icis presentations during apic 2017 committee meetings · 1 icis presentations during apic 2017...

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ICIS Presentations during APIC 2017 Committee Meetings

• Delicately Tweaking China Polyolefin Sector Sustainability to Trump US Export Surge• Survival of the fittest – Are the non-traditional olefins and polyolefins routes sustainable in

the low-oil, low-naphtha price environment? • The road ahead for Asia’s styrene and feedstocks• Asia vinyls market review and the revival of China as an export player• Gas or coal-to-olefins (CTO) – Will it ever work in the current low oil price environment? • Exploring the intertwining relationship between propylene oxide (PO) and polyether

polyols

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Asia Petrochemical Industry Conference |19 May 2017 | Sapporo, Japan

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Delicately Tweaking China Polyolefin Sector Sustainability to Trump US Export Surge

Amber LiuSenior manager, ICIS

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Cost changes competitiveness•Diversification of olefins processes differentiate the costs of polyolefins and change the domestic supply structure

Demand becomes a major driver•Industrial structure adjustment deepens and downstream sectors are on the way to segmentation

Global trade flow shifts•Expanding capacity breaks local supply-demand balance and import & export arbitrage attracts market focus

Hot topics in the polyolefins market•Challenges and opportunities brought by policies in the petrochemical industry, effects of the depreciation in the Chinese yuan on import & export and so on

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OCT

Ethane steam cracking

PDH

CTO/MTO/MTP

Naphtha, light diesel, hydrogenated tail oil steam cracking

1

23

4

5

Feedstock diversification

Diversification of feedstock olefins differentiates the costs


Polyolefin producers’ profits vary significantly

Diversification of olefins production processes leads to differentiation in producers‘ profits

Source: ICIS

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2013 2014 2015 2016 2017E 2018F 2019F 2020F

CNY/tonne

Methanol-based

Propane-based

Coal-based

Naphtha-based


Start-up of coal-based PP projects is delayed on worse margins

Note: Powdered PP capacity is not included

Source: ICIS

1.31.31.3

4.2

11.6

Crude oil

Coal

Propane

Methanol

Purchased propylene

Changes in feedstock diversification (2016 VS 2020)

Unit: million tonnes

Designed capacity=19.7

2016 2020


Purchased

propylene5%

Methanol

7%

Propane

8%

Coal21%

Crude oil

59%

Purchased

propylene6%

Methanol

6%

Propane

7%

Coal34%

Crude oil

47%

1.51.61.8

8.5

12.0

Crude oil

Coal

Propane

Methanol

Purchased propylene


Start-up of coal-based PE capacity is delayed on worse margins

Data Source: ICIS

Changes in feedstock diversification (2016 VS 2020)



2016 2020


0.1 0.7 2.4

13.0

Crude oil

Coal

Methanol

Purchased ethylene

Purchased

ethylene

1%

Methanol

4%Coal15%

Crude oil

80% 0.1 0.8

5.9

13.7

Crude oil

Coal

Methanol

Purchased ethylene

Purchased

ethylene

1%

Methanol

4%

Coal29%

Crude oil

66%


Supply-demand of polyolefins in major regions

Production Demand

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2010 2015 2016 2017E 2018F 2019F 2020F

tonnes

ASIA AND PACIFIC

NORTH EAST ASIA

MIDDLE EAST

AFRICA

FORMER USSR

EUROPE

SOUTH & CENTRAL AMERICANORTH AMERICA

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

2010 2015 2016 2017E2018F2019F2020F

tonnes

ASIA AND PACIFIC

NORTH EAST ASIA

MIDDLE EAST

AFRICA

FORMER USSR

EUROPE

SOUTH & CENTRAL AMERICANORTH AMERICA

Source: ICIS Supply and Demand Database

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New US crackers under construction, FID made

9 new crackers = 10.8m tonnes/yearThrough 2018/2019 = 9.3m tonnes/year

Data Source: ICIS

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 1,500ELITE 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 1,250PE (525), LDPE (625.5), MEG (1,000), plus DEG, TEG, PEG Point Comfort, Texas H2 2018

Sasol 1,500LDPE (450), LLDPE (450), EO/EG (300), ethoxylates, detergent alcohols (300) Lake Charles, Louisiana

H2 2018LDPE early 2019, Others H2 2019

Westlake (Axiall)/Lotte 1,000MEG (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


Expansions of existing US crackers, plus 1 restart

Expansions about 1m tonnes/year + new crackers 9.3m = 10.3m, or 36% of existing US capacity by 2018/2019

Data Source: ICIS

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


The 2nd wave? – visibility clearing

Data Source: ICIS

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 GlobalChemicals 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


M tonnes

1.7

0.7

3.9

1.2

2.7

6.5

0.3

Middle East 15.7

Europe4.0

Asia & Pacific2.1

North East Asia9.7

S&C America2.4

Former USSR0.2

Africa3.0

North America5.8

2.30.8

2.3

2.1

0.4

0.2

0.3

0.3

North America Exports 2020 vs 2015, ‘000 tonnes

Northeast Asia +1,280

Asia & Pacific +827

S&C America +402

Europe +269 Source: ICIS Supply and Demand Database

Global polyethylene trade flow (2015 vs 2020)


Above the threshold for five consecutive months

Feedstock and product replenishment

Stronger demand

PMI index increased, solid foundation for a stable economy

Source: National Bureau of Statistics of China

42

44

46

48

50

52

54

PMI 新订单指数产成品库存指数原材料库存指数Index of Inventory index of finished goods

Inventory index of raw material


Development in downstream sectors

PP PE

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2015 2016 2017E2018F2019F2020F2025F

non-wovenpipeothersinjection moldingfibre productsplastic film

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2015 2016 2017E 2018F 2019F 2020F 2025F

plastic filminjection moldingblow moldingpipeagricultural filmsothersdrawingwire & cablecoating

Data Source: ICIS


Establish 5-8 petrochemical and chemical demonstration bases

Upgrade ethylene feedstock and improve units’ competitiveness

Moderately develop MTO and PDH technologies, increase the proportion of non-oil based products in ethylene and propylene output

Further implement the Belt and Road Initiative, support domestic producers’ participation in the exploration and exploitation of overseas resources, especially the oil and gas resources, methanol, ethylene and derivatives based on shale gas in North America

China 13th five-year Petrochemical and Chemical Industry Development Plan

3.6

4.7

6.6

8.8

6.7

0

1

2

3

4

5

6

7

8

9

10

0

10

20

30

40

50

60

70

80

90

Ethylene Propylene PX Methanol MEG

CAGR, %Million tonnes

20152020CAGR

Source: China Ministry of Industry and Information


Seven petrochemical bases, further development of refining-chemical integration projects

CNOOC and Shell, 10/1

ZRCC, 15/1.2


Refinery/Ethylene

Gaoqiao Petrochemical, 15/1

Fujian Gulei, 16/1.2Sinochem Quanzhou, 30/2

Mao-Zhan Integration, 10/8

Zhejiang Petrochemical, 40/2.8

Changxing Island

Caojing, Shanghai

Huizhou, Guangdong

Gulei, Fujian

Caofeidian

Ningbo, Zhejiang

Lianyungang, Jiangsu

Petrochemical base

Source: ICIS

Hengli Petrochemical, 20Sinopec, 12/1

Shenghong Petrochemical, 16


Depreciation in the Chinese yuan

Increased export

Stimulate domestic demand

Effects of depreciation in the Chinese yuan on PP import & export

一美元折合人民币(期末数)(元)

Source: People’s Bank of China

Dollar-Yuan exchange rate

Source: China customs and ICIS

0

100

200

300

400

500

600

2010 2011 2012 2013 2014 2015 2016 2017E2018F2019F2020F

Unit: KT PP Export Trend

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Survival of the Fittest – are the non-traditional olefin/polyolefin routes sustainable in a low oil price environment?

Dr Regan HartnellSenior ConsultantICIS Analytics & Consulting

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Events Shaping Future of Global Olefins & PolyolefinsTrends & Dynamics in Alternative Olefin Supplies; and how these

are impacted by changing Oil Price ScenariosSummary

Agenda

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Events Shaping Future of Global Olefins & Polyolefins

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Trends & Dynamics in Alternative Olefin Supplies

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0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Changes in Global Feedstock SlatesEthane LPGs Naphthas Heavier Liquids++

Initially from a Naphtha supply point of view: it will remain more than sufficient to satisfy the rise in demand until early 2020s, after which more refining capacities are likely to be required

(120)(100)(80)(60)(40)(20)020406080100

(120)(100)

(80)(60)(40)(20)

020406080

100

IN M

ILLI

ON

TO

NN

ES

IN M

ILLI

ON

TO

NN

ES

Naphtha Supply/Demand BalancesNorth America South & Central AmericaEurope Former USSRAfrica Middle EastNortheast Asia South & Southeast Asia

Petrochemicals (both olefins & aromatics) will play a growing part in oil demand via naphtha feedstock, in comparison to naphtha for gasoline blending

13%

7%

47%

33%

15%

8%

38%

39%

www.icis.com 29

NGLs – primarily ethane, is changing the world of polyolefin manufacture…

A large amount of ethane remains “rejected”, waiting for the new demand. But once demand arrives, more production will be required and transport costs featured…

Propane availability suggests ample supply is available, but seasonal factors remain in place. Steam -crackers’ with feedstock flexibility will have a substantial competitive advantage

Developments in LPG price setting mechanisms, inline with naphtha cracking economics, could reward flexible crackers with seasonally cheaper, imported feedstocks

0

500

1000

1500

2000

2015 2016 2017 2018 2019 2020

US Ethane Balances under unchanged Supply (‘000 b/d)

To Ethylene Export by PipelineDeep Sea exports 2015 Production

Rejection

Source: ICIS Consulting & ICIS Pricing

www.icis.com 30

Steam cracking remains the key workhorse for petrochemical production, although non-traditional routes (CTO/MTO and PDH) capacities are expected to gain an important share


2% 6% 10% 13%

0%10%20%30%40%50%60%70%80%90%

100%

2010 2015 2020 2025

Global Olefins Feedstock

Steam Cracking/Refinery Gas Non-Traditional Routes Others

Olefins feedstock via non-traditional routes is expected to make up 13% by 2025

How would this affect olefin prices?

www.icis.com 31

Close to 7m tonnes/year of ethylene capacity is expected to be via CTO/MTO by 2020

In the case of China, non-traditional routes (CTO/MTO and PDH) fill a considerable demand gap

Above 16m tonnes/year of propylene capacity is expected to be via PDH and CTO/MTO by 2020


0

5

10

15

20

25

30

35

40

2015 2016 2017 2018 2019 2020

mill

ion

tonn

es

China Ethylene Capacity and Demand

Traditional Route CTO MTO Consumption

0

5

10

15

20

25

30

35

40

2015 2016 2017 2018 2019 2020

Mill

ion

tonn

es

China Propylene Capacity and Demand

Traditional Route PDH CTO MTO Consumption

www.icis.com 32

0%

5%

10%

15%

20%

0

5000

10000

15000

20000

25000

'000

tonn

es

Regional PDH Capacity DevelopmentsNorth America South & Central America EuropeFormer USSR Africa Middle EastNE Asia South & SE Asia PDH % of Global Propylene

Past few years saw the peak of PDH capacity addition, with more than 6 million tonnes/year of capacity added in 2014-16.1.1m expected in 2017.

PDH is fast growing as a more common propylene supply mechanism in order to balance the market

More than 60% of PDH capacity addition in the future will come from the US and NE Asia.


2016-2021 PDH Capacity Addition by Region

North America20%

South & Central America

5%

Europe6%

Former USSR3%

Middle East15%

NE Asia45%

South & SE Asia6%

www.icis.com 33

Firm supply-demand fundamentals + Availability of imported NGLs (both planned & fortuitous) promote investments in on-purpose PDH-based propylene production especially in NE Asia


0%

20%

40%

60%

80%

100%

NE Asian Propylene Capacity ShareSteam Cracking Refinery Gas PDH Metathesis/OCU Methanol-to-Olefins Coal-to-Olefins

-

1000

2000

3000

4000

5000

'000

Ton

nes

NE Asian Propylene Capacity Additions2015-2010 2020-2015 2025-2020

-

1000

2000

3000

4000

'000

Ton

nes

South & SE Asian Propylene Capacity Additions2015-2010 2020-2015 2025-2020

0%

20%

40%

60%

80%

100%

SE & South Asian Propylene Capacity ShareSteam Cracking Refinery Gas PDH Metathesis/OCU

www.icis.com 34

-12

-9

-6

-3

0

3

6

9

12

-90

-60

-30

0

30

60

90

Global Propane BalancesNorth America South & Central AmericaEurope Former USSRAfrica Middle EastNortheast Asia Asia & PacificBalance (right scale)


-12.00

-9.00

-6.00

-3.00

0.00

3.00

6.00

9.00

12.00

-250

-200

-150

-100

-50

0

50

100

150

200

250

Global Propane Supply & Demand

Ex NGLs Ex Refinery

To Ethylene (SteamCracking) To Propylene (PDH)

To Other (energy) Balance (right scale)

Production

Consumption

Market Long

Market Tight

Propane will be increasingly available in International MarketsIncremental Supplies are primarily expected from NGLs developments in the US, Middle East and Russia

Petrochemicals will increasingly influence demand developments – pricing implications to aid LPG balances

Exporters

Importers

www.icis.com 35

Balances: Surplus Deficit

to Japan

to rest of S&SE Asia

to China

Global Propane: Key Trade Flows (2016)

*Volumes in Million tonne

US Propane will remain long: flows to international markets rapidly increasing

The US is by now the largest country exporter of Propane in the World. It was a net importer of LPG just a few years ago.

US Exports are now flowing to Asia and Europe

The Middle East remains the largest region in terms of exports

Ample avails in international markets have promoted Asian PDH developments

China imports are now exceeding those of Japan


20.2

North America

3.4 -9.8

Europe 3.1

-5.5South & Central America

5.4

5.0Africa

3.2

22.7

Middle East

3.1Former USSR

-4.5

South Korea

-8.9

Japan1.4

4.8

-11.6China

7.1

-3.4

India

-4.5

3.4

Rest of South & SE Asia

3.4

3.3

1.2

2.2

www.icis.com 36

Several CTO/MTO start-ups have been delayed with the current low oil environment


Several planned start-ups have lapsed; expected delay about 1-2 yearsFurther 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

'000

tonn

es

Current Estimated CTO/MTO Additions in China

Ethylene via CTO Ethylene via MTO

Propylene via CTO Propylene via MTO

0

500

1000

1500

2000

2500

3000

3500

4000

'000

tonn

es

Estimated CTO/MTO Additions in China

(as at mid-2015)



Ethylene

Propylene

Ethylene

Propylene

“ “

“ “

www.icis.com 37Copyright © 2016 ICIS

With the fall in oil prices, the ethylene cost curve flattened dramatically, reducing the ingrained competitive advantage of ethane crackers in North America or the Middle East. From a C2 perspective, CTO loses it’s cost advantage in a lower oil scenario

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Although generally lower cost, CTO costs are highly leveraged to oil prices via a ‘round-about’ mechanism. MTO costs are higher, but less volatile.


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Lower oil closes window for MTO projects “integrated” to US methanol -- ‘Poor Man’s LNG’

Chinese companies have plans to invest in methanol production in the US and ship to China, riding on the cheap natural gas

The advantage, however, has disappeared in the low oil environment

Assume ~$60/bbl Brent oil in 2020

Source: ICIS Consulting

US Shale revolution gave rise to wide availability of cheap natural gas

www.icis.com 40

Asian Cost Comparisons: Imported Ethane vs Traditional NaphthaThe ‘easy decision’ window on ethane imports from the US has closed

Risk appetite, any hedging opportunities & infrastructure will be important considerations

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Does US Ethylene derivative export-oriented projects still make sense?

Ethylene derivative exports still have a considerable buffer – though narrower – in a low oil environment.2020 – Assume ~$60/BBL

Brent Crude Oil & ~4$/MMBTU Henry Hub PriceLower ROI will lead to longer

CAPEX payback and will slow down future waves of ethylene derivative exports

Ethane feed

HDPE

www.icis.com 42

In Summary

www.icis.com 43

Will Non-Traditional Routes Continue?

Non-traditional routes (PDH/CTO/MTO) are not as attractive as an option in lower oil scenarios

Much lower Naphtha prices and fairly healthy co-product demand have helped to lower naphtha cracking costs while demands of polyolefins remain strong

However, non-traditional capacity additions have helped to satisfy supply –demand balances – and will be required in the future, especially for C3 chains.Current slimmer margins will make it more difficult to justify new non-traditional

route methanol-based investments, especially in market priced methanol-to-olefin projects.CTO & PDH investments will play a part of future olefin supply, as easier a

market balancing requirement or a ‘strategic’ development.

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Clive Ong Senior Editor Manager

Asia Petrochemical Industry Conference19 May 2017Royton Sapporo, Japan

APIC 2017 – The road ahead for Asia styrene & benzene feedstock

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Asia Pacific styrene trade flow

Key developments in the first half of 2017

Styrene reverse arbitrage

Comparison between styrene and styrenics resins

Asia benzene overview, impact on styrene market

Agenda

www.icis.com 48

Styrene Monomer (SM) 2017 Overview


Styrene demand and trade flows for China

Demand: 10m tonnesImports 3.9m tonnes

Deep Sea Sources

Source: ICIS


SM plant turnarounds in H1 2017

Source: ICIS


Styrene Plant Maintenance and Outages H1 2017

Source: ICIS

Estimated Loss: 537,500 tonnes


Styrene prices across the regions in Q1 2017

Source: ICIS


Asia traders moving cargoes to the US

H2 Feb / H1 Marchloading

S Korea seeking vessels for exports

Estimated 25,000 tonnes

Source: ICIS

South Korea


Styrene Inventories - East China Q1 2017

Source: ICIS

0

50,000

100,000

150,000

200,000

250,000

06-Jan-17 06-Feb-17 06-Mar-17 06-Apr-17

Tonnes


China Bonded Tank Cargoes moving to Asia

Source: ICIS

China bonded tank cargoes seeking vessels H2 March30,000-40,000 tonnes

China

N E Asia

S E Asia


SM Import vs Domestic Prices in China Q1 2017

Source: ICIS

11001150120012501300135014001450150015501600

06-Jan-17 20-Jan-17 03-Feb-17 17-Feb-17 03-Mar-17 17-Mar-17 31-Mar-17

Import Domestic

> $300/tonne fall> $200/tonne

$


Overview of SM Margins

Source: ICIS

$

0

50

100

150

200

250

300


Styrenic Resins Price Spread Q4 2016 – Q1 2017

Source: ICIS

$2000

$1130

$2200

$1300


One-Year Resins to SM Price Spread Average

Source: ICIS

0

500

1000

1500

2000

2500

08-Apr-16 08-Jul-16 08-Oct-16 08-Jan-17

ABS EPS PS SM$

ABS - $392/tonne

EPS - $147/tonne

PS - $112/tonne


Q1 2017 Resins to SM Price Spread Average

Source: ICIS

ABS - $545/tonne

EPS - $129/tonne

PS - $74/tonne

0

500

1000

1500

2000

2500

06-Jan-17 06-Feb-17 06-Mar-17

ABS EPS PS SM$


Q4 2016 – Q1 2017 ABS vs Feedstock Prices

Source: ICIS

800

1300

1800

2300

2800

3300

07-Oct-16 07-Nov-16 07-Dec-16 07-Jan-17 07-Feb-17 07-Mar-17

ABS AN BD SM$


Q4 2016 – Q1 2017 ABS vs Feedstock Prices

Source: ICIS

150

200

250

300

350

400

450

500

550

07-Oct-16 07-Nov-16 07-Dec-16 07-Jan-17 07-Feb-17 07-Mar-17

Price Spread ($/tonne)

Q4 16 High - 496

Q1 17 Low - 208

Q4 Average - 328

Q1 Average - 331

$

www.icis.com 63

Benzene 2017 Overview


SM – Benzene Spot Price Spread Q1 2017

Source: ICIS

$491/tonne$329/tonne

$514/tonne


One-Year SM – Benzene Spot Price Spread

Source: ICIS

0200400600800

10001200140016001800

Benzene SM$


SM – Benzene Price Spread 2007-2017

Source: ICIS

100

200

300

400

500

600

700

800

$


SM – Benzene Price Spread Average 2007-2017

Source: ICIS

326307

282 296305

265

423

307

411 420435

0

50

100

150

200

250

300

350

400

450

500

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Q1

$


China’s SM Demand Growth Slows

1997

China NE Asia Rest of World

2006


China 19%

NE Asia 24%

2015


NE Asia 21%

China 33%World Demand18m tonnes

World Demand25.5m tonnes

World Demand28.8m tonnes

China 4%

+ 39%

+ 12%

Source: Market & ICIS Consulting


Benzene Expansions in 2017Company Location BZ (kta) Output (kt) Start-up period

Reliance Jamnagar, India 500 292 Apr-17Petro Rabigh II Rabigh, KSA 400 100 Q4 2017

Sadara Chemical Al Jubail, KSA 280 140 Q2 2017

Nghi Son Refinery & Petrochemical Complex Thanh Hoa, Vietnam 250 104 Jul-17

ONGC Petro-additions Limited’s (Opal) Dahej, India 150 138 mid Jan 2017KPIC (debottleneck) Onsan, Korea 80 40 Jun-17

Hanwha Total (debottleneck) Daesan, South Korea 70 29 Jul-17

S-oil (debottleneck) Onsan, Korea 20 13 mid-Apr 2017CNOOC Huizhou Huizhou, China 250 125 Jun-17

Petrochina Yunnan Yunnan, China 130 54 Jul-17Jinling Petrochemical China 100 17 Q4 2017

Jiujiang PC Jiujiang, China 70 18 2017Hainan Refinery Hainan, China 140 35 2017

Hongrun Shandong, China 200 117 May-17Jingbo Shandong, China 70 23 Aug-17Lihuayi Shandong, China 30 28 Jan-17

Kenli Petrochemical Shandong, China 24 6 2017Zhenghe Shandong, China 40 10 2017

Lijin Shandong, China 20 5 2017Jinchen PC Shandong, China 30 8 2017

Huaxin Shandong, China 40 10 2017Total in 2017 2894 856

Total in China 2017 1144 454


Downstream Expansions in 2017

Product Company Location Capacity(kta)

est. benzene usage (factor* mths of

pdn)Start-up period

SM Jiujiang Petrochemical Jiangxi, China 80 32 Q2 2017SM Qingdao Hailan Qingdao, China 500 133 Q3 2017

SM Ningbo ZRCC Lyondell Chemical Co Ningbo, China 35 14 Q2 2017

SM Ningbo Keyuan Ningbo, China 100 40 Jun-17Phenol Petro Rabigh ll Rabigh, KSA 250 56 Q3 2017Phenol CNOOC Huizhou Huizhou, China 220 99 H2 2017CPL Taiyuan Yangmei Shanxi, China 200 47 2017CPL Shanxi Lubao Group Shanxi, China 100 23 2017CPL Luxi Chemical Shandong, China 200 93 Jun-17ADA Huafon Chongqing, China 180 11 end 2017ADA Taiyuan New Materials Taiyuan, China 140 61 May 2017

MDI Sadara Chemicals Saudi Arabia, Al Jubail 400 67 Q3 2017

MDI Kumho Mitsui Chemicals Inc (KMCI) Yeosu, South Korea 100 6 end 2017

Total in 2017 2505 682Total in China 2017 554


Benzene Expansions after 2017

Company Location BZ (kta) Timing Type 2018 2019 2020

Rabigh No 2 Rabigh, Saudi Arabia 400 2018 Ref/TDP/PX 400 400 400

Saudi Aramco Ras Tanura, Saudi Arabia 425 2018 Pygas 425 425 425

Zhongjin No 2 Ningbo, China 500 2018 PX 500 500 500

Sinochem Quanzhou PC Fujian, China 200 2018 Refinery 200 200 200

Ningxia Baota Ningxia, China 200 2018 PX 200 200 200

Sinopec Hainan No 2 Hainan, China 140 2019 PX 240 240

JG Summit Batangas, Philippines 150 BTX 2019 Pygas 150 150

Saudi Aramco Jazan, Saudi Arabia 200 2019 Pygas 200 200

Brunei Hengyi Pulau Muara Besar, Brunei 500 2020 Cracker 500

RAPID (Petronas) Johor, Malaysia 180 2020 Pygas 180

Zhongke (Guangdong) Refinery PC Zhanjiang, China 360 2020 Refinery 360


New SM plants 2017-2019

Source: ICIS

2017 - 715,000 tonnes2018 - 260,000 tonnes2019 - 2,650,000 tonnes


715,

000

260,

000

2,65

0,00

0

2,89

4,00

0

1,72

5,00

0

3,35

5,00

0

2017 2018 2019

SM BZ(Tonnes)

SM and Benzene Expansions 2017-2019


-

50,000

100,000

150,000

200,000

250,000Ja

n-14

Feb-

14M

ar-1

4A

pr-1

4M

ay-1

4Ju

n-14

Jul-1

4A

ug-1

4Se

p-14

Oct

-14

Nov

-14

Dec

-14

Jan-

15Fe

b-15

Mar

-15

Apr

-15

May

-15

Jun-

15Ju

l-15

Aug

-15

Sep-

15O

ct-1

5N

ov-1

5D

ec-1

5Ja

n-16

Feb-

16M

ar-1

6A

pr-1

6M

ay-1

6Ju

n-16

Jul-1

6A

ug-1

6Se

p-16

Oct

-16

Nov

-16

Dec

-16

Jan-

17Fe

b-17

Mar

-17

Apr

-17

Tonn

es

China shore tank inventories

E China (Jiangsu) BZ (crude-based only)

20,765

140,340

73,538

*Jiangsu ports include Lishide, Litian, Chengli, Hengyang, Haiqi, Jiantao, Qianhong, Huaxi; exclude Ningbo

China Benzene 2014-2017 shore tank inventories


Benzene Prices Korea vs US & Arbitrage Opportunities


SM tight supply and trade flow in H1 2017 to normalise in H2

Styrene market may hit bottom if Q3 styrenics season strengthens

Benzene market seen under pressure as new capacities come on stream

Asia-US arbitrage availability remains key although uncertain

Chinese benzene demand and inventories

Summary

www.icis.com 77

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We produce reliable price assessments and analyses covering Asian aromatics markets, including price histories and a 12-month rolling price forecast , enabling you to understand price drivers and settle your contract prices more confidently. Our pricing coverage includes:


Real-time Supply and Demand Data for China StyreneView real-time supply and demand data on China's chemicals, with real-time forecast updates on production, imports, consumption by demand segments as well as net balance.



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www.icis.com 78

Asia Vinyls Market Review & the Revival of China as an Export Player

Markets EditorAsia Petrochemical Industry Conference19 May 2017Royton Sapporo, Japan

Kite Chong

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Asia Pacific Export Overview

Key export destinations for NE Asia producers

China production and trade trends

Carbide- and Ethylene-based PVC price interactions

Key issues in China and market outlook

Impact of China’s export revival on India

Agenda

www.icis.com 81

Asia PVC Overview for 2016


Global Trade Flow Overview

Northeast Asia

Southeast Asia

Australia

India

USA

Latin America

North America

Middle East


NE Asia PVC Exports: China overtakes Taiwan to take back the lead

Source: Cheminfo, METI, KITA, Taiwan Bureau of Foreign Trade


ChinaPVC exports 2016: 1,050,100 tonnes

Source: Cheminfo

CountryVolume

(‘000 tonnes)

2016 2015

India 239 158

Malaysia 147 111

Russia 106 66

Thailand 89 53

Vietnam 64 46

Kazakhstan 51 50

Others 354 290

Exports increase by 35.6% YOY


Taiwan PVC exports 2016: 933,359 tonnes

Country

Volume(‘000 tonnes)

2016 2015

India 347 349

China 184 200

Australia 81 14

Bangladesh 86 47

Vietnam 63 34

Others 172 203

Exports increase by 10.21% YOY

Source: Taiwan Bureau of Foreign Trade


Japan PVC exports 2016: 611,750 tonnes

CountryVolume

(‘000 tonnes)2016 2015

India 264 201China 123 172Vietnam 86 78Hong Kong 34 39Thailand 20 23Others 83 85

Source: Japan Customs

Export rose 2.4% YOY


South Korea PVC exports 2016: 535,525 tonnes

CountryVolume

(‘000 tonnes)2016 2015

India 309 323China 43 46Turkey 27 23Iran 17 11Malaysia 17 16Others 122 171

Exports fell 9.2% YOY

Source: Korea International Trade Association


India still the biggest market for NE Asia

Taiwan Japan

South KoreaSource: METI, KITA, Taiwan Bureau of Foreign Trade, Cheminfo

39% 43%

58%23%

China

www.icis.com 89

A Closer Look at China


Carbide-based PVC: Coal price changes (coal, coke, electricity, calcium carbide), transportation cost

Ethylene-based PVC: Oil/petrochemicals price changes (oil, ethylene, EDC, VCM)

PVC prices have a high correlation with upstream energy prices, such as coal and oil

Carbide-based PVC export prices track domestic prices

Ethylene-based PVC prices track international spot prices

Factors Affecting China’s PVC production


Why Carbide-based? – China’s Coal AdvantageConsumption by fuel type (Total 3.01bn oil equivalent)

Source: BP Statistical Review of World Energy 2016

Coal Reserves: 115bn tonnes3rd largest in the world12.8% of global total

Oil Reserves: 18.5bn bbls1.1% of global total

Natural Gas: 3.8tr m3

2.0% of global total

Coal

Oil

Natural Gas

HydroRenewables Nuclear


China’s PVC production by geographical areas

North China:7.2 million tonnes

Northwest China:6.7 million tonnes

East China:5.3 million tonnes

Top 3 areas: (82% of total production)North ChinaNorthwest ChinaEast China

Top 5 provinces:Inner MongoliaXinjiang ShandongTianjin Shaanxi

Inner MongoliaXinjiang

Shaanxi

Shandong

Tianjin

Source: ICIS


Chinese Production and Demand 2012-2015

Source: ICIS

(‘000 tonne) Operating rates


PVC Import/Export Monthly Comparison in 2016

Source: CheminfoImport Export


China’s Import/Export Comparison 2011-2016(‘000 tonnes)

Source: Cheminfo


China’s PVC Import Comparison 2015-2016

Source: Cheminfo


China’s PVC Export Comparison 2015-2016

Source: Cheminfo


Carbide-based vs Ethylene-based Export Prices Since 2015 Increase in coal prices and transportation costsUS$/tonne US$/tonne

Source: ICIS Dashboard


Export trends heavily influenced by PVC price spread

Source: Cheminfo, ICIS Dashboard


Stricter environmental inspections from July to September, carbide-based PVC producers’ operating rates declined dramatically

Coal prices surged: Government policy restricting coal mines to only 276 working days in 2016

Transportation cost increased: Government restricted and fined vehicles overloading, leading to increases in transportation cost

Reasons behind carbide-based PVC price surge in 2016


Gross overcapacityConsistently low operation rates

Environmental inspections Older, smaller plants that are highly inefficient

“Inferiority” of carbide-based PVC vs ethylene-based PVCMercury-based catalyst Smaller number of applications

Key issues faced by the market today


Solving overcapacity, reduce environment footprint

Increasing exports through One Belt and One Road (OBOR) initiative

Increasing domestic consumption, government construction projects

Urbanisation of China, e.g. Xiongan New Development Area, will likely see booming

demand for construction materials, including PVC

What’s Ahead for China’s PVC?

www.icis.com 103

India: The Key PVC Import Destination


Snapshot of India’s imports 2012-2016

Source: Department of Commerce, Government of IndiaFinancial Year (April to End March)


Impact of ADD on Import Origins

Before ADD After ADD ADD introduced in 2014

Source: Department of Commerce, Government of India


PVC demand in the Chinese market: Stable to soft

Cash flow issues affecting downstream demandEnvironmental checks on

downstream plants

Affected selling indications to India and other regions

Premium still exists between China and India

Recent price trends USD/tonne

Source: ICIS


Consumption in India estimated to grow, projected to cross 4m tonnes by 2020

Domestic capacity accounted for half of the demand in 2016, no expansion plans for

now

India will continue to be a major net importer

The Way Forward For India


China PVC exports will continue to rise

Exports from other northeast Asia producers capped, no plans for expansion

India a growing net importer of PVC

Rapid consumption growth, stagnant production

Carbide and Ethylene based PVC prices key to trade flows

Summary

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Gas or Coal to Chemicals – will it ever work in a low oil price environment?

Balasubramaniam RamaniSenior ConsultantICIS Analytics & Consulting

www.icis.com 111

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Olefin sources as building blocks for PetrochemicalsOlefin supply from Non-traditional routes and resultant impactImpact of Low Oil Price and Shale Gas BoomSummary

Agenda

www.icis.com 113

Olefin sources as building blocks for Petrochemicals

www.icis.com 114

Steam cracking remains the key workhorse for petrochemical production, although non-traditional routes (CTO/MTO and PDH) capacities are expected to gain an important share


2% 6% 10% 13%

0%10%20%30%40%50%60%70%80%90%

100%

2010 2015 2020 2025

Global Olefins Feedstock

Steam Cracking/Refinery Gas Non-Traditional Routes Others

Olefins feedstock via non-traditional routes are expected to make up 13% by 2025

How is this likely to affect pricing of olefin as well as derivatives?

Steam cracking remains the key workhorse

Non-traditional sources include CTO, MTO, PDH (Discussed in next section)


www.icis.com 115

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Changes in Global Feedstock SlatesEthane LPGs Naphthas Heavier Liquids++

Initially from a Naphtha supply point of view: it will remain more than sufficient to satisfy the rise in demand until early 2020s, after which more refining capacities are likely to be required

(120)(100)(80)(60)(40)(20)020406080100

(120)(100)

(80)(60)(40)(20)

020406080

100

IN M

ILLI

ON

TO

NN

ES

IN M

ILLI

ON

TO

NN

ES

Naphtha Supply/Demand BalancesNorth America South & Central AmericaEurope Former USSRAfrica Middle EastNortheast Asia South & Southeast Asia

Petrochemicals (both olefins & aromatics) will play a growing part in oil demand via naphtha feedstock, in comparison to naphtha for gasoline blending

13%

7%

47%

33%

15%

8%

38%

39%

www.icis.com 116

North America has the largest upcoming capacity for Steam Cracking between 2016 & 2021, followed by Middle East.

100%

Ethane LPG Naphtha

43% 57%

Ethane LPG Naphtha

16% 7%

77%

Ethane LPG Naphtha

66%

15% 19%

Ethane LPG Naphtha

100%

Ethane LPG Naphtha

58%25% 17%

Ethane LPG Naphtha

12% 12%

76%

Ethane LPG Naphtha

CrackerPX plantNew Crackers Feedstock Slate

North America

Middle East

CIS

India

*Size of bubble denotes total cracker capacity additions in 2016-2021

Africa

China(10,970)

(1,960)

(4,890)

(2,820)

(3,140)

(1,200)

(2,800)SE Asia

Ethane Crackers due to Shale Gas boom

www.icis.com 117

Upcoming Global Steam Crackers (2016-2021)2016 2017 2018 2019 2020 2021

NO

RTH

AMER

ICA

United States Chevron PhillipsChemical1500ktpa (E)Dow Chemical1500ktpa (E)Exxonmobil Chemical1500ktpa (E)Indorama Ventures375ktpa (E)Ingleside Ethylene545ktpa (E)

Shintech500ktpa (E)

Sasol1500ktpa (E)

LACC – Lotte/Axiall1000ktpa (E)

Shell Chemicals1500ktpa (E)

Mexico Braskem Idesa1050ktpa (E)

AFRI

CA Egypt Egypt Ethydco460ktpa (E)Tahrir Petrochemicals1500ktpa (N)

MID

DLE

EAST

Iran Kavian Petrochemical1000ktpa (E)

Gachsaran Petrochem1100ktpa (E)Ilam Petrochemical490ktpa (E/L)

Oman ORPIC800ktpa (N)

Saudi Arabia Sadara Chemical1500ktpa (E/N)

CIS

Kazakhstan Kazakhstan PC Industries850ktpa (E)

Russia Zapsibneftekhim1500ktpa (L)

Turkmenistan Turkmenneftegaz390ktpa (L)

Uzbekistan UZ-KOR Gas Chemical400ktpa (L)

E – Ethane; L – LPG; N – Naphtha

www.icis.com 118

Upcoming Global Steam Crackers (2016-2021)E – Ethane; L – LPG; N – Naphtha

2016 2017 2018 2019 2020 2021

NE

Asia China CNOOC and Shell PC

1200ktpa (N)

S &

SE

Asia

India BCPL220ktpa (E)GAIL400ktpa (E)OPaL1100ktpa (E/N)

Reliance1100ktpa (E/L)

Malaysia PETRONAS Chemicals Group1200ktpa (N)

Thailand PTTGC500ktpa (N)

Vietnam Long Son Petrochemical1100ktpa (N)

www.icis.com 119Source: ICIS Supply and Demand Database

US Ethane Balances may get tighter, although ethane will not be short…

Brazil

India

UKNorway

Canada Sweden

USA Ethane Exports(Million Metric Tonnes)

2015 2018 2020

Brazil - -0.2 -0.2

Canada -1.5 -1.7 -1.8

India - -1.2 -1.6

Sweden - -0.6 -0.6

UK 0.0 -0.8 -1.1

Total USA Exports 1.5 4.5 5.3

www.icis.com 120

NGLs – primarily ethane, is changing the world of polyolefin manufacture…

Ethane price is influenced by growth of USA shale production - A large amount of ethane remains “rejected”, waiting for the new demand. But once demand arrives, more production will be required and transport costs featured…

Propane availability suggests ample supply is available, but seasonal factors remain in place. Steam-crackers’ with feedstock flexibility will have a substantial competitive advantage

Developments in LPG price setting mechanisms, inline with naphtha cracking economics, could reward flexible crackers with seasonally cheaper, imported feedstocks

0

500

1000

1500

2000

2015 2016 2017 2018 2019 2020

US Ethane Balances under unchanged Supply (‘000 b/d)

To Ethylene Export by PipelineDeep Sea exports 2015 Production

Rejection


Low Crude oil prices

www.icis.com 121

Asian Pricing for Propane, Naphtha and fuel oil.

0

5

10

15

20

25

30

35

$/M

Mbt

u

Fuel oil vs. Propane vs. Naphtha (Converted to energy equivalence)

Propane Naphtha Fuel Value


www.icis.com 122

Olefin supply from Non-traditional routes and resultant impact

www.icis.com 123

Close to 7m tonnes/year of ethylene capacity is expected to be via CTO/MTO by 2020

In the case of China, non-traditional routes (CTO/MTO and PDH) fill a considerable demand gap

Above 16m tonnes/year of propylene capacity is expected to be via PDH and CTO/MTO by 2020


0

5

10

15

20

25

30

35

40

2015 2016 2017 2018 2019 2020

mill

ion

tonn

es

China Ethylene Capacity and Demand

Traditional Route CTO MTO Consumption

0

5

10

15

20

25

30

35

40

2015 2016 2017 2018 2019 2020

Mill

ion

tonn

es

China Propylene Capacity and Demand

Traditional Route PDH CTO MTO Consumption

www.icis.com 124

Several CTO/MTO start-ups have been delayed with the current low oil environment


Several planned start-ups have lapsed; expected delay about 1-2 yearsFurther 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

'000

tonn

es

Current Estimated CTO/MTO Additions in China



0

500

1000

1500

2000

2500

3000

3500

4000

'000

tonn

es

Estimated CTO/MTO Additions in China

(as at mid-2015)



Ethylene

Propylene

Ethylene

Propylene

“ “

“ “

www.icis.com 125

0%

5%

10%

15%

20%

0

5000

10000

15000

20000

25000

'000

tonn

es

Regional PDH Capacity DevelopmentsNorth America South & Central America EuropeFormer USSR Africa Middle EastNE Asia South & SE Asia PDH % of Global Propylene

Past few years saw the peak of PDH capacity addition, with more than 6 million tonnes/year of capacity added in 2014-16.1.1m expected in 2017.

PDH is fast growing as a more common propylene supply mechanism in order to balance the market

More than 60% of PDH capacity addition in the future will come from the US and NE Asia.


2016-2021 PDH Capacity Addition by Region

North America20%

South & Central America

5%

Europe6%

Former USSR3%

Middle East15%

NE Asia45%

South & SE Asia6%

www.icis.com 126

Firm supply-demand fundamentals + Availability of imported NGLs (both planned & fortuitous) promote investments in on-purpose PDH-based propylene production especially in NE Asia


0%

20%

40%

60%

80%

100%

NE Asian Propylene Capacity ShareSteam Cracking Refinery Gas PDH Metathesis/OCU Methanol-to-Olefins Coal-to-Olefins

-

1000

2000

3000

4000

5000

'000

Ton

nes

NE Asian Propylene Capacity Additions2015-2010 2020-2015 2025-2020

-

1000

2000

3000

4000

'000

Ton

nes

South & SE Asian Propylene Capacity Additions2015-2010 2020-2015 2025-2020

0%

20%

40%

60%

80%

100%

SE & South Asian Propylene Capacity ShareSteam Cracking Refinery Gas PDH Metathesis/OCU

www.icis.com 127

Impact of Low Oil Price and Shale Gas Boom

www.icis.com 128Copyright © 2016 ICIS

With the fall in oil prices, the ethylene cost curve flattened dramatically, reducing the ingrained competitive advantage of ethane crackers in North America or the Middle East. From a C2 perspective, CTO loses it’s cost advantage in a lower oil scenario

www.icis.com 129

Asian Cost Comparisons: Imported Ethane vs Traditional NaphthaThe ‘easy decision’ window on ethane imports from the US has closed

Risk appetite, any hedging opportunities & infrastructure will be important considerations

www.icis.com 130

Although generally lower cost, CTO costs are highly leveraged to oil prices via a ‘round-about’ mechanism. MTO costs are higher, but less volatile.


www.icis.com 131

Lower oil closes window for MTO projects “integrated” to US methanol -- ‘Poor Man’s LNG’

Chinese companies have plans to invest in methanol production in the US and ship to China, riding on the cheap natural gas

The advantage, however, has disappeared in the low oil environment

Assume ~$60/bbl Brent oil in 2020

Source: ICIS Consulting

US Shale revolution gave rise to wide availability of cheap natural gas

www.icis.com 132

In Summary

www.icis.com 133

In Summary – the Impact of Low Oil

Non-traditional routes (PDH/CTO/MTO) are not as attractive as an option in lower oil scenarios

Much lower Naphtha prices and fairly healthy co-product demand have helped to lower naphtha cracking costs while demands of polyolefins remain strong

However, non-traditional capacity additions have helped to satisfy supply –demand balances – and will be required in the future, especially for C3 chains.Current slimmer margins will make it more difficult to justify new non-traditional

route methanol-based investments, especially in market priced methanol-to-olefin projects.CTO & PDH investments will play a part of future olefin supply, as easier a

market balancing requirement or a ‘strategic’ development.

www.icis.com 134

Stay on top of developments across Asian olefins markets

Pricing information


We produce reliable price assessments and analyses covering Asian olefins markets, including price histories and a 12-month rolling price forecast , enabling you to understand price drivers and settle your contract prices more confidently. Our pricing coverage includes: - Propylene- Ethylene- Butadiene – C4s





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www.icis.com 135

Exploring the intertwining relationship between PO and polyether polyols

Matthew ChongMarkets Editor

Asia Petrochemical Industry Conference19 May 2017Royton Sapporo, Japan

www.icis.com 136

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Sadara updatesPropylene oxide (PO) and polyether polyols

Consumption by applicationPrice trend analysisSupply-demand analysisChanging share in PO technology production processesPO plant expansionsTrade flow analysis

Agenda


Sadara’s PU Chain Facilities

400kt/year of propylene from

mixed-feed cracker

PO Cap: 390kt/year

Polyether PolyolsCap: 400kt/year

MDICap: 400kt/year

TDICap: 200kt/year

Propylene Glycol (PG)

Cap: 70kt/year

Unsaturated Polyester Resin

(UPR)

PU foam for furniture, mattresses, automotive seats; applications in refrigerators, insulation, construction; pre-polymer for applications in shoe soles, adhesives,

thermoplastic polyurethane (TPU) resins, spandex, synthetic leather

OR

Started up on 28 Aug 2016

Expected start-up date: May/June 2017

Toluenediamine (TDA)Cap: 153kt/year

Dinitrotoluene (DNT)Cap: 250kt/year

AnilineCap: 316kt/year

Mononitrobenzene (MNB)Cap: 416kt/year

TolueneCap: 134kt/year

BenzeneCap: 280kt/year

+ imported benzene

+ imported toluene

Expected start-up date: Q3 2017

Sources: Sadara, industry


PO-Polyols Consumption by Application

Source: ICIS Supply-Demand Database

POLYETHER POLYOLS64%

PROPYLENE GLYCOLS17%

GLYCOL ETHERS6%

1-4 BUTANEDIOL1%

MISCELLANEOUS12%

PO Consumption by Application, 2016

FLEX/SEMIFLEX FOAM48%

RIGID FOAM33%

OTHER PU RESINS19%

Polyols Consumption by Application, 2016


Asia Propylene-PO-Polyols Price Trend Analysis May 2007 – May 2017


Asia Propylene-PO-Polyols Price Trend Analysis May 2016 – May 2017

Wide propylene-PO spread

Downtrend in propylene prices since March

Market anomaly – China PO prices jumped 45%, polyols surged 55% in one month

Narrow PO-polyols spread


Global PO Supply-Demand Analysis


• Capacity growth projected to rise faster than consumption growth in coming years.

• Plant operating rates on a declining trend since 2015 due to new capacity additions.

70

75

80

85

90

95

100

7,000

8,000

9,000

10,000

11,000

12,000

13,000

2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F

%

'000

tonn

es

Consumption Capacity Plant Utilisation Rates ( % )


Global PO Production Process


Chlorination41%

Hydrogen Peroxide (HPPO)9%

PO/TBA or PO/MBTE14%

PO/SM32%

Cumene4%

2012

Chlorination40%

Hydrogen Peroxide (HPPO)

15%

PO/TBA or PO/MBTE

15%

PO/SM26%

Cumene4%

2016

Chlorination37%

Hydrogen Peroxide (HPPO)

18%

PO/TBA or PO/MBTE16%

PO/SM25%

Cumene4%

2020

• Environmental regulations in China result in declining share of chlorination route

• HPPO route gaining popularity for new capacity expansions• Proprietary technologies (e.g. Sumitomo Chemical’s cumene route)

that are difficult to replicate creating barriers of entry for small players


Thailand

Singapore

Saudi Arabia

India

China

South Korea

Japan

36

390

490490

200

3,612

4,728

6,438

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2012 2016 2020

Asia Pacific PO Capacity

200 200

590

0

100

200

300

400

500

600

700

2012 2016 2020

Middle East PO Capacity


390390

1,815310 571

390

490

36200


Saudi Arabia

India

China

South Korea

Japan

Thailand

Singapore

Taiwan77

144

6

94

278

0

50

100

150

200

250

300

2012 2016 2020

Middle East PO Consumption

3,308

4,2815,028

55

44

44

0

1,000

2,000

3,000

4,000

5,000

6,000

2012 2016 2020

Asia Pacific PO Consumption

Key Asian PO Consuming Countries Rest of Asia Pacific


474

77


China PO Expansion

Company Location Capacity (‘000 tonnes)

Production process

Target onstreamdate

Status Comment

CNOOC and Shell Petrochemicals Co (CSPC)

Huizhou, Guangdong, China 320 PO/SM 2018 Planned Expansion

Shandong SanyueChemical

Wudi, Shandong, China 80 Chlorination H2 2017

Completed

New unit; has another two 80kta units which are running

Blue Planet Eco New Materials

Changzhou, Jiangsu, China 400 Unknown 2018

Construction underway New unit

Nanjing Hong Bao Li GroupNanjing, Jiangsu, China 120

Unknown (to be developed in-house)

End-2017or later


Jinling Huntsman New Materials

Nanjing, Jiangsu, China 240 PO/MTBE

June/July 2017


Jiangsu Yida Chemical Taixing, Jiangsu, China 150 + 220 Unknown2018 or later Planned New unit

Sources: ICIS, market


Global ex-China PO Expansion

Company Location Capacity (‘000 tonnes)

Production process

Target onstreamdate

Status Comment

Sadara Chemical Al Jubail, Saudi Arabia 390 HPPOEnd-May 2017


SKC Chemicals Group Ulsan, South Korea 300 HPPO Cancelled New unit

S-Oil Ulsan, South Korea 300 Cumene Q2 2018Construction underway New unit

PTTGC Rayong, Thailand 200 Cumene 2019 Planned

New unit; collaboration with Toyota Tsusho and Sanyo Chemical Industries

LyondellBasell US Gulf Coast, USA 450 PO/TBA 2019 Planned New unit

Sources: ICIS, market


Global Polyether Polyols Supply-Demand Analysis


60

62

64

66

68

70

72

74

76

78

80

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F

%

'000

tonn

es

Consumption Capacity Plant Utilisation Rates ( % )

• Market oversupply as capacity far outstrips consumption

• Plant operating rates on a downtrend since 2014

• Capacity growth to reach a plateau by 2020


China

Japan406

406

410

579

7474

South Korea

Taiwan

Thailand

Singapore

Indonesia

Saudi Arabia

India

4,494

6,607

8,14727

32

32

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2012 2016 2020

Asia Pacific Polyols Capacity

Key Asian Polyols Producing Countries Rest of Asia Pacific

400

0

50

100

150

200

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