global plasticizer trends-brasil plast 2007
DESCRIPTION
bookTRANSCRIPT
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PresenterMr. Shane P. WalkerOxo Regional Sales Manager, Americas
Global Plasticizer Industry TrendsGlobal Plasticizer Industry Trends
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Overview
Simplified Integrated Plasticizer Production
ExxonMobil Chemical Global Oxo Capability
Global Alcohol Supply/Demand and Average Capacity Utilization
Plasticizer Market Structure Changes
Global Plasticizer Demand by Region
Energy and Raw Material Costs
Future Landscape
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Refinery CatCracking
Butenes
Propylene
Ethylene
C7-C13 Oxo
Alcohol
LinearAlcohols
LinearPlasticizers
PLASTICIZER
BranchedHigher Olefin
(C6-C12)
Linear Olefins
RefineryReforming Orthoxylene
PhthalicAnhydride
(PAN)
OXOALCOHOL
Steam Cracking
HIGHER OLEFINLIGHT OLEFIN
DINP (C9)DIDP (C10)
Other (C7-C13)HMW
Simplified Plasticizer Production Steps -Alcohol Step most complex
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ExxonMobil Chemical Oxo Global Capability
Higher Olefin Mfg. Site
Alcohol Mfg. Site
Plasticizer Mfg. Site
Technology Center
Phthalic Anhydride Site
ExxonMobil Chemical is the largest WW Supplier of Plasticizers and the OXO Alcohols used to make them
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Capacity:
Announced capacity additions lagging demand growth feed availability an issue
Limited capacity investment in US and Europe
Recent alcohol additions all in Asia Pacific
Average WW 2EH alcohol capacity reduction of 4% from 05 to 06.
Reductions in EU and US
Global Alcohol Supplies & Average Capacity Utilization Tightening
kta
0
1000
2000
3000
4000
5000
6000
7000
2004 2005 2006 2007 2008 2009 2010 2011 2012
Global 2EH/HMW Alcohol Capacity
WW Demand
WW Capacity
Source external consultants and EMCC estimates
Average Capacity Utilization (CU):
Average Global capacity utilization tightening
Significant supplier outage could swing balance quickly
AP capacity utilization higher than rest of the world >90% WW 2EH CU predicted for near term future
Expect inter-regional plasticizer price differentials minimized at high average CU.
Source external consultants and EMCC estimates
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Structural changes ongoing globally less integrated most vulnerable:
Americas: 2000 Solutia sells business to Ferro (BBP); Atanor (Argentina) s/d
PAN and PLA; Sunoco acquires Mitsubishi
2002 Shell s/d 2EH/butanol plant; Elekeiroz (Brazil) buys Ciquine 2004 BASF purchases Sunoco 2EH/PLA/PAN: Announces plan to
convert Pasadena 2EH to alternative product slate; BP announces 05 s/d of Pasadena LAO
2005 BP Pasadena LAO s/d in Sept. 2006 -- Pasadena 2EH s/d to convert to 2PH; Sterling Linear alcohol
plant to s/d; Elekeiroz announces s/d of Taubate (Brazil) plant
Announced investments providing no additional Alc/Pla capacity; attempt only to improve feedstock economics
Europe: Since 2000, 600 kT of Oxo assets mothballed or closed in Europe. No new investments announced Further mergers/consolidations in 2EH and derivative markets
expected
AP Plasticizer market structure most fragmented (esp. China): DOP has ~75% market position. Low esterification margins in Asia Pacific Alcohol key to supply reliability
Market Demand Shifts & Profit Pressures Driving Changes
Integration key for long-term supply assurance
0
50
100
150
200
250
'00 '01 '02 '03 '04 '05
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A
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Plz Alc or Ester EU Capacity closures/mothballEMC est based on Tecnon
0
40
80
120
160
200
0 25 50
06
WE '98
NA '98
06
China '98
06
Bubble size: demandJapan 98
SA '98
06
Industry Structural ChangesAvg size, kT
Source: Trade Publications, EM estimates
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Global Plasticizer Demand Environment Specifics by Region
All Other Uses1%
Cal - Film & Sheet for Packaging
11%
Resellers and Compounders
15% All Other Paste
Process Uses3%
Mold - All Other Molding Uses3%
Coat - Flooring3%
Coat - Textile and Paper Coating
2%
Adhesives and All Other Coating Uses
2% Ext - Wire and Cable
16%
Ext - Film and Sheet17%
All Other Extrusion Uses10% Protective Coatings
1%
All Other Calendering Uses16%
Americas -06 Plz market ~915 kT (NA 750/SA 165) 06 NA PVC domestic sales declined vs. 05 with sales down
3.3% (APC Data) 06 NA Flexible market decline estimated down 4% vs. 05. PVC Imports, which increased +30% during 05 (some
Hurricane impacts), declined 13% during 06. Dispersion PVC appears to be most of the growth
Key Flexible markets reflected declines since 04 - esp. Calendaring/Coating W&C slowed 2H06 (Housing start decline).
Planning basis remains phthalate growth @ less than GDP Imported finished goods affect demand in multiple markets
NA Flexible PVC Breakdown (estimated from ACC PVC Resin sales)
Compounding28%
Films/Sheets/Calendering
22%
Shoes20%
Extrusion8%
Wire and Cable4%
Toys6%
Under Body Coats
4%
Distributor4%
Others4%
SA Flexible PVC Breakdown (EMCC estimates)
ACC PVC Sales for Key Flexible Markets
60%65%70%75%80%85%90%95%
100%105%110%115%
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Calendering Coating Wire & Cable
Source: American Chemistry Council Monthly Statistical Report
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Global Plasticizer Demand Environment Specifics by Region
Coated Fabrics10%
Hoses2%
Compounding31%
Wall Covering5%
UBC6%Wire & Cable
16%
Film and Sheet12%
Sealants3%
Flooring15%
European Market (06 Plz market ~ 1000 kT) 06 market up 6% vs. 05 stronger construction demand. DOP now less than 20% of market driven by consolidating
manufacturing base and HMW conversion (shift to DINP/DIDP).
Example: BASF exited 2EH/DOP market Sept 05. High demand growth in Russia and Baltic regions (6-8%/yr) in
Flooring, Wallcovering, and Underbody Auto Coatings EU Risk Assessments conclude no risk reduction required
for DINP and DIDP in current applications REACH Legislation enters into force mid-2007 Lower value stationary and coated fabrics are targets for
imported finished foods from AP. $/Euro exchange - Large fluctuations influence trade.
Asia Pacific Market (06 Plz market ~ 3000 kT) 2006 Region GDP (ex Japan) estimated @ 8% Long term growth estimates robust with focus on China and
India. Chinas near term growth 7-8%/year DOP represents 75% of the market Faster HMW Plasticizer Growth (DINP vs. DOP) particularly
for export markets Esterification margins have been well below reinvestment
lowest in the world for non-integrated esterifiers China PVC investments focus on cost advantaged coal vs.
ethylene-based (65% now based on coal).
EU Plasticizer Demand by End-use (2005)
$/t
Gross Margins Over FeedstockAP Independent Esterifier
05
10152025303540
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$/T
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Chemical Raw Material Cost impacted by Chemical Raw Material Cost impacted by Global Crude Oil & Energy MarketsGlobal Crude Oil & Energy Markets
Crude Multiple events affect crude oil markets: Strong fuel demand, OPEC production constraints, and renewed tension in
the Middle East supports higher Global crude prices through March and April OPEC production in March held at ~26.6 MBPD in March (per US Dept of Energy), flat with February. Total Global demand is ~85MBPD.
Demand relatively inelastic, even at higher price levels: IEA February Oil Market report O/Ls global oil demand growth in 07 of about 1.5 MBD (1.8%).
Limited spare capacity: OPEC production restraint implies higher levels of spare production capacity which, if sustainable, could ease reduce market concerns on supply security DOE estimates that world spare oil production capacity will recover to over 2 MBD in 2007
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Plasticizer Raw Material CostsPlasticizer Raw Material Costs Record Costs and Volatility pressure profitability GloballyRecord Costs and Volatility pressure profitability Globally
Oxo Feedstock Costs
Propylene - influenced by energy markets, mogas reformulation, steam cracker feed slates, and derivative demands. 1Q07 trends upward with energy costs, improved derivative demand (Polypropylene), as well as typical 1Q07 cracker downtimes limiting supply.
Ethylene - influenced by energy markets, steam cracker feed slates (relative economics and light/heavy feeds), and derivative demands (Polyethylene). 1Q07 cost trend upward.
Orthoxylene - influenced heavily by octane demand (for mixed xylenes) associated with motor gasoline reformulations (MTBE phase out). 1Q07 cost trend upward.
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Future Landscape Key Points to Consider
Tightening global alcohol supply/demand conditions Higher average CU minimizes inter-regional price differences Reduction in opportunistic exports Non-integrated esterifiers most vulnerable
High energy prices and continued volatility will challenge non-integrated suppliers
Transitions in North American market underway BASF reducing/restructuring their product portfolio to compete Announced rationalization of linear alcohol production and conversion of 2-EH
capacity to alternate chemistry
ExxonMobil advantageously positioned with fully integrated alcohol production at multiple sites globally
+ Investments tailored by Region to meet customer needs+ US/Europe: Project focus on feedstock utilization and efficiency+ 2006: Expansion of Singapore INA plant to 180 - 220 kta+ Progressing potential second steam cracking train and derivative units in
Singapore
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