005
2012
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Nor
thAmer
ica South
America W
est
Euro
pe East
Euro
peM
E & A
frica
S&SE
Asia
Nor
theas
t Asia
China
Textile Filament
High Ten Yarn
BCF & Staple
PA6 Resin
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150
$/ton Caprolactam
Brent Crude oil price $/bbl
Cyclohexane
Energy related costs (steam, ammonia, etc.)
Energy dependant costs
Delivery
Packing, loading
Fixed costs of supplying plants
Cats & Chemicals
Fixed costs of caprolactam plant
Cost of Production in Asia
APIC 2013
CAPROLACTAM PRODUCTION COST vs OIL PRICE
Source: Tecnon OrbiChem
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150
$/ton Caprolactam
Cyclohexane
Packing, loading shipping
Fixed costs of supplying plants
Cats & Chemicals Fixed costs of
caprolactam plant
Cost of Production in Asia
Crude Oil Price $/bbl
Delivery
Energy dependant costs
Energy related costs (steam, ammonia, etc.)
11
1 2 3 45
6 78
9
10
12
2009
2008
12
34
5 6
7
89
1011
12
2010
Profit zo
ne
12
34
5
7
6
8 910
1112
2011
1 2
3 4
510
9
8
6 7
11
12
2012
2013
51
2 3
4
6
7
89
10
11
12
APIC 2013
CAPROLACTAM PRODUCTION COST vs OIL PRICE
Source: Tecnon OrbiChem
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150
$/ton Caprolactam
Cyclohexane
Packing, loading shipping
Fixed costs of supplying plants
Cats & Chemicals Fixed costs of
caprolactam plant
Cost of Production in Asia
Crude Oil Price $/bbl
Delivery
Energy dependant costs
Energy related costs (steam, ammonia, etc.)
11
1 2 3 45
6 78
9
10
12
2009
2008
12
34
5 6
7
89
1011
12
2010
Profit zo
ne
12
34
5
7
6
8 910
1112
2011
1 2
3 4
510
9
8
6 7
11
12
2012
2013
51
2 3
4
6
7
89
10
11
121 2
3
APIC 2013
CAPROLACTAM PRODUCTION COST vs OIL PRICE
Source: Tecnon OrbiChem
0
500
1,000
1,500
2,000
2,500
3,000
3,500
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150
$/ton Caprolactam
Brent Crude oil price $/bbl
Cyclohexane
Energy related costs (steam, ammonia, etc.)
Energy dependant costs
Delivery
Packing, loading
Fixed costs of supplying plants
Cats & Chemicals
Fixed costs of caprolactam plant
Cost of Production in Asia
APIC 2013
CAPROLACTAM PRODUCTION COST vs OIL PRICE
Source: Tecnon OrbiChem
0 1000 2000 3000 4000 5000 6000
0
500
1000
1500
2000
2500
3000
3500
Cumulative Capacity ktpa
US Dollars per Ton
Fixed Cost
Variable Cost
Source: Tecnon OrbiChem
APIC 2013
CAPROLACTAM INDUSTRY CASH COST CURVEOctober 2012
Each Column Represents an Existing Caprolactam Plant
APIC 2013
TIGHTNESS INDEX
(Sloppy)
Over-Supplied75.0%
Loose 84.0%
Balanced 90.0%
Tight 93.7%
Very Tight 96.0%
Markets Utilisation Rate
WorldWorld Capacity
Source: Tecnon OrbiChem
0.6
0.8
1
1.2
1.4
Index
Tightness
Source: Tecnon OrbiChem
For a given year:
World Tightness Index = log10
Capability
Capability - Consumption
Capability = Annual Nameplate Capacity less Capacity off line*
* Due to unscheduled stoppages, not scheduled maintenance turnarounds
APIC 2013
TIGHTNESS INDEX
Source: Tecnon OrbiChem
APIC 2103
WORLD CAPROLACTAM CAPABILITY vs DEMAND
1,000 Metric Tons
2,500
3,000
3,500
4,000
4,500
5,000
5,500
6,000
6,500
7,000
7,500
1984 1988 1992 1996 2000 2004 2008 2012 2016 2020
Growth 3.4% p.a. Growth 3.0% p.a.
Growth 2.7% p.a.
Capability to produce
Caprolactam Consumption
Tightness Index for 2014 = Log10CB
B
C
Including uncertain plants
Including highly probable new plants
APIC 2013
CAPROLACTAM PRICE HISTORY - ASIA
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
60 70 80 90 100 110 120 130 140
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
60 70 80 90 100 110 120 130 140
Tightness Index
Brent Crude Oil Price $/bbl
$3400$3200$3000$2800$2600$2400$2200$2000
VERY TIGHT
TIGHT
BALANCED
OVER-SUPPLIED(SLOPPY)
LOOSE
H2 2009
H1 2010
H2 2010
H1 2011
H2 2011
H1 2012
H2 2012
H1 2013
Source: Tecnon OrbiChem
APIC 2013
CAPROLACTAM PRICE – ASIA – 2010 by month
2010
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
60 70 80 90 100 110 120 130 140
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
60 70 80 90 100 110 120 130 140
Tightness Index
Brent Crude Oil Price $/bbl
$3400$3200$3000$2800$2600$2400$2200$2000
H1 2010
H2 2010VERY TIGHT
TIGHT
BALANCED
OVER-SUPPLIED(SLOPPY)
LOOSE
Source: Tecnon OrbiChem
2011
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
60 70 80 90 100 110 120 130 140
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
60 70 80 90 100 110 120 130 140
Tightness Index
Brent Crude Oil Price $/bbl
$3400$3200
$3000$2800$2600$2400$2200$2000
VERY TIGHT
TIGHT
BALANCED
OVER-SUPPLIED(SLOPPY)
LOOSE
H1 2011
H2 2011
APIC 2013
CAPROLACTAM PRICE – ASIA – 2011 by month
Source: Tecnon OrbiChem
APIC 2013
CAPROLACTAM PRICE – ASIA – H1 2012 by month
H1 2012
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
60 70 80 90 100 110 120 130 140
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
60 70 80 90 100 110 120 130 140
Tightness Index
Brent Crude Oil Price $/bbl
$3400$3200$3000$2800$2600$2400$2200$2000
VERY TIGHT
TIGHT
BALANCED
OVER-SUPPLIED(SLOPPY)
LOOSE
H1 2012
Source: Tecnon OrbiChem
H2 2012
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
60 70 80 90 100 110 120 130 140
Tightness Index
APIC 2013
CAPROLACTAM PRICE – ASIA – 2012 by month
Brent Crude Oil Price $/bbl
$3400$3200$3000$2800$2600$2400$2200$2000
VERY TIGHT
TIGHT
BALANCED
OVER-SUPPLIED(SLOPPY)
LOOSE
H2 2012
Source: Tecnon OrbiChem
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
60 70 80 90 100 110 120 130 140
Tightness Index
Brent Crude Oil Price $/bbl
$3400$3200$3000$2800$2600$2400$2200$2000
VERY TIGHT
TIGHT
BALANCED
OVER-SUPPLIED(SLOPPY)
LOOSE
2013
Forecast by the US Energy Information Administration
APIC 2013
CAPROLACTAM 2013 PRICE FORECAST – ASIA(Dec 2012 Forecast)
Source: Tecnon OrbiChem
$2400
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
1.5
1.6
60 70 80 90 100 110 120 130 140
Tightness Index
Brent Crude Oil Price $/bbl
$3400$3200$3000$2800$2600
$2200$2000
VERY TIGHT
TIGHT
BALANCED
OVER-SUPPLIED(SLOPPY)
LOOSE
2014
APIC 2013
CAPROLACTAM 2014 PRICE FORECAST - ASIA
Source: Tecnon OrbiChem
Forecast by the US Energy Information Administration
April 2013
APIC 2013
CONCLUSIONS - POLYAMIDE 6 INDUSTRY
• World caprolactam consumption showed little growth in 2011, then returned to growth in 2012 -- but only in China
• Caprolactam consumption has grown about 18% in 2012 in China, a bounce-back after stagnation in 2011, boosted by both textile applications and engineering plastics applications
• Outside China, caprolactam growth has been zero or negative in 2012• Six new 100 ktpa caprolactam units have been brought on stream in China
in 2012, by Haili (2), Hengyi (2), Hongye (1) and Sinopec (1), doubling China’s capacity within 12 months
• These additions have moved the world caprolactam balance into over-supply, yet more capacity of 400 ktpa will come on stream in H2 2013 and various other projects are under construction or planned in China
• World caprolactam over-supply is thus inevitable over the next few years, possibly mitigated by closure of some old plants
• This has dire consequences for caprolactam industry profitability over the next few years
• Caprolactam producers need to develop and promote PA6 engineering plastics applications in order to boost consumption
Source: Tecnon OrbiChem
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1995 1999 2003 2007 2011 2015 2019
Source: Tecnon OrbiChem
APIC 2013
WORLD ADIPIC ACID CAPABILITY vs DEMAND
Adipic Acid Consumption
ForecastGrowth 2.7%
Capability to Produce
Invista closes 450 ktpaat Wilton & Maitland, rebuilds Orange
Growth 4.0%
1,000 Metric Tons
APIC 2013
WORLD ADIPIC ACID PRODUCERS
Source: Tecnon OrbiChem
1,000 Metric Tons
Invis
ta
Rhod
ia
Asc
end
BA
SF
Asa
hi K
ase
i
Ra
dic
i
Lanx
ess
Uk
rain
e
Lia
oya
ng P
etr
och
em
ica
l
Chin
a S
henm
a
Sha
nd
ong H
ongye
Sha
nd
ong H
aili
Dush
anzi Ti
anli
Hua
lu H
engsh
eng
Chongq
ing F
ux
iang
Ya
ngm
ei Fengx
i
Ka
ilua
n E
nerg
y
Zhejia
ng S
huya
ng0
200
400
600
800
2011→
2013 closure
Additions 2013
Additions 2012
China
Singapore
APIC 2013
WORLD ADIPIC ACID CONSUMPTION BY END-USE
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Polyamide 66
Plasticisers
Polyurethane
Others
Source: Tecnon OrbiChem
1,000 Metric Tons
2.4%
2.9%
2.2%
Growth 2012 - 2020
3.1%
Source: Tecnon OrbiChem
APIC 2013
WORLD ADIPONITRILE CAPABILITY vs DEMAND
1,000 Metric Tons
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1995 2000 2005 2010 2015 2020
AdiponitrileConsumption
Capability to Produce
BASF closes 116 ktpaat Wilton, UK
Growth 3.1%Invista’s 254 ktpa unit atOrange, USA out of action
Assumed new300 kpta plant
ForecastGrowth 2.8%
Capability = 0.95 x Nameplate Capacity
APIC 2013
WORLD POLYAMIDE 66 CONSUMPTION BY END-USE
Source: Tecnon OrbiChem
1,000 Metric Tons
0
500
1,000
1,500
2,000
2,500
3,000
3,500
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Textile Fibre
Bulked Carpet
High Ten Yarn
Staple
PA66 Resin
1.7%
2.4%
3.9%
Growth 2012 - 2020
1.9%
APIC 2013
WORLD POLYAMIDE 66 DEMAND BY REGION
Source: Tecnon OrbiChem
1,000 Metric Tons
PA66 Fibre
PA66 Resin
Nor
thAmer
ica South
America W
est
Euro
pe East
Euro
peM
E & A
frica
S&SE
Asia
Nor
theas
t Asia
China
2005
2012
2005
2012
2005
2012
2005
2012
2005
2012
2005
2012
2005
2012
2005
2012
0
200
400
600
800
1,000
1,200
1,400
• The world adipic acid market is seriously oversupplied. China has the biggest adipic acid capacity of any country, but the average utilisationrate in China is now as low as 50%.
• Adipic acid demand for both polyurethane and polyamide applications will grow steadily, with major increases taking place in China
• However, fierce competition will lead to low profit, even for top quality adipic acid producers. A reshaping of the adipic acid industry is possible if the global economy stays volatile in 2013 and beyond
• If adiponitrile capacity is not increased in the near future, adiponitrilewill be extremely tight from 2016, possibly earlier
• PA66 producers have to grapple with high and volatile costs which are likely to persist and may damage long term PA66 growth
• Polyamide 66 resin demand in engineering plastics applications shows more dynamism than polyamide 66 fibre
• PA66 faces substitutional pressure from PA6, due to the widening pricing difference
Source: Tecnon OrbiChem
APIC 2013
CONCLUSIONS - POLYAMIDE 66 INDUSTRY
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