24
www.icis.com 1 Petrochemical Market Outlook – What’s in store for 2017? Malini Hariharan Head of South Asia Markets ICIS
www.icis.com 1
Petrochemical Market Outlook – What’s in store for 2017?
Malini Hariharan Head of South Asia Markets ICIS
www.icis.com 2
Agenda
Pricing&MarginTrends
China&India
Outlook
www.icis.com 3
A strong start .…but price corrections have set in
Prices were largely supported by demand and supply issues; Chinese buying But weaker crude oil, destocking and start up of new capacities are
setting the tone for Q2
0
40
80
120
160
0
50
100
150
200
250
300
350
4002006
2008
2010
2012
2014
2016
2017
US$/bblAsiaIPEXvBrent
BrentCrudeOil($/bbl) AsiaIPEX
www.icis.com 4
60011001600210026003100
May'16
June
'16
July'16
Aug'16
Sep'16
Oct'16
Nov'16
Dec'16
Jan'17
Feb'17
March'17
April'17
May'17
Olefins(US$/tonne)
Propylene Ethylene Butadiene
40060080010001200
May'16
June
'16
July'16
Aug'16
Sep'16
Oct'16
Nov'16
Dec'16
Jan'17
Feb'17
March'17
April'17
May'17
AromaKcs(US$/tonne)
Benzene Toluene
1000
1100
1200
1300
May'16
June
'16
July'16
Aug'16
Sep'16
Oct'16
Nov'16
Dec'16
Jan'17
Feb'17
March'17
April'17
May'17
Polyolefins(US$/tonne)
LLDPE PP
5006007008009001000
May'16
June
'16
July'16
Aug'16
Sep'16
Oct'16
Nov'16
Dec'16
Jan'17
Feb'17
March'17
April'17
May'17
FibreIntermediates(US$/tonne)
Paraxylene PTA
Propylene – weighed down by ample supplies in China; weakness in key derivatives
Butadiene – sharp correction after a 70% jump in prices led by tight availability and strong buying
Excess supplies and downstream shutdowns have weighed down PX prices
www.icis.com 5
But margins remain robust supported by lower oil prices
0
100
200
300
400
500
600
700
800
900
1000
2011 2012 2013 2014 2015 2016 2017todate
Cracker Margins (US$/tonne)
SEAsianaphtha(spot) Europenaphtha(contract) USethane(contract)
www.icis.com 6
Gains have extended to PE
0
200
400
600
800
1000
1200
1400
1600
PE margins (US$/tonne)
US-ContractMargin,EthaneFeed Europe-ContractMargin,NaphthaFeed NEAsia-SpotMargin,NaphthaFeed
www.icis.com 7
How will China perform this year?
Realignment of the economy – slower growth a reality
But demand for many products showed good growth in 2016 Speculative buying/trading activity helped But indications of tighter credit conditions this
year Start up of new capacities – CTO/MTO/PDH and
wide range of derivatives And rising self sufficiency or excess capacity in some
products has opened doors for competitively priced exports and constrained operating rates
74
76
78
80
82
84
86
88
90
0
5
10
15
20
25
30
35
2015 2016 2017 2018 2019 2020
Polypropylene(mtonnes)
ProducKon Imports Selfsufficiency(%)
Source: ICIS Supply and Demand Database
%
www.icis.com 8
Capacity racing ahead of demand
0
20
40
60
80
100
00.51
1.52
2.53
3.5
2010 2015 2016 2018 2020
Phenol(mtonnes)
Capacity Demand
OperaKngRate(%)
010203040506070
0
1
2
3
4
2010 2015 2016 2018 2020
VAM(mtonnes)
Capacity Demand
OperaKngRate(%)
65
70
75
80
85
90
95
0
1
2
3
4
5
2010 2015 2016 2018 2020
Caprolactam(mtonnes)
Capacity Demand
OperaKngRate(%)
Source: ICIS Supply and Demand Database
www.icis.com 9
Constraints setting in…
Source: ICIS Consulting; 2016 to-date
www.icis.com 10
Several start-ups have been delayed with the current low oil environment
Source: ICIS Supply and Demand Database
Several planned CTO/MTO start-ups have lapsed; expected delay about 1-2 years Further out, development of methanol to olefins is expected to fizzle out, although
investments in coal to olefins will remain.
0
500
1000
1500
2000
2500
3000
3500
4000'000to
nnes
EsKmatedCTO/MTOAddiKonsinChina
(asatmid-2015)
EthyleneviaCTO EthyleneviaMTO
PropyleneviaCTO PropyleneviaMTO
Ethylene
Propylene
0
500
1000
1500
2000
2500
3000
3500
4000
'000to
nnes
CurrentEsKmatedCTO/MTOAddiKonsinChina
EthyleneviaCTO EthyleneviaMTO
PropyleneviaCTO PropyleneviaMTO
Ethylene
Propylene
www.icis.com 11
Mixed fortunes in India • Demonetisation impact temporary • 2016-17 growth for key chemicals slower than previous
year • Medium and long-term prospects remain positive
Startup of new capacities • Two new crackers in 2017 • Temporary surplus for some products
Rising import dependency • Imports of key chemicals continues to expand
www.icis.com 12
Long-term prospects intact
[CELLRANGE]
[CELLRANGE] [CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
[CELLRANGE]
0
1
2
3
4
5
6
7
0 2 4 6 8 10 12
Dem
and
m to
nnes
Growth (%)
www.icis.com 13
Gearing up for significant ethylene capacity additions
www.icis.com 14
New US crackers complete, under construction, FID made Company C2 capacity
(kt/year) Downstream (kt/year) Location Start-Up
OxyChem/Mexichem 544 Feed existing VCM plant of 1,050 Ingleside, Texas Q1 2017 (done)
Dow Chemical 1,500 ELITE PE (400), LDPE (350), EPDM (200), elastomers (320) Freeport, Texas Mid-2017 (mech complete Q1)
ExxonMobil Chemical 1,500 mLLDPE plus LLDPE (650 x2) at Mont Belvieu Baytown, Texas End 2017
Chevron Phillips Chemical 1,500 Bimodal HDPE (500), mLLDPE (500) at Sweeny Cedar Bayou, Texas Q4 2017, PE mid-2017
Formosa Plastics 1,250 PE (525), LDPE (625.5), MEG (1,000), plus DEG, TEG, PEG Point Comfort, Texas H2 2018
Sasol 1,500 LDPE (450), LLDPE (450), EO/EG (300), ethoxylates, detergent alcohols (300) Lake Charles, Louisiana H2 2018
LDPE early 2019, Others H2 2019
Westlake (Axiall)/Lotte 1,000 MEG (700) by Lotte, feed into existing PVC for Westlake St Charles, Louisiana Q4 2018
Shintech 500 VCM (300), PVC (300), caustic soda (200) Plaquemine, Louisiana 2018
Shell 1,500 HDPE/LLDPE (550 x2), HDPE (500) Monaca, Pennsylvania Early 2020s
9newcrackers=10.8mtonnes/yearThrough2018/2019=9.3mtonnes/year
www.icis.com 15
Expansions of existing US crackers, plus 1 restart
Company Capacity (kt/year) Location Status/Start-Up
Dow Chemical 250 Plaquemine, Louisiana Started up Nov/Dec 2016
LyondellBasell 363 Corpus Christi, Texas Completed Jan 2017 but op issues. End Q2 expected
Westlake Chemical 32 Calvert City, Kentucky H1 2017
Indorama (restart) 370 Lake Charles, Louisiana End 2017
LyondellBasell 250 Channelview, Texas Evaluating for 2020s
Expansionsabout1mtonnes/year+newcrackers9.3m=10.3m,or36%ofexisKngUScapacityby2018/2019
www.icis.com 16
North America PE expansions
Company C2 capacity (kt/year) Downstream (kt/year) Location Start-Up
Dow Chemical 750 ELITE PE (400kt), LDPE (350kt) Freeport, Texas Mid-2017 (mech complete
Q1) Chevron Phillips Chemical 1,000
Bimodal HDPE (500kt), mLLDPE (500kt) Sweeny, Texas Mid-2017
ExxonMobil Chemical 1,300 mLLDPE plus LLDPE (2 x 650kt) Mont Belvieu, Texas End 2017
INEOS/Sasol 470 HDPE LaPorte, Texas Q4 2017
Formosa Plastics 1,150 PE unspec (525kt), LDPE (625.5kt) Point Comfort, Texas H2 2018
Sasol 890 LLDPE (470kt), LDPE (420kt) Lake Charles, Louisiana H2 2018 (LLDPE), 2019
(LDPE)
LyondellBasell 500 HDPE LaPorte, Texas Mid-2019
Total/Borealis/NOVA* 625 Borstar PE Bayport, Texas End 2020
Shell 1,600 HDPE/LLDPE (2x 550kt), HDPE (500kt) Monaca, Pennsylvania Early 2020s
PTT Global Chemicals* 700 HDPE (2x 350kt) Belmont County, Ohio 2021
NOVA Chemicals* 450 LLDPE Sarnia, Canada 2022
SABIC/ExxonMobil* NA PE unspec (2 units) US Gulf Coast NA
Through2019=6.1mtonnes/yearThrough2022=10.7mtonnes/year***NoFIDyet
**Assuming1,300ktPEforSABIC/ExxonMobil,start-upby2022
www.icis.com 17
The US 2nd wave – visibility clearing
Company Capacity (kt/year)
Downstream (kt/year) Location Start-up Status
Total/Borealis/NOVA 1,000 Borstar PE (625) +
existing PE (400) Port Arthur, Texas End 2020 FID end 2017
Shell 1,500 HDPE/LLDPE (2x 550), HDPE (500)
Monaca, Pennsylvania Early 2020s Construction late
2017
SABIC/ ExxonMobil 1,800 PE (2 units), MEG Corpus Christi,
Texas ---
PTT Global Chemicals 1,000 HDPE (700), MEG
(500), EO (100) Belmont County,
Ohio 2021 Evaluating, FID Q4 2017
Formosa Plastics 1,200 LDPE, HDPE, EG Louisiana --- Evaluating
Odebrecht/ Braskem 1,050 PE (3 units) Wood County,
West Virginia --- On hold
www.icis.com 18 Copyright © 2016 ICIS
M tonnes
1.7
PE – 2020 product flow 0.7
3.9
1.2
2.7
6.5
0.3
MiddleEast15.7
Europe4.0
Asia&Pacific2.1
NorthEastAsia9.7
S&CAmerica2.4
FormerUSSR0.2
Africa3.0
NorthAmerica5.8
2.30.8
2.3
2.1
0.4
0.2
0.3
0.3
Source: ICIS Supply and Demand Database
NorthAmericaExports2020vs2015,‘000tonnes
NortheastAsia+1,280
Asia&Pacific+827
S&CAmerica+402
Europe+269
www.icis.com 19
Conclusion
Resurgent US First wave of cracker expansions heading towards completion Strong interest points to a second wave Trade flows set to change
Slowing Middle East Slower pace of investments Focus on value-added derivatives
Balancing Asia Low oil prices sustains margin recovery for naphtha crackers China - moving towards increasing self-sufficiency; pace of expansion slows Healthy demand growth across key markets
www.icis.com 21
Market intelligence for the energy, chemical and fertilizer industries
www.icis.com 22
ICIS is part of RELX Group
RELX is the world-leading provider of information solutions for professional customers across industries Reed Business Information provides data, analytics and insight that enable customers to
evaluate and manage risks, and develop market intelligence, supporting more confident decisions, improved economic outcomes, and enhanced operational efficiency. ICIS is the world's largest petrochemical market information provider, and has fast-growing
energy and fertilizer coverage. Its aim is to give companies in global commodities markets a competitive advantage by delivering trusted pricing data, high-value news, analysis and independent consulting.
www.icis.com 23 www.icis.com
Global Presence, Local Insight
Over9,200priceassessmentsin1,200reportscovering180commodi[es
Morethan30yearsofindustryinsightanddata
Over100,000industrycustomers
Customersincludevirtuallyeverymajorchemicalcompany
Weeklycontactwiththousandsofmarketpar[cipants
17,000+newsstoriesannually
800+globalemployees
www.icis.com 24 www.icis.com
Support for Immediate Through Long-Term Decisions
PriceAssessments
MarketNews
PriceForecastsSupply&DemandData
In-depthScenarioStudies
Near-Term
Long-Term Long-TermData-DrivenStrategic
Planning Industry-focusedglobalconsultancy
24hourreal-[menews Training&conferences
AvailableonDashboard
Marketinsight&analysis Plantproduc[onsandshutdowns
Pricereports
Marginreports
Pricealerts
Priceindices
Pricehistories
Priceforecasts Annualstudies
Global/regionaltradeflows Companyownershipinforma[on
Supply&demanddata–historicalandforecastdataforcapaci[es,consump[ons,imports,exports
