Global Propylene Market

Transcription

1 Global Propylene Market Motivated to Change Chuck Carr, IHS Senior Director - Propylene September, 2014 IHS Asia Chemical Conference Singapore

2 Global Propylene Market The Big Picture and what is motivating the changes China continues to strive towards self sufficiency North America NGL s impact supply Overbuild on the horizon..prices forecast to weaken

3 Global Propylene Market The Big Picture and what is motivating the changes China continues to strive towards self sufficiency North America NGL s impact supply Overbuild on the horizon..prices forecast to weaken

4 Propylene Demand Growth Averages 4 mmt/yr Million Metric Tons Operating Rate 90% 80% 70% 60% Acrylic Acid Acrylonitrile Cumene Isopropanol 2-Ethyl Hexanol Butanols Polypropylene Propylene Oxide Others Operating Rate 50%

5 Capacity Additions.PDH and CTO Lead the On-Purpose Wave FCC Splitters 31% FCC Splitters 25% Dehydro 13% Metathesis 4% Stm. Crackers 55% Others On- Purpose 1% Dehydro 5% Metathesis 4% HS FCC 3% Coal /Methanol To Olefins 1% Stm. Crackers 46% Others On- Purpose 1% Methanol to Olefins 2% Coal to Olefins 5% Coal to Propylene 1% HS FCC 3% Doubling On-Purpose Capacity

6 Global On Purpose Production/Demand Million Metric Tons Big Ramp in Capacity Op. Rate, Percent Production Capacity Operating Rate 50

7 Total World Propylene Alkylation 50% LPG/Fuel 35% IPA 20% Cumene 40% Refinery FCC/Coker Steam Crackers 30% 35% 40% - 45% Polygas/ Dimersol 15% Others On- Purpose 1% HS FCC 14% Splitters 68% Fuels 24% Direct 8% Metathesis 11% Propylene Oxide 8% Oligomers 40% Others 2% Acrylic Acid 4% Acrylonitrile 6% Cumene 4% Isopropanol 1% 2-Ethyl Hexanol 3% Butanols 3% Polypropylene 69% On-Purpose 25% - 30% Via Methanol 30% Olefin Cracking 1% PDH 43%

8 Global Propylene Market The Big Picture and what is motivating the changes China continues to strive towards self sufficiency North America NGL s impact supply Overbuild on the horizon..prices forecast to weaken

9 Asia Leads Demand Growth.. Million Metric Tons N. America S. America W. Europe C. Europe CIS & Baltics Africa Middle East Indian Subc. NE Asia SE Asia

10 China s Propylene Self-Sufficiency is Rapidly Improving Million Metric Tons Percent, % Production Net Equivalent Import (Export) Self-sufficiency

11 Not Surprising with All the New On- Purpose Capacity Asia Propylene Incremental Capacity, Million Metric Tons China Coal/ Methanol China PDH China Crackers/ Refineries Other NE Asia

12 Propylene Derivative Capacity Additions Shift Away from PP Global Percentage 100% Propylene Equivalent Basis 80% 60% 40% 20% 0% PP Polypropylene Acrylonitrile Acrylic Acid Cumene Oxo Alcohol Propylene Oxide Other

13 And Provides Abundance of Non-PP Derivative Capacity Mostly China Global, Million Metric Tons 7.0 Propylene Equivalent Basis PP Polypropylene Acrylonitrile Acrylic Acid Cumene Oxo Alcohol Propylene Oxide Other

14 Global Propylene Market The Big Picture and what is motivating the changes China continues to strive towards self sufficiency North America NGL s impact supply Overbuild on the horizon..prices forecast to weaken

15 NGL s Supplies: Effects on Propylene Ethane Propane Butanes Negative Positive Negative C5+ Provides alternatives for refiners and steam crackers

16 North America Propane Abundance Supports Global PDH Additions MBPD 2,500 2,000 1,500 1, Domestic Exports

17 World Propylene PG/CG Cost Curve 2018 $/Metric Ton 1800 MDE Avg MDE PDH US PDH SEA Avg NAM Avg SAM Avg China PDH NEA Avg WEP Avg Cumulative Production - Million Metric Tons Demand US Price W Europe Price NE Asia Price 2018

18 US Propylene Prices Stay Discounted Versus Alky Alternatives Cents Per Pound 100 Dollars Per Metric Ton Alky Alternative Value Spot Refinery Grade Contract Polymer Grade 0

19 Propylene Splitter Margin More Motivation for Refiners Price, Cents Per Pound 100 Margin Gain by Splitters Margin J 03 J 04 J 05 J 06 J 07 J 08 J 09 J 10 J 11 J 12 J 13 J 14 J 15 J Margin RG Wtd Avg Acq (Estimated) PG Benchmark Contract 0

20 Propylene Alkylation Economics Revived Will Refiners Invest? Return on Investment for an Alky Unit in US + 0% _ $75 Million $150 Million $225 Million

21 Global Propylene Market The Big Picture and what is motivating the changes China continues to strive towards self sufficiency North America NGL s revive supply Overbuild on the horizon..price forecast weakens

22 Global Propylene Capacity Additions Versus Demand Growth Million Metric Tons Capacity Overwhelms Anticipated Demand Growth North America Middle East China West Europe Others Other Asia Annual Demand Increase

23 Global Monthly Propylene Prices Dollars Per Metric Ton 2,200 2,000 1,800 Monthly Volatility Already Declining 1,600 1,400 1,200 1, A J O 11 A J O 12 A J O 13 A J O 14 A J O 15 A J O NAM Net Trans. Contract Price WEP Disc. Contract Price SEA CFR Spot Price

24 Global Propylene Net Equivalent Trade Contracts With the Overbuild Million Metric Tons 15.0 Net Exports Net Imports North America West Europe Middle East Asia (Ex China) China

25 Propylene to Ethylene Price Ratios Ratio 1.5 A Return to the 1990 s? Ratio ? More than 2X GDP Growth in 1990 s Southeast Asia North America West Europe 0.5

26 World PG/CG Propylene GDP Elasticity Average GDP Elasticity from '= 2.14 Average GDP Elasticity from = 1.58 Forecast GDP Elasticity from = 1.55 Forecast GDP Elasticity from = Could Get a Boost from Weaker Prices

27 Global Annual Propylene Prices Dollars Per Metric Ton 1,800 NAM back to lowest Asia lowest price NAM Net Trans. Contract Price WEP Disc. Contract Price SEA CFR Spot Price

28 Conclusions Propylene demand growth could get a boost if oversupply of propylene and propylene derivatives significantly weakens prices Abundance of North America NGL s will provide a mixed impact on propylene supply On-purpose will continue to be the growth engine for propylene supply. Could methane based propylene via methanol could be the next wave

29 Thank You