CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E€¦ · Market Insights Retainer...

CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E

CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Oct-2017 2

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LPG

Ethane

Olefins and their feedstocks

Global petchem gases trade


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CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E Sep-17 4

LPG: One Product, Two Different Stories (Propane vs Butane)

LPG Demand: Petchems Influence

LPG Pricing Linked More to Other Products Economics

Retail Market: Present & Potential


•


N. Eu

rop

e In

flue

nce

s

Far East Influ

en

ces

N. A

me

rica

Infl

ue

nce

s

A.G

. In

flu

en

ces

Glo

bal

In

flu

en

ces


N. Eu

rop

e In

flue

nce

s

Far East Influ

en

ces

N. A

me

rica

Infl

ue

nce

s

A.G

. In

flu

en

ces

Glo

bal

In

flu

en

ces


•••


Incremental Propane Production since 2010

Incremental Butane Production since 2010

East of SuezWest of Suez

0

30

2012 2014 2016 2017

mm

t

0

30

2012 2014 2016 2017

mm

t

0

30

2012 2014 2016 2017

mm

t

0

30

2012 2014 2016 2017

mm

t


Incremental Propane Demand since 2010

Incremental Butane Demand since 2010

West of Suez

0

30

2012 2014 2016 2017

mm

t

0

30

2012 2014 2016 2017

mm

t

0

35

2012 2014 2016 2017

mm

t

0

30

2012 2014 2016 2017

mm

t

East of Suez


Import / ExportSeaborne Trade Balance

Per RegionPropane


Per RegionButane


0

30

2010 2012 2014 2016 2017 2020

mm

t

-30

0

30

2010 2012 2014 2016 2017 2020

mm

t

-30

0

2010 2012 2014 2016 2017 2020

mm

t

-30

0

30

2010 2012 2014 2016 2017 2020

mm

t



Per RegionPropane


Per RegionButane


0

30

2010 2012 2014 2016 2017 2020

mm

t

-30

0

30

2010 2012 2014 2016 2017 2020

mm

t

-30

0

2010 2012 2014 2016 2017 2020

mm

t

-30

0

30

2010 2012 2014 2016 2017 2020

mm

t


•••

Retail vs Petchem Demand 2010-2020 Cumulative Increase (%) 2010-2020


0

100

200

2010 2012 2015 2017 2020

Retail Petchem

mm

t

0%

40%

80%

2010 2012 2015 2017 2020

Retail Petchem

Cu

mu

lati

ve I

ncr

eas

e %

Propane Petchem Demand East Propane Petchem Demand West


0 10 20

Cracking - local sources

Cracking - seaborneimports

PDH - local sources

PDH - seaborne imports

mm t

2017 2016

0 10 20

Cracking - local source

Cracking - seaborneimports

PDH - local source

PDH - seaborne imports

mm t

2017 2016

PDH much more significant in East

Seaborne imports for cracking more

significant in West

Globally, PDH demand up, cracking demand down

Butane Demand in Petchems & Refinery Applications


0

10

20

2016 2017 2016 2017

West East

Steam Cracking nBDH MA/BDO PO/TBA/ETBE

iBDH/MTBE Alkylation Aromatics

mm

t

East of Suez gasoline components more significant than

cracking demand

Globally gasoline component demand upcracking demand down

West of SuezCracking demand &

PO/ETBE/TBAdominates


••

• Mont Belvieu especially complex• Cracking more influential in West• PDH influence greater East, but occasional

Propane Butane


0%

10%

20%

30%

40%

50%

60%

70%

80%

2010 2011 2012 2013 2014 2015 2016 2017

Mt. Belvieu (Propane)/WTI

CFR N. Europe (Propane)/Brent

CFR Far East (Propane)/Brent

% o

f vo

l vs

Cru

de

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2011 2012 2013 2014 2015 2016 2017

Mt. Belvieu (Butane)/WTI

CFR N. Europe (Butane)/Brent

CFR Far East (Butane)/Brent

% o

f vo

l vs

Cru

de

M. Belvieu Price Determinants


Domestic Supply/Demand

Dynamics

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-170

600

1,200

$/t

MB Propane Retail Estimate vs WTI

Cracking Value PDH Value

Fuel Value N.Europe Netback (based on long-term contracts)

Far East Netback (based on long-term contracts)

Export Cancellations

Terminalling fees

Inventory Levels/Changes

Trading Decisions

External Events

Cracker Incremental Cash Margins Advantage N. Europe

Cracker Incremental Cash Margins Advantage Far East


Oct-2017 20

-200

0

200

400

600

Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17

Naphtha vs Propane Advantage Naphtha vs Butane Advantage

$/t

-600

-400

-200

0

200

400

600

Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17

Naphtha vs Propane Advantage Naphtha vs Butane Advantage

$/t

LPG Advantage

Naphtha Advantage

Oct-2017 20

0

10

2014 2015 2016 2017

LPG Cracking NW Europe

mm

t

0

10

2014 2015 2016 2017

LPG Cracking Far East

mm

t

Far East Propylene Price versus Costs


0.50

0.70

0.90

1.10

1.30

1.50

1.70

0

200

400

600

800

1,000

1,200

Jan

-15

Mar

-15

May

-15

Jul-

15

Sep

-15

No

v-1

5

Jan

-16

Mar

-16

May

-16

Jul-

16

Sep

-16

No

v-1

6

Jan

-17

Mar

-17

May

-17

Jul-

17

Sep

-17

$/t

Propylene price PDH Metathesis MTP P/E ratio

PDH Uneconomic

MTP Uneconomic Key variables:

Methanol pricePropane priceEthylene price

High PDH plant operating rates favoured by:

High Methanol price (MTP uneconomic)

High Ethylene price (metathesis uneconomic)

Low propane prices


••

Actual vs Theoretical Retail Demand Growth in Some Key Countries


0.0

6.0

12.0

2012 2016 2020 2012 2016 2020 2012 2016 2020 2012 2016 2020

Thailand Indonesia Turkey Nigeria

Actual Theoretical Kg/Capita Growth Theoretical Population Growth

mm

t

Population Growth:

Theoretical growth based on

population growth and stable consumption per

capita (basis 2012)

Kg/Capita Growth:

Theoretical growth based on

per capita assumptions according to

market potential (basis 2012)

Price Changes

GovernmentIntervention

High PotentialLimited Growth

-20

20

2012 2014 2016 2017 2020

mm

t


High Growth

Some Growth

Stable to Decreasing Stable to

DecreasingStable to

Decreasing

Some Growth High Potential

Retail Growth West

0

50

2012 2014 2016 2017 2020

mm

t

Retail Growth East

General Factors

Weather

Population

GDP/Inflation

Price Elasticity

Consumption per Capita

Market Factors

Government intervention

Competition with other products

Anticipating Changes

Infrastructure

Funding Availability

Marketing/Penetration



Period of Change

Production Dynamics Stabilization

Adjustment of the Demand Dynamics

Rebalancing of Pricing Mechanisms

Change of Market Structure

Change of Trading Structure

MaturityGas Related Production

Shale Gas/Tight Oil

Increase of Large Bulk Demand

Slower increase in Retail Demand

Large Price Fluctuations

New Price Dynamics (i.e. US)

Government/Market Reaction

New Demand Creation

Competition with other Fuels

Opportunities Creation

Trading Patterns

Contractual Changes

Competition ↑/ Margins ↓

Finding Market Balance

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CMT 12th LPG Trade Summit - 23-25 Oct, 2017 - Dubai, U A E€¦ · Market Insights Retainer...

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