moving from “irrational exuberance” to a “new …...market share (2017) 42m tonnes (2017) 0.34...
TRANSCRIPT
www.icis.com 1
Moving from “Irrational
Exuberance” to a “New
Normal” in the Polyester &
PET Value Chain
JENNY YISENIOR ANALYST
ANALYTICS &
CONSULTING,
ICIS, ASIA
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Corporate Structure
35years in petrochemical
benchmarks
More than
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ICIS Supply & Demand DataThe ICIS Supply & Demand Database delivers an end-to-end perspective of the global petrochemicals market, covering 160 countries and over 100 products.
Data includes:
Historical and forecast data (1978-2040)
Petrochemical trade flows and patterns
Import, export and consumption volumes
Plant capacity, production and operating status
Upcoming plants, including speculative and announced projects
Data breakdown by country, region, product or product family
Key information on over 12,000 refinery units, and 18,500 petrochemicals plants
GDP, population, and consumer price index by country
ICIS Supply & Demand Database
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Agenda
PET Value Chain Review
Global PET Market Outlook
Macroeconomic Trend for PET
Global PET Supply and Demand balance
www.icis.com 9
PET Value Chain Review
www.icis.com 10
Polyester Film
ParaxylenePET Melt
PTA(Purified
Terephthalic Acid)
Polyester Fibre
PET Resin
MEG(Mono Ethylene Glycol)
Polymer Demand
Avg. Annual growth
2011-2017
5.5%
5.2%
4.1%
5.8%
5%
28%
66%
Market Share
(2017)
42m tonnes
(2017)
0.34
0.860.67
CF - conversion
factor
CF CF
CF
Melt phase
86m tonnes
(2017)
62m tonnes
(2017)
4.1%
5.1%
5.4%
5.1%
Polymer Demand
Avg. Annual growth
2017-2023
Source: ICIS Supply & Demand Database
Polyester fibre and PET resins are key consumers ofPET melt with a combined market share of >90%
28m tonnes
(2017)
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Source: ICIS Supply & Demand Database
Global PET melt demand maintained rapid growth andoutpaced GDP growth rate
Global PET melt demand
growth trend tracks GDP
growth movements
The average PET melt demand
growth rate was at 7% in 2000-
2017, while the average of GDP
growth rate was at 2.6%
Population growth and better
quality living continue to drive
PET melt demand growth
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
2000
2001
2002
2003
2004
2005
2006
2007
200
8
2009
2010
2011
2012
2013
2014
201
5
2016
2017
Global PET Melt Demand Growth Rate
PET Growth Rate GDP Growth Rate
AA
GR
,%
www.icis.com 12Source: ICIS Supply & Demand Database
Driven by demand, capacity growth of PET value chain outpaced GDP growth rate as well
Global PET capacity growth drives thedevelopment of raw materials PTA andPX
2000-2017 CAGR
PET Melt: 6.5%
PTA: 6.1%
PX: 5.3%
0%
4%
8%
12%
16%
0
20
40
60
80
100
120
20
00
20
01
20
02
20
03
200
4
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
Global PET Melt Capacity Growth Rate
Capacity Growth Rate
Mill
ion
To
nn
es
7.6%
5.5%
-4%
0%
4%
8%
12%
16%
0
20000
40000
60000
80000
20
00
20
01
20
02
20
03
20
04
200
5
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17Global PTA Capacity Growth Rate
Capacity Growth Rate
Mill
ion
To
nn
es
6.8%5.4%
-4%
0%
4%
8%
12%
16%
0
10000
20000
30000
40000
50000
60000
200
020
01
200
220
03
200
420
05
200
620
07
200
820
09
201
020
11
201
220
13
201
420
15
201
620
17
Global PX Capacity Growth Rate
Capacity Growth Rate
Mill
ion
To
nn
es
5.1%5.3%
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PET value chain prices were at historically high levels during the rapid development of the markets
PET Value Chain Prices
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Global PET Market Outlook
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Source: Lenzing, Textile World
105m tonnes
Synthetic fibres lead the fibres market while polyester leads the synthetic fibres market
Driven by rapid demand growth, polyester fibres now take up not only the largest share in
synthetic fibres, but also the biggest portion in the global fibres market
The demand for polyester fibres will be growing fastest among all fibres, followed by cotton
Total Fibre Demand (million tonnes)
Synthetic fibers, 64%
Wood-based cellulose fibers, 6%
Cotton, 24%
Wool, 1%
Other natural fibers, 4%
Global Fibres consumption in 2017
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Note: "A" Index-is a proxy for the world price of cotton.
Source: ICIS & National Cotton Council or America
PET fibres is preferred relative to cotton due to lower cost and predictable availability
Cotton and PET fibres can
replace each other in
applications
Cotton is more susceptible to
natural factors due to long
growth cycle
Polyester fibres have a price
advantage over cotton0
40
80
120
160
200
0
1000
2000
3000
4000
200
5
2006
200
7
2008
200
9
2010
201
1
2012
201
3
2014
201
5
2016
201
7
Cotton VS PET Fibres
PET Fibre Grade FOB NEA Cotton "A Index"
$/t
on
ne
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Source: Statista 2018
PET bottle leads the packaged beverage business, primarily driven by awareness for healthy living
PET bottle is the largest packaging type in the world thanks to its many advantages
Concerns over ground water contamination and quality of tap water drives consumption of
bottled water
Concerns over sugar intake drives consumption of smaller soft drinks packaging
35%
24%
19%
11% 11%
0%
5%
10%
15%
20%
25%
30%
35%
40%
PET Class bottles Cans Cartons Other
Pack mix of beverages worldwide in 2017, by packaging type
share
of
glo
bal p
ack
mix
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Source: ICIS Supply & Demand Database
Bubble size refers to populations Bubble size refers to populations
PET resins consumption per capita in Asia is below global average and presents an opportunity for further growth
The average consumption per capita of
global PET resins was approximately 3kg in
2016. The consumption level at Asia stood
lower than the global average, which
indicates growth potential in the future.
The average consumption per capita of
global PET fibres was approximately 6.5 kg
in 2016. The consumption level at Asia was
higher than the global average level as
China is the world's largest textile exporter.
GDP (K$/capita) GDP (K$/capita)
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Source: ICIS Supply & Demand Database
Global PET melt demand forecast growth continues to outpace global GDP growth driven by consumption into PET fibres and PET resins
The growth rate of PET melt demand is
expected to be stable from 2017-2023,
although still higher than global GDP growth
The increase in demand for PET melt is
mainly attributed to demand growth in PET
fibres and PET resins, with fibres
accounting for the largest share, while
resins’ growth will be the highest
3%
4%
5%
6%
10
15
20
25
30
35
2011-2017 2017-2023
PET Melt Phase Demand Growth
Incremental AAGR
Mill
ion
To
nn
es
AA
GR
0%
1%
2%
3%
4%
5%
6%
0
5
10
15
20
25
PET Fibre PET Resins PET Film
PET Melt Phase Demand Growth (2017-2023)
Incremental Demand AAGR
Mill
ion
To
nn
es
AA
GR
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Source: ICIS Supply & Demand Database
86m tonnes
Asia has the largest consumption area in the world, accounting for 81% of the global total,
largely driven by intake from China
China is expected to remain as the major PET melt consumer in 2017-2023, predominantly in
Polyester fibres
Potential shift in PET fibre demand to low cost manufacturing countries due to R-PET ban in
China
PET melt phase consumption is led by Asia, especially China, and is expected to remain the same in the forecast period
North America8%
Europe6%
Middle East2%
Others3%
China58%
the rest of Asia23%
Asia81%
PET Melt Phase Consumption by Region (2017)
0
5
10
15
20
China ASIA (ExclChina)
NorthAmerica
EUROPE Middle East
Incremental Demand by Key Region (2017-2023)
PET RESINS POLYESTER FIBRES POLYESTER FILM PES RESINS
Mill
ion
To
nn
es
www.icis.com 21
Source: ICIS Supply & Demand Database
113m tonnes
Most PET melt phase capacities are forward integrated with PET resins, PET fibres and PET
film manufacturing
Asia is the largest production base, particularly in China
PET melt phase supply by region is very similar to demand
North America
7%
Europe6%
Middle East3%
Others3%
China59%
the rest of Asia22%
Asia81%
PET Melt Phase Capacity by Region (2017)
0
2
4
6
8
10
China ASIA (ExclChina)
NorthAmerica
EUROPE Middle East
Incremental Capacity by Key Region (2017-2023)
Incremental Capacity
Mill
ion
To
nn
es
www.icis.com 22
Source: ICIS Supply & Demand Database
20m tonnes
Global recycled PET capacity has enjoyed a stable growth in the past 10 years and more
China is also taking a lead in the global recycled PET capacity, followed by Europe and NorthAmerica
Recycled PET can save resources and reduce environmental pollution, but the lack ofadvanced technology may lead to secondary pollution
Recycled PET capacity in 2017 was dominated by China
ASIA ( Excl China & India )
6%EUROPE
8%
North America8%
China69%
India5%
Others4%
Recycled PET Melt Phase Capacity (2017)
0
20
40
60
80
100
120
140
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
PET Melt Phase Supply
Recycled Capacity Virgin Capacity
Mill
ion
To
nn
es
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In 2018, China banned the import
of post-consumer plastics and
restricted the import of post-
industrial plastics, which will be
prohibited from 2019
In 2018, as China’s R-PET imports
fell sharply, demand shifted to
virgin PET, which will push up
operating rates of virgin PET and
raw materials
Improved domestic recycling
systems and strengthened
recycling of domestic recycled PET
Accelerated the survival of the fittest among domestic recycled PET companies
Polyester manufacturing may shift to other emerging countries in Asia, which allow for the
import of R-PET
Source: China Customs
China’s R-PET Import Ban will boost virgin PET demand
0
100
200
300
400
500
600
700
800
China's import ban on waste plastics
Waste PET Waste PE Waste other plastic
Th
ou
san
d T
on
nes
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0%
20%
40%
60%
80%
100%
Naphtha-PX PX-PTA PTA-PET Melt MEG-PET Melt PET Melt-PET,Fib,Film
% in
tegr
ated
cap
acit
y
Lower integration in the mid-stream is likely to result in heavy influence of supply-demand fundamentals on the mid-stream price spread
Naphtha – PX – PTA – PET Melt – PET Resins, Fib, Film
Lower integration in mid
stream in the PET chain
Naphtha-PX, PET melt-PET fibres/resins/film are highly integrated, while integration level is
lower in the mid-stream sectors
The supply-demand fundamentals in the mid-stream sectors have heavy influence on price
spreads
Some major PET producers will begin to extend into the upstream to cover the entire industry
chain
Source: ICIS Supply & Demand Database
www.icis.com 25
+940
North America
South & Central America
Africa
Europe
CIS
Asia (excl China)
Middle East
PET Net Surplus / Deficit by Key regions (thousand tonnes) (2017 VS 2023)
China
Surplus PET Resins
Deficit PET Resins
PET net trade flows from Asia to rest of the world; China is also the biggest exporter
Surplus PET Fibres
Deficit PET Fibres
Source: ICIS Supply & Demand Database
-807 -1005-248 -306
2017 2023
-550 -492-761 -692
2017 2023
-1774 -1883
-718 -488
2017 2023-129 -50-304 -304
2017 2023
-266 -379-744 -595
2017 2023
-121
1025705
2017 2023
2195 24581950 1650
2017 2023
1414 1336832
20
2017 2023
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+940
North America
South & Central America
Africa
Europe
CIS
Asia (excl China)
Middle East
PX/PTA Net Surplus / Deficit by Key regions (thousand tonnes) (2017 VS 2023)
China
China is the world’s largest PX importer, with cargoes coming from Asia and Middle East, while PTA is roughly balanced in China
Surplus PTA
Deficit PTA
Surplus PX
Deficit PX
Source: ICIS Supply & Demand Database
-290 -632
386 743
2017 2023
-54
0
-380 -524
2017 2023
185
-378-1090 -1011
2017 2023
90 260
-273 -75
2017 2023
2318 2724
-570 -100
2017 2023
-14039 -13869
-494
1082017 2023
12182 11806
2651 1387
2017 2023
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Trade War between China and the US may affect the textile and apparel industry and upstream PET; However, SE Asia may see some gains
269b dollars
106b dollars
United States, 17%
Vietnam, 8%
Indonesia, 10%
Pakistan, 8%
India, 6%
Rest of world, 52%
China PET fibers(Polyester staple fiber) Exports in 2017
United States, 2%
Vietnam, 10%
Turkey, 17%
Pakistan, 8%
Egypt, 14%
South Korea, 8%
Rest of world, 40%
China PET fibers(Polyester filament) Exports in 2017
1.5m tonnes 1m tonnes
United States, 17%
Vietnam, 5%
Japan, 8%
Hong Kong Special Administrative
Region, 5%
United Kingdom, 4%
Rest of world, 62%
China Textiles and Apparel Exports Value 2017
China, 37%
Vietnam, 11%
Indonesia, 4%
India, 7%
Bangladesh, 5%
Rest of world, 35%
US Textiles and Apparel Imports Value 2017
Source: OTEXA, China Customs
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Summary
The PET value chain has maintained rapid growth in the past 10 years and more,
especially before the 2008 economic crisis
Under the “new normal” mode, global PET demand and capacity growth is expected to
be flat
Global PET melt phase forecast growth continues to be driven by population growth,
increasing income, higher standards of healthy living
Global PET melt demand forecast growth continues to outpace global GDP growth
driven by consumption into PET fibres and PET resins
Asia is the largest consumption and supply area in the world, predominantly driven by
China, and is expected to remain the same in the forecast period
China’s R-PET Import Ban will boost virgin PET demand
Jenny Yi
Senior Analyst, ICIS Analytics & Consulting
+86-21-5155 0243
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