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Osamu Ishitobi - - Thailand/Keynote speeches/APIC (Mr...Osamu Ishitobi Director and Senior ... SAP...

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  • A Strategic Vision for the Sustainable Growth

    of our Petrochemical Business

    Osamu IshitobiDirector and Senior Managing Executive Officer

    Rabigh Project Office

    May 2006

  • Sumitomo Chemical

  • 3

    Sumitomo Chemicals Petrochemical Milestones1691 The Besshi copper mine opens.

    1913 The House of Sumitomo opens a fertilizer plant to produce fertilizers from sulfur dioxide recovered from copper smelting emissions.

    1958 Sumitomo Chemical Starts petrochemical operations at its Ehime Works.

    1965Sumitomo Chiba Chemical Co., Ltd. is established and begins petrochemical operations at the Chiba Works.

    1984The Petrochemical Corporation of Singapore (PCS) begins operations.

    1997 PCS commences operation of a new ethylene cracker under its 2nd-Phase expansion.

    2005 Sumitomo Chemical and Saudi Aramco forms Rabigh Refining and Petrochemical Co.

  • 4

    Net Sales & Operating Income by Segment

  • 5

    Major Global Locations

    l

    Manufacturing OperationOther Operation

  • 6

    Basic Chemicals

    IT-related chemicals

    Where We Want to Be ?

    Petrochemicals & Plastics

    Fine Chemicals

    Hybrid Chemistry

    A Truly Global Chemical Company

    High profitability

    Pharmaceuticals

    Cost Competitiveness

    Technological Synergy

    Core Competencies

    Agricultural Chemicals

    Global MarketGlobal Standard

    Process Development Process & Production Technology Biotechnology

    Polymer Synthesis Inorganic SynthesisAnalytical Chemistry

    Safety Assessment Catalyst TechnologyOrganic Synthesis

  • 7

    Sumitomo Chemicals Petrochemical Milestones1691 The Besshi copper mine opened.

    1913 The House of Sumitomo opens a fertilizer plant to produce fertilizers from sulfur dioxide recovered from copper smelting emissions.

    1958 Sumitomo Chemical Starts petrochemical operations at its Ehime Works.

    1965Sumitomo Chiba Chemical Co., Ltd. is established and begins petrochemical operations at the Chiba Works.

    1984The Petrochemical Corporation of Singapore (PCS) begins operations.

    1997 PCS commences operation of a new ethylene cracker under its 2nd-Phase expansion.

    2005 Sumitomo Chemical and Saudi Aramco forms Rabigh Refining and Petrochemical Co.

  • 8

    Sumitomo Chemical Group's Petrochemical Products

    FEEDSTOCK Monomer Derivatives

    Ethylene

    AcetaldehydePropylene

    POAN

    Butadiene

    Isobutylene

    MTBEMMA

    Butene-1

    Benzene

    SM

    LDPE/LLDPE

    EVA

    EPDM

    TPEPP

    Polymer Alloy

    PS

    Methionine

    SBR

    SAP

    Naphtha/LPG

    Toluene

    Xylene

    Focused on Technologically competitive productsPolyolefins, EPDM/TPE, PO (Petrochemicals Sector)

    MMA, Resorcin, Methionine (Other Sectors)

    Resorcin

    ABS

    EPPE

    Gas Oil/NGL

  • Petrochemical Business Environment

  • 10

    Cyclical BusinessSegment Contribution to Weighted Average EBIT

    Current Dollars Per Metric Ton200

    Rev : Mar 2006

    Reinvestment Level Earnings

    PlasticsMethanolChlor-Alk.AromaticsOlefins

    175

    150

    125

    100

    75

    50

    25

    0

    -25Cost & non-cost competitiveness is required to be profitable

    even at the bottom of the business cycle.-50

    -7585 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

  • 11

    Domestic Naphtha & SEA LDPE Price

    0

    100

    200

    300

    400

    500

    600

    700

    Feb-9

    0

    Apr-9

    1

    Jan-93

    Oct-9

    4

    Jul-96

    Apr-9

    8

    Jan-00

    Oct-0

    1

    Jul-03

    Apr-0

    5

    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

    Naphtha C+F JapanPlatt's Mid (US$/T)

    LDPE Film Spot SEAICIS (US$/MT)

  • 12

    Polyolefin Market Forecast

    Average growth of GDP and demand for polyolefin in 0510

    note

    World 4.0% 4.8% 5.5%

    3.1%

    8.0%

    7.0%

    Driven by Asian demand

    Japan 2.0% (0.8%) PP grows

    China 8.7% 7.6% Growing at high rates

    6.3% 6.6% Growing faster than GDP

    Source METI

    Market Maturation in JapanMarket development with high-performance products

    Growing Asian Market Market entry of Global Petchem. players Cost competitiveness is the key

    Market Maturation in JapanMarket development with high-performance products

    Growing Asian Market Market entry of Global Petchem. players Cost competitiveness is the key

  • 13

    Energy and Ethylene Demand ForecastYear 2000 2030Primary Energy Demand will grow at 1.7%/Yr

    Coal1.4%Oil1.5% non-OECD countries growGas 2.4%

    Gas demand grows faster, driven mainly by Power Generation.

    Ethane production increases as LNG demand goes up. Surplus of heavier fuel oils

    Refinery-Petrochemical integration

    Year 2000 2030Primary Energy Demand will grow at 1.7%/Yr

    Coal1.4%Oil1.5% non-OECD countries growGas 2.4%

    Gas demand grows faster, driven mainly by Power Generation.

    Ethane production increases as LNG demand goes up. Surplus of heavier fuel oils

    Refinery-Petrochemical integration

    World Primary Energy Demand

    0

    10

    20

    2000 2010 2020 2030

    Billio

    n t

    oe

    Others

    Hydro

    Nuclear

    Gas

    Oil

    Coal

    World Ethylene derivatives demand and ethylene source

    0

    20

    40

    60

    80

    100

    120

    140

    2000 2002 2004 2006 2008 2010

    Mil.

    to

    ns/

    Yr

    Others

    N, GO

    E, P, B

    Capacity

    World Ethylene Derivatives Demand and its sources

    Year 2000 2010Ethylene Demand Growth4.9/Year

    90 140M tons/Yr50M tons/YrGas base 30M tons/Yr 6.6/Yr

    EthanePropyleneButaneLiquid base 20M tons/Yr 3.5/YrNaphthaGas Oil

    Gas base increase from 38 45

    Ethane will be the key feedstock for Petrochemical business development.

    Year 2000 2010Ethylene Demand Growth4.9/Year

    90 140M tons/Yr50M tons/YrGas base 30M tons/Yr 6.6/Yr

    EthanePropyleneButaneLiquid base 20M tons/Yr 3.5/YrNaphthaGas Oil

    Gas base increase from 38 45

    Ethane will be the key feedstock for Petrochemical business development.

    METI and Sumitomo Chemical)

  • 14

    Planned Petrochemical Plant Expansions

    New plants planned in Middle East and China through 0510

    0

    2000

    4000

    6000

    8000

    10000

    2005 2006 2007 2008 2009 2010

    New Ethylene Plants planned by 2010

    ME China Others

    KTA

    CMAI

    Capacity grows significantly112M tons in 2004 Over140M tons

    75% of New Capacity comes from ME and China. Global Producers in US and Europe enter into Asian Market

    Capacity grows significantly112M tons in 2004 Over140M tons

    75% of New Capacity comes from ME and China. Global Producers in US and Europe enter into Asian Market

  • Outlook for Sumitomo Chemicals Petrochemical Business

  • 16

    Ethylene Production in Japan has grown in parallel with GDP growth

    0

    1000

    2000

    3000

    4000

    5000

    6000

    7000

    8000

    9000

    1958

    1960

    1962

    1964

    1966

    1968

    1970

    1972

    1974

    1976

    1978

    1980

    1982

    1984

    1986

    1988

    1990

    1992

    1994

    1996

    1998

    2000

    2002

    2004

    Th

    ou

    sa

    nd

    to

    ns

    Trillio

    n Y

    en

    0

    100

    200

    300

    400

    500

    600

    Ethylene Product ion

    Cars & Trucks product ions

    Elect r ical products sh ipping value

    GDP

    Ehime Chiba PCS I PCS IIKEC RabighPSPC

    1979 oil crisis1973 oil crisis

    16,000

    14,000

    12,000

    10,000

    8,000

    6,000

    4,000

    2,000

    0

    70,000

    60,000

    50,000

    40,000

    30,000

    20,000

    10,000

    0

    50

    40

    30

    20

    10

    Millio

    nY

    en

    Th

    ou

    sa

    nd

    un

    its

    10

    3MJ

    /t

    E thy lene Energy Uni t Consumption

  • 17

    Improvement in Catalyst ActivityToday, 100s of times higher!

    '60 '70 '80 '90 '00

    Slurry PolymerisationBulk polymerisation

    Gas-phaseNew Gas-PhaseDevelopment in

    PP Polymerisation Process

    Improvement ofproduct quality

    Cost reduction due tosimplified facilities

    PurchasedCat

    SC-catDX3

    PurchasedCat

    PurchasedCat

    SC-catDX4

    SC-cat(DX5

    SC-catDX9

    SC-catEX

    Development of Sumitomo Technology (1) PP

  • 18

    '60 '70 '80 '90 '00

    HP-LDPE(Autoclave)

    ZN-LLDPE(Gas

    Innovation of Process &Products

    Star t of LDPEProduct ion

    High per formanceZN catalyst

    Gas Phase Process

    m-LLDPE

    EPPE

    EPPE(Gas

    Tubu lar Process m-LLDPE(Gas*

    HP-LDPE(Tubular)

    )

    ZN-LLDPE(HIP)

    m-LLDPE( HIP)

    Improvement ofproduct quality

    Cost reduction due tosimplified facilities

    *Evolue

    Development of Sumitomo Technology (2) PE

  • 19

    '80 '90 '00

    Solid Products, FilmLamination, Co-Injected Products

    Hollow ProductsFoaming ProductsVariety of ProductsCAE

    In ject ion-Blow

    SC Co2- In ject ion

    Foaming Tech .

    SP Mold

    Co-In ject ion

    Gas- In ject ion

    CAO

    Total Material Solution

    New Product

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