Global Propylene & Derivatives SummitHouston 2014

Mathew GeorgeIndian Oil Corporation Ltd

Agenda for the Presentation

Acrylic Acid –An Introduction

UnderstandingAcrylic Acid Value Chain

Global Market Overview

Regional Acrylic Acid Market Overview

Acrylic Acid Price Trend

Key Price Determinant of Acrylic Acid

Which Region is attractive to source Acrylic Acid?

Industry Trends

Bio-Acrylic Acid –An Overview

Acrylic Acid - An Introduction

5%5%

4%4%

3%3%

2%2%

Construction & Automobiles

1%1%

0%0%

Demand Growth

Diversified end use industries

Top five suppliers accounts to 50% of

the global market, with 30-40% of

suppliers backward integrated with its

feedstock

Top five paint companies accounts to

40-45% of the global market share of

paints & coatings application

Key downstream industries –

Indicators: Housing Index, Automobile

sales

Glacial Acrylic Acid 45%

Top four suppliers accounts to 47-

50% of the global market share, with

90% of the suppliers backward

integrated to acrylic acid and 50%

with prime feedstock propylene.

Top four diaper producing companies

accounts to 65-70% of the GAA

market share

Key downstream industries – FMCG

Indicators: Baby birth rate, low market

penetration in emerging economics

like China and India, increasing

working women population,

Purchasing Power Parity per capita

Acrylate Esters 55%

Crude Acrylic Acid – Market Size in 2012: 4.6 MMT

Understanding Acrylic Acid Value Chain

76% 15% 9%

Caustic Soda

4 Feedstock

Production RoutesCrystallization /

Distillation 45%

Derivatives

Applications

Demand by Application

Propylene Oxidation(Single / Two Stage

Process)

55%Propylene

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+ Methanol + 2-Ethyl Hexanol+ Butanol 3+ Ethanol

Acrylate

Coatings

Inks

Lubricating Oil

2-Ethyl Hexyl

Paints

Adhesives

Engineered Plastics

Additives

5%

Methyl Acrylate

Polymer Coatings &

Finishes Adhesives

Sealants

Plastics

Textiles

13%

Ethyl Acrylate

Coatings

Elastomers

Adhesives

Thickeners

Amphoteric

Surfactants

Fibers

Plastics

Textiles

Inks 27%

Butyl Acrylate

Plastic Sheet

Textiles

Coatings

Adhesives

55%

Crude Acrylic Acid

Glacial Acrylic Acid

Detergent BuildersPolyacrylatesSuper Absorbent

Polymers

DetergentsWater TreatmentFeminine Hygiene

Products

Adult Incontinency

Products

Disposable Baby

Diapers

Global Market OverviewGlobal acrylic acid demand to grow at 4.6% Y-o-Y till 2016.

Construction, Automobiles & FMCG industries to remain the major demand sectors for acrylic acid.

5% 3%

35%57%

Sources: Analysis, Company Annual Reports, Expert InformationAcrylate Esters SAP

Detergent Co-builderWater Treatment

2016

(F)

2012 Construction,Automobile & Adhesives Industry

Low penetration of diaper usage in developing

economies Detergent industry shifting towards substitute markets

Global Acrylic Acid Demand by Application

Demand shifting towards emerging nations due to

matured growth rates in developed economies

China and India to witness maximum growth rates in

terms of future consumption New capacity additions in emerging regions like Latin

America, SaudiArabia, China, etc.

Global Acrylic Acid Market Dynamics

Regional AcrylicAcid Market Overview

Developing economies to witness growth rates of above 5% in the next three years

Western Europe 5

1.31 1.310.87 0.99

North America 5

2016 (F)2012

Asia Pacific

4.02

3.27

2.02

251.44 1.441.271.15

2012 2016 (F)2.53

Others 32012 2016 (F)

0.800.15 0.55 0.72

2012 2016 (F)

Production

Demand

No.of.suppliers by region

Sources: Analysis, Company Annual Reports, Expert Information

Demand CAGR: 6%

Demand CAGR: 5.8%

Demand CAGR: 2.4%

Demand CAGR: 2-3%

AcrylicAcid Price Trend

Feedstock Propylene prices accounts for about 48-55% of the total production cost of acrylic acid.

Feedstock propylene prices

started to rise due to tight

supply

weak macro-economic

conditions impacted the

demand for acrylic acid

Stabilized market conditions as

there are no major improvement

from downstream industries

Sources: Supplier Information

Low High

Low High

Price Determinant Factors Impact

Feedstock Price

Macro-Economic FactorsLow High

Downstream Demand

Global Acrylic Acid Price Trend

Feedstock Propylene Price Trend

Seasonal demand coupled with

supply shortage of propyleneTight supply due to shale

gas impact

Major plant outages and

hedging resulted inincrease of propylene prices

Sources: Supplier Information

Low High

Low High

High fluctuation in crude oil prices

Seasonal Price fluctuations

Low High

Price Determinant Factors Impact

Feedstock Price Volatility

Major plant outages

SupplyAvailability of propylene

Low High

Low High

Global Propylene Price Trend

Which Region is Currently Attractive to SourceAcrylic Acid?

Propylene accounts for about 48-55% of the total production cost of acrylic acid

Sources: Beroe Analysis, Supplier Information

Raw Material Cost Utility Cost Labor Cost Fixed Cost

Asia is predominantly the best region to source acrylic acid due to:

Low cost of production

Low feedstock prices compared to the US & Europe

Huge capacity additions in the next five years

Global Acrylic Acid Production Cost

This may all change with advent of PDH Technologies

Industry Trends

To reduce the greenhouse gas emissions and to obtain a better profit margin, suppliers have started tomake their step towards bio-acrylic acid.

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Future Trends

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Crackers switching towards lighter feedstock's in the US

Effect: Fall in propylene supply resulting in propylene and acrylic acid price

hikes

Increasing diaper usage in developing economies

Effect: Demand for SAP to grow at 4-5% across the globe

Shift from PVA and Vinyl Acetate to Acrylic Emulsions.

Effect: Increasing demand for acrylic acid

Shift from petro-based to bio-based acrylic acid

Effect: Reduces the impact of crude oil price volatility

20%

33%

40%

48%

Bio-Acrylic Acid - An Overview

Cargill/NovozymesDow/OPXBio

Nippon Shokubai/Arkema

Genomatica

Metabolix

Propane OxidationGlycerine to Acrylic Acid

Ethylene Oxide to Acrylic Acid

Pros:

Cost effective

Best Quality

Better margins for the suppliers

Cons:

High investment cost

Price volatility of bio feedstock

Sources: Expert Information, Industry Magazines, Annual Reports

Petro vs. Bio-acrylic acid

Industry Players Upcoming Technologies

Bioacrylic Acid3 Hydroxy–propionic

acidGlucoseStarch, Biomass

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