Global C4 Chain Dynamics

Global C4 Chain Dynamics

9th International Olefins Annual Conference

Suzhou, October 29-30 2014

by Matias Kerkhofs, Sales Manager Europe

1. C4’s are cracker co-products

2. C4 chain: supply & demand overview, future

outlook and trade flows

3. C4U Trade: a company fit for market changes

4. C4 chain: closer look to the 4 regions

5. Conclusions

Table of Contents

IOAC 2014 2 Suzhou, October 29-30

1. C4’s are the tail of the squirrel

3

Crude Oil

C4’s

Petchem’s

IOAC 2014 Suzhou, October 29-30

1. Petchem vs Crude Oil

4

Over 90% of global C4 olefins originate from crude C4 from steam crackers

2013 Global Demand (mio mT)

Petchem Building blocks Ammonia 172

Methanol 60

Ethylene 140

Propylene 85

Butadiene 11

Butenes 15

Benzene 45

Toluene 25

Xylene 50

Total Petchem's 603

Crude Oil 3800


C4’s are co-products of ethylene crackers

11

Global demand

Butadiene Butenes Toluene Benzene Xylene

Methanol Propylene Ethylene Ammonia Crude oil






5. Conclusions

Table of Contents


2. CC4 applications

6 IOAC 2014 Suzhou, October 29-30

• CC4 from steam crackers is used for:

• BD extraction + Raf-1 & Raf-2

• Partial Hydrogenation to Raf-1 or Metathesis (C4 + C2 -> 2 C3)

• Full Hydrogenation for co-cracking

• BD is the most important driver

• Raf-1: iso-Butylene for lubricants, tire inner lining and fuel-ether gasoline

additives (MTBE/ETBE)

• Raf-2: Butene-1 as co-monomer for PE & Butene-2 for plasticizers

Remark: i-B is also made from other technologies:

•TBA dehydration ex PO/TBA technology

•Refinery FCC Butylenes stream

2. BD applications

7

BR28%

eSBR23%sSBR

6%

ABS12%

SB-Latex9%

ADN5%

Others17%

BR eSBR sSBR ABS SB-Latex ADN Others

• SR is biggest BD derivative, around 60%

• Almost 50% of all BD goes into tyres

• SR and Tyre markets are the drivers of BD demand and production

• More then 97% of global BD is produced by extraction from CC4

• Car Park, Car Sales and GDP growth define future BD demand


8

2.On-Purpose BD in China

• On-purpose BD only running in China at this moment (480 kT capacity

and 1.3 mio mT planned)

• ODH: not competitive at today’s pricing (Houdry/Oxo-D)

• China: high gasoline values and feedstock shortage undermine ODH

economics and keep operating rates low

• China: MTO could bring cheap butenes, but no immediate prospect

• US: expensive investment, even cheap butane keeps this technology

uncompetitive


2. BD applications

9

BR28%

eSBR23%sSBR

6%

ABS12%

SB-Latex9%

ADN5%

Others17%

BR eSBR sSBR ABS SB-Latex ADN Others

• SR is biggest BD derivative, around 60%

• Almost 50% of all BD goes into tyres

• SR and Tyre markets are the drivers of BD demand and production

• More then 97% of global BD is produced by extraction from CC4

• Car Park, Car Sales and GDP growth define future BD demand


2. Our world in a nutshell

10

(source IMF & Wikipedia)

Brazil Russia India China ME EU27 USA World

Area (1000 km²) 8,515 17,098 3,287 9,640 4,694 4,325 9,629 148,940

Population (MM) 203 144 1,237 1,367 163 506 314 7,171

GDP (TRI $) 2.5 2.1 2.0 9.5 2.5 17.5 16.8 74.2

GDP/cap ($) 12,300 14,600 1,600 6,900 15,200 34,600 53,500 10,300

Annual Growth Rate 2.3% 1.3% 4.7% 7.5% 3.3% 0.1% 3.4% 3.6%


2. BD: Global Demand (forecast)

11

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

2010 2015 2020

BUTADIENE 2010 - 2020 (KT)

South East Asia

West Europe

Middle East

North America

North East Asia

2010: 10 mio mT /// 2015: 12 mio mT /// 2020: 14 mio mT • Corresponds to an average 3.6% world GDP growth rate:

11 mio mT (2013) to 14 mio mT (2020)

• Growth in regions reflects AGR’s:

Flat in EUROPE /// Steep in NEA & SEA /// Modest in US

• China will consume almost 50% of Global BD demand

Europe: flat growth and expensive feedstocks and yet 500 kT BD capacity is added in 2014-15

(annually in ‘000 mT, IHS)


12

2. BD & derivatives: Global Capacity

• Overcapacity of 30% for derivatives and 20% for BD

• Enough extraction capacity to produce the forecasted demand for 2020

• Will there be enough CC4 ?

co-product of ethylene production

BD

Capacity BD

Demand

Derivatives

Capacity Derivatives

Demand

BD contained

BR 100%

SBR 70%

Latex 41%

ADN 61%

ABS 21%

-

5,000

10,000

15,000

20,000

25,000

30,000

29,000

20,000

13,500

11,000

20

13

(kT

)


13

2. C2: Global Production (forecast)

0

10.000

20.000

30.000

40.000

50.000

2010 2015 2020

ETHYLENE 2010 - 2020 (KT)

South East Asia

West Europe

Middle East

North America

North East Asia


• C2 and B/E ratio’s are key to understand the CC4 balance

• 2010: 122 mio mT /// 2015: 145 mio mT /// 2020: 175 mio mT

• Everywhere strong growth except in Europe, closures

• Not all C2 production generates the same CC4 (volume & quality)


2. CC4: typical composition & yields

14

• Naphtha cracker allows for captive BD extraction

• LPG + N cracking lowers BD yield and operating rates

• Ethane cracker has not enough BD for an extraction unit

Naphtha LPG + N Ethane

BD 40-45% 30-40% 70-80%

i-B 25-35% 15-25% 0-5%

B-1/B-2 15-25% 10-15% 10-20%

Butane 5-10% 15-30% 5-10%

B/E 12-17% 8-10% 2%

1 MM C2 -> BD 150 kT 100 kT 20 kT


2.CC4: Global Production (forecast)

15

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

2010 2015 2020

Crude C4 as Butadiene 2010-2020 (KT)

South East Asia

West Europe

Middle East

North America

North East Asia

• 2010: 12 mio mT /// 2015: 13 mio mT /// 2020: 16 mio

• On a global basis, enough CC4 feedstock to produce all the BD

the world needs

• Changing landscape, C4’s balances and C4’s being not very

liquid are key to understand dynamics



2. BD: Regional balances &

operating rates

16

2013 (kT) BD extraction cap. BD producion Domestic Demand Balance

USA 2,387 1,544 1,791 -247

Europe 2,684 2,195 1,993 202

Middle East 382 283 70 213

North East Asia 6,189 4,955 5,221 -266

South East Asia 570 436 379 57

(source IHS)


17

2. C4’s: Traditional trade flows

A

M

E

R

I

C

A

S

E

U

R

O

P

E

A

S

I

A

MDE 400 kT CC4

150-175 kT BD

50-80 kT BD

25-50 kT BD

200 kT BD

300 kT CC4

140 kT CC4


18

A

M

E

R

I

C

A

S

E

U

R

O

P

E

A

S

I

A

MDE

2. C4’s: New trade flows

Less CC4 availability

More BD, less CC4

Bra

zil

continues to e

xport

SE

A c

aptive u

se,

low

ers

export

• Changing trade flows

• Regions become more self-sufficient

• Optimised logistics remain key

Compensation for

EU CC4

Competition US & Asia







5. Conclusions

Table of Contents


3. C4U Trade: A Global platform

for liquefied gas

20 IOAC 2014 Suzhou, October 29-30

21

• C4U Trade is a global logistic service provider and trader for C4 Olefins and other liquefied gases.

• We operate a logistics infrastructure and focus on creating recurrent, long-term value.

• Facilitating between producers and consumers.

C4U

TRADE


3. C4U Trade: A Global platform

for liquefied gas

22

3. C4U Trade company structure

C4U TRADE INTERNATIONAL, AG

ZUG, SWITZERLAND (2013)

C4U TRADE USA

HOUSTON, TEXAS (2011)

C4U TRADE EUROPE

LEUVEN, BELGIUM (2010)

C4 MIDDLE EAST

UAE (2014)

C4U TRADE ASIA

SINGAPORE (2015)

• Agreement in the Middle East with Al Hassan Energy (May 15, 2014)

• Incorporation of C4 Middle East in Dubai (Sept 3, 2014)

• Agreement for Asian markets with ALBA Corporation (Sept 9, 2014)







5. Conclusions

Table of Contents


24

4. Europe: tough times...

• Was traditionally cracking Naphtha

• Lighter cracking: Ethane & LPG

LPG used to be seasonal, now: +/- 30% all year

• +/- 500 kT extra BD extraction capacity by end 2015 (LBI, BASF, Evonik,

OMV, MOL)

• Much of this extra BD is relocated capacity

• Net extra molecules 200-250 kT by stopping hydrogenation

• Extra capacities for BD consumption are compensated by closures

• Crackers facing lower operating rates & closures

• EU will be shorter in Crude C4: less export to US

• EU will be even longer in BD IOAC 2014 Suzhou, October 29-30

25

4.USA: shale effect

• Shift to light cracking happened already in 2005-2010

• Shale effect: 10 million tonnes of extra Ethylene capacity announced by 2018 (30 -> 40 MMT)

• Despite Ethane cracking and low B/E, non-negligible 200 KT extra BD.

• Better utilisation of existing BD extraction and close to self-sufficiency... but may be offset by less Crude C4 available from Europe.

• Healthy market and new tyre plants announced

• Strong competition from imported rubber (EU & Asia)

• On-purpose BD: not competitive at the moment


26

4.Asia: driven by GDP growth

• Cracking Naphtha with some projects for lighter cracking

• Very high GDP growth rates compared to rest of world

• Series of elastomer projects (NBR, PBR, ABS, SBR, EPDM, Butyl Rubber)

• Continued need for C4 imports, despite Ethylene expansions

• US/ MDE will use feedstock cost advantage to compete for Asian markets

• Natural rubber effect: BD price may stay low for coming years

• Alternative technologies CTO/ MTO can change the landscape

• On-purpose BD: not competitive at the moment


27

4.Middle East: exciting times

• Mainly ethane cracking till now

• New projects on NGL’s and Naphtha, hence B/E ratio’s improving from 2 to 5%

• Ethylene capacity annouced to grow from 20 -> 35 MMT.

• BD derivative projects planned (ABS, PBR, EPDM, Butyl Rubber)

• C4 logistic constraints for stand alone crackers, but high potential for complexes like Al Jubail

• Heavier olefins/ Elastomers/ product diversification/ job creation/ automotive industry high on the strategic agendas


28

5.Conclusions

• C4’s are Steam Cracker Co-Products

• On purpose BD is not competitive at the moment

• Massive petchem investments based on competitive

feedstock in the US & ME, steady growth in Asia, Europe

under pressure

• C4’s on the agenda in the MDE

• Shift in C4 trade flows

• No global C4 shortage at today’s operating rates and

projected growth: prices may stay low for a long time


THANK YOU!

谢谢大家！

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Global C4 Chain Dynamics

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