Mr. Steve Jenkins Head Global PX and Derivatives PCI X&P Malaysia Recognized as a leading global authority in the commercial analysis of the paraxylene and derivatives industry sector, Mr. Steve Jenkins, has broad experience in the petrochemical industry gained during the past 28 years in a range of functional and product management roles within ICI and the specialist polyester and intermediates consultancy PCI. He has managed many assignments for clients in the petrochemical sector and works closely with producing and consuming companies in the fields of paraxylene and PTA, providing strategic, commercial and technical analysis and recommendations. A graduate from Oriel College Oxford, he has conducted several major industry-wide studies analyzing the commercial development of paraxylene and feedstock markets and their impact on future corporate operating strategies.
Transcript
Mr. Steve Jenkins
Head Global PX and DerivativesPCI X&PMalaysia
Recognized as a leading global authority in the commercial analysis of theparaxylene and derivatives industry sector, Mr. Steve Jenkins, has broadexperience in the petrochemical industry gained during the past 28 years in arange of functional and product management roles within ICI and thespecialist polyester and intermediates consultancy PCI.
He has managed many assignments for clients in the petrochemical sector andworks closely with producing and consuming companies in the fields ofparaxylene and PTA, providing strategic, commercial and technical analysisand recommendations.
A graduate from Oriel College Oxford, he has conducted several majorindustry-wide studies analyzing the commercial development of paraxyleneand feedstock markets and their impact on future corporate operatingstrategies.
Steve Jenkins
PCI Xylenes & Polyesters Asia Sdn BhdMarch 18th, 2013
Paraxylene – Is the Tail Wagging the Dog ?
IOC Petrochemical Conclave
IOC Petrochemical Conclave 18th March 2013
About PCI Xylenes & Polyesters
Formed in 1988, PCI Xylenes & Polyesters provides
integrated consultancy services in the polyester and
upstream raw material sector
Team of 10 industry consultants, each with over 20 years
industry experience in refining / aromatics / PTA / polyester
EO and glycols
Expertise in all aspects of the refinery/cracker – polyester
business (commercial/strategic/technical/investment)
Located in Guildford, UK and Kuala Lumpur, Malaysia with
representatives in India, Pakistan, Taiwan, Korea, China,
USA and Brazil
IOC Petrochemical Conclave 18th March 2013
Agenda
• Paraxylene Supply - Demand Review
• Paraxylene Trade Development
• Evolution of Aromatics Feedstocks Sources
• Polyester Chain and Refinery Challenges
IOC Petrochemical Conclave 18th March 2013
World Paraxylene Supply-Demand
2011-2017
78%
80%
82%
84%
86%
88%
90%
-
10
20
30
40
50
60
2011 2012 2013 2014 2015 2016 2017
Asse
t U
tilis
ation
Mill
ion
To
nn
es
North America South America
Europe Middle East/Africa
Asia/Far East Utilisation (RHS)
• Expect 2013 to remain tight until
new capacity coming on line is
fully established.
• 2014 - 2017 forecast growth at
trend level of 6 to 7% (approx 2.5
million tonnes per annum).
• Capacity additions in excess of
demand growth from 2014
onwards.
• Supply based on several varying
sources of feed
IOC Petrochemical Conclave 18th March 2013
Asia Paraxylene Supply-Demand
2011-2017
70%
75%
80%
85%
90%
95%
100%
-10000
-5000
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
2011 2013 2015 2017
Asse
t U
tilis
ation
‘00
0 T
on
ne
s
Production Capacity Consumption
Net Trade Utilisation (RHS)
• Asian system running hard until the
end of 2013 when more capacity fully
on line.
• Most PX projects are major
investments ($1bn+) usually
associated with new or re-vamped
refineries - inevitably taking longer
than expected to completion
• The region will gradually import
increasing quantities from the Middle
East.
• Constraints on feedstocks supply
currently encouraging JV’s with
existing mixed xylenes suppliers thus
avoiding heavy investment in
reforming.
IOC Petrochemical Conclave 18th March 2013
China Paraxylene Supply-Demand
2011-2017
70%
75%
80%
85%
90%
95%
100%
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
2011 2013 2015 2017
‘00
0 T
on
ne
s
Production Capacity Consumption
Net Trade Utilisation (RHS)
• Chinese paraxylene consumption
continues to vastly outpace the ability
to produce.
• Trade gap will grow to over 7 million
tonnes in 2013.
• Three major projects scheduled in
2013 either linked to major refining
project completions, have other
significant feedstock supply
challenges or are deploying new
Chinese technology
• Trade gap filled by suppliers in South
Korea and the Middle East.
• It remains challenging for Chinese
private investors to fill the gap
between the state run refining industry
and a dynamic polyester chain.
IOC Petrochemical Conclave 18th March 2013
Middle East Paraxylene Supply-Demand
2011-2017
60%
65%
70%
75%
80%
85%
90%
95%
100%
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2011 2013 2015 2017
Asse
t U
tilis
ation
‘00
0 T
on
ne
s
Production Capacity Consumption
Net Trade Utilisation (RHS)
• SATORP JV in 2013 first new
paraxylene unit in the region for 4
years - also slightly delayed into Q3
• Four major investments scheduled
from 2016/17 by Saudi Arabia and
Qatar adding almost 4 million tonnes
of paraxylene capacity.
• Limited in-region demand growth with
only one PTA project forecast to be
completed by 2017.
• Strategy of new paraxylene units
aimed at the Asian deficit but capable
also of servicing Europe and South
America.
IOC Petrochemical Conclave 18th March 2013
North America Paraxylene Supply-Demand
2011-2017
70%
75%
80%
85%
90%
95%
100%
-1000
0
1000
2000
3000
4000
5000
6000
2011 2013 2015 2017
Asse
t U
tilis
ation
‘00
0 T
on
ne
s
Production Capacity Consumption
Net Trade Utilisation (RHS)
• North America assumed not to add
any additional capacity through this
period although BP is expected to re-
start Decatur.
• Trade flow from South America
reverses from 2013 with the start up
of the PQS PTA plant.
• NA also assumed to export to Asia as
and when economics will support.
IOC Petrochemical Conclave 18th March 2013
EU27 Paraxylene Supply-Demand
2011-2017
70%
75%
80%
85%
90%
95%
100%
-1000
-500
0
500
1000
1500
2000
2500
3000
2011 2013 2015 2017
Asse
t U
tilis
ation
‘00
0 T
on
ne
s
Production Capacity Consumption
Net Trade Utilisation (RHS)
• Modest consumption growth in 2013
but critically dependant on PTA
exports.
• Net trade peaks at around 0.4 million
tonnes by 2014 with assets running
relatively hard through the period.
• The region remains long on aromatics
feedstocks providing an incentive to
divert from a long gasoline market to a
short paraxylene market.
IOC Petrochemical Conclave 18th March 2013
Regional Paraxylene Net Trade 2012-2016
-1000
-500
0
500
1000
2012 2013 2014 2015 2016
-1000
-500
0
500
1000
0
2000
4000
6000
8000
0
2000
4000
6000
8000
-1000
-500
0
500
1000
-12000
-9000
-6000
-3000
0North America
EU27
South America
Middle East
China
Other Asia
IOC Petrochemical Conclave 18th March 2013
Benzene
Ben
zen
e
Co
lum
n
To
luen
e
Co
lum
n
Deh
ep
tan
izer
Xyle
ne
Co
lum
n
OX
Co
lum
n
Refo
rmate
Sp
litt
er
CCRNaphtha
Aromatics
Extraction
Xylenes
Isomerisation
Paraxylene
Recovery
Metaxylene
Recovery
Gasoline
Blending
Raffinate
Paraxylene
Toluene
Metaxylene
Orthoxylene
Hydrogen
LPG
C5 minus
Heavy
Aromatics
C7 & C9
Conversion
Imported Mixed
Xylenes
Aromatics Complex
IOC Petrochemical Conclave 18th March 2013
0
10000
20000
30000
40000
50000
60000
1990 1993 1996 1999 2002 2005 2008 2011 2014
‘00
0 T
on
ne
s
Mixed XylenesExisting Reformer
TolueneDisproportionation
Heavy NaphthaNew Reformer
C7/C9 AromaticsTransalkylation
CondensateNew Reformer
Other
Cumulative Paraxylene Feedstock Trends
IOC Petrochemical Conclave 18th March 2013
Polyester Fibre Mill Consumption Growth to 2020
IOC Petrochemical Conclave 18th March 2013
World Polyester Production Long-term Forecast (excludes Recycle)
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
2013 2017 2021 2025 2029
Kte
s
Staple Filament PET Film Polyester Growth Rate (AAGR)
Long-term global growth trends towards approx 1.3x GDP
IOC Petrochemical Conclave 18th March 2013
Polyester Polymer Production by Region 2000-2030
2000 2030
18%
2%
12%
3%
65%
North America South America
Europe Middle East/Africa
Asia/Far East
5%
2%
6% 4%
83%
Asia continues to capture market share of global production
IOC Petrochemical Conclave 18th March 2013
Global Paraxylene Capacity & Consumption
2012-2030 - The Market Gap
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
100,000
2012 2014 2016 2018 2020 2022 2024 2026 2028 2030
‘00
0 T
on
ne
s
PX Capacity Speculative Capacity PX Consumption
Gap analysis indicates >30m tes new PX capacity needed in
next 15 years (50% of current global capacity!)
IOC Petrochemical Conclave 18th March 2013
New PX Capacity Development 2012-2030
C8’s now have to be created. Existing MX pools have dried up.
Capex therefore much higher for new investment
IOC Petrochemical Conclave 18th March 2013
Top 20 PX Producer Groups – 2012 (’000 Tonnes)
Currently a relatively even spread of production
IOC Petrochemical Conclave 18th March 2013
Top 20 PX Producer Groups – 2020 (’000 Tonnes)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Chinese, Middle East and NE Asian producers
exploiting growth by 2020
IOC Petrochemical Conclave 18th March 2013
Paraxylene Conclusions
• Polyester chain set to deliver strong long-term growth
• Long-term issues regarding availability of feedstocks for the polyester chain in
N Asia
• Opportunities exist to upgrade heavy naphtha and condensates to aromatics in
South Asia
• The emergence of US shale oil & gas not as positive for the US Aromatics
industry due to the impact on naphtha composition and reforming economics
• JV’s currently being established between Japanese mixed xylenes aligning with
new paraxylene capacity in South Korea, avoiding large capex and timing
delays to plug short-term gap
• Most new projects will need significant access to feedstock
(FRN/HVN/condensates)
• Investment options come with wide range of capex and risk
