european propylene and polypropylene (epca 2012 presentation)

European Propylene and Polypropylene Monicca Egoy

Editor, Europe Propylene & Polypropylene

2

Agenda

• 2012 price trends: A rollercoaster ride for the industry

• Issues and challenges

• Opportunities

• What shale gas means to the European propylene industry?

NWE propylene and naphtha prices

Source: Platts On The Net

European propylene and polypropylene prices

Source: Platts On The Net

European propylene production 2005-2011

Source : APPE

NWE propylene quarterly production 2007-2012

Source: APPE

European polypropylene contract, spot prices

Source: Platts On The Net

Inherent features of European propylene market: The incredible balancing act

• Credible revival of downstream demand yet to materialize

• Tight control of working capital

• Cautious inventory management

• Utilization rates adjusted based on downstream demand

• Self-sufficiency, self-preservation mode at all times

• Industry remains vigilant

Global propylene demand 2010-2016

Source: Japan METI

0 20,000 40,000 60,000 80,000 100,000 120,000

2010

2011

2012

2013

2014

2015

2016

US Western Europe, includng Turkey Total Asia TOTAL DEMAND

Global polypropylene demand 2010-2016

Source: Japan METI

0 10000 20000 30000 40000 50000 60000 70000

2010

2011

2012

2013

2014

2015

2016

US Western Europe, includng Turkey Total Asia TOTAL PP Demand

Global propylene production 2010-2016

Source: Japan METI

0 20,000 40,000 60,000 80,000 100,000 120,000

2010

2011

2012

2013

2014

2015

2016

US Western Europe, includng Turkey Total Asia TOTAL PRODUCTION

European polypropylene production/demand 2010-2016

Source: Japan METI

7,500

8,000

8,500

9,000

9,500

10,000

10,500

2010 2011 2012 2013 2014 2015 2016

production Demand

• Europe’s diversified cracker portfolio to benefit in times of global C3

shortages, as new US investments favour C2 production

• Europe to capitalize on robustness in C3 production chains

• Nimble infrastructure in Europe to aid arbitrage opportunities

• Strength of feedstock/downstream integration to aid efficiency

• Close proximity to customers to continue strengthening integration on a

larger scale

Opportunities: What Europe will capitalize on

Summary

14

•Volatile feedstock to remain a key feature, margins weak

•End-user markets fragile

•Production rates adjusted based on demand

•Long term outlook positive

•Shale gas brings opportunities for European propylene industry