pc & pp market update - media-tech
TRANSCRIPT
PC & PP
Market Update
Martin Wiesweg
Director – Aromatics Polymers
Europe, Middle East and Africa
Media Tech
Conference Europe 2012
Hamburg 22/23 May 2012
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Polycarbonate Prices Peaked in 2010 and
2011
0
500
1,000
1,500
2,000
2,500
3,000
Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12
PCB Cash Cost PCB Optical Media Market Price
PCB Optical Media Margin
Euros Per Metric Ton
~
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• Structural
changes in supply
/ demand
• Outlook for prices
and margins
Polycarbonate Chain Review
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Crude - Expensive Relatively And Absolutely
0%
10%
20%
30%
40%
50%
60%
70%
0
2
4
6
8
10
12
14
16
18
20
06 07 08 09 10 11 12 13 14 15 16
Crude (WTI) Natural Gas Gas as % of Crude
Dollars Per MMBtu Gas as a% of Crude, BTU Basis
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0
200
400
600
800
1,000
1,200
1,400
0
50
100
150
200
250
300
350
400
450
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Delta Benzene Spot Naphtha
Cents Per Gallon Dollars Per Metric Ton
Global Benzene Prices Very High
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0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
0
10
20
30
40
50
60
70
80
90
Jan-09 Aug-09 Mar-10 Oct-10 May-11 Dec-11 Jul-12
Delta Phenol Avg Acquisition Benzene contract
Cents per Pound Dollars Per Metric Ton
Benzene Dictates Phenol Pricing
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• Feedstock impact
• Structural
changes in supply
/ demand
Polycarbonate Chain Review
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World
2012 Polycarbonate Demand By Region
N. America 13%
S. America 2%
W. Europe 14%
C. Europe 3%
CIS & Baltics 2%
Middle East 3%
Indian Subc. 4%
NE Asia 51%
SE Asia 7%
Demand = 3.7 Million Metric Tons
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2012 World Polycarbonate Demand
Sheet/Film 18%
Auto (Non-Window)
12%
Auto (Window) 2% Optical Media
16%
Housewares 12%
Electronics 21%
Medical 3%
Cons./Sports/ Rec. 3%
Packaging 4%
Other 8%
Demand = 3.7 Million Metric Tons
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Optical Media Demand Declining
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
1996 1998 2000 2002 2004 2006 2008 2010
CD-A (Audio) CD-ROM CD-R (Recordable) Blu-ray DVD DVD-R (Recordable) Blu-ray (Recordable) CD RW
Million Units
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World Polycarbonate Demand Forecast
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sheet/Film Auto (Non-Window) Auto (Window)
Optical Media Housewares Electronics
Medical Cons./Sports/Rec. Packaging
Other
Million Metric Tons
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Phenomenal Growth in Electronics In India
• 900 million mobile
phone connections
in India
• Mobile penetration
now 74% and still
growing
• Other electronic
applications also
growing very rapidly
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A and B pillar
covers
(PC/ABS, ABS)
Instrument panel
(PC/ABS, ABS)
Front Grille
(ABS)
Wheel covers
(PC/ABS)
Center console
(ABS, PC/ABS)
Door Panels
(PC/ABS)
Panoramic Roof &
Roof Modules (PC)
Rear windshield
glazing (PC)
Side mirror
housings
(PC/PBT,
PC/ASA)
Bumper, Bumper with
integrated lighting,
Fender (PC/ABS,
PC/PBT)
Oil Pan (PA6,6)
Headlight lens
(PC)
Engine Cover
(PA6,6)
Air intake
manifold PA6,6
Door Handles
(PA, ABS,
PC/ABS)
Headlight
housings (PC,
ABS)
Interior trim
(ABS, PC/ABS)
Engineering Resins in Automobiles
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0
50
100
150
200
250
300
350
2011 2012 2013 2014 2015 2016
Northeast Asia Middle East West Europe
Thousand Metric Tons
Polycarbonate Global Capacity Additions
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Kayan 260KT 2011
Al Jubail, Saudi
Arabia
Kurosaki, Japan
MCC/MEP/SINOPEC 60KT 2011
Yanshan, Beijing
Bayer 100KT 2010
Bayer 300KT 2014-2016
Caojing, Shanghai
Zhenjiang ChiMei 75KT 2012 Jiangsu
Kazanorgsintez 65KT 2009
Kazan, Russia
LingYou Engineering Plastics
80KT 2012, 80KT 2016
Shanghai
Mitsubishi 60KT 2010
New Polycarbonate Projects
SINOPEC/SABIC JV 260KT 2015 Tianjin
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Kayan 260KT 2011
Al Jubail, Saudi
Arabia
Kurosaki, Japan
MCC/MEP/SINOPEC 60KT 2011
Yanshan, Beijing
Bayer 100KT 2010
Bayer 300KT 2014-2016
Caojing, Shanghai
Zhenjiang ChiMei 75KT 2012 Jiangsu
Kazanorgsintez 65KT 2009
Kazan, Russia
LingYou Engineering Plastics
80KT 2012, 80KT 2016
Shanghai
Mitsubishi 60KT 2010
… All In China
SINOPEC/SABIC JV 260KT 2015 Tianjin
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• Feedstock impact
• Structural
changes in supply
/ demand
• Outlook for prices
and margins
Polycarbonate Chain Review
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Global Polycarbonate Rates Will Improve
40%
50%
60%
70%
80%
90%
100%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Production Total Capacity Operating Rate
Million Metric Tons Operating Rate
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Polycarbonate Margins Recovering
0
500
1,000
1,500
2,000
2,500
3,000
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Phenol Contribution Acetone Contribution ECU Contribution Conversion Costs (Var. + Fixed) PCB Optical Media Market Price PCB Optical Media Margin
Euros Per Metric Ton
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• PC demand growth for
automotive glazing will help
offset some optical media
reduction
• Outlook dependent on strength
of demand growth from China
and India, and rate of increase
in new production capacity
• Supply demand in balance but
producer margins at 10 year
lows, so expect price
increases
Conclusions
Polypropylene
Versatility vs. Price
Martin Wiesweg
GSK – Polymer Workshop
April 11, 2012
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The Good Old Days…
• Cheap Material −Avenue to move excess
propylene
• Versatile −Able to replace other
products
−“Poor man’s” engineering polymer
• Low price and versatility drove growth
−PP one of the polymers with the highest demand growth rate
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In Last Two Years, Cost Position Changed
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1.4
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
PP/HDPE North America PP/HDPE West Europe PP/HDPE China
Price Ratio
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Economy & Price
Causing PP Demand To Falter
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Global Capacity Growth Global Demand Growth
Cumulative Global Capacity Growth Cumulative Global Demand Growth
Growth, Million Metric Tons Cumulative Growth, Million Metric Tons
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Ensuing Oversupply Driving Profitability Down
-88
-44
0
44
88
132
176
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
United States West Europe
Margin, Dollar Per Metric Ton Margin, Cents Per Pound
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Consequence: Per Capita Demand
To Grow at Slower Pace Than Expected
4.0
5.0
6.0
7.0
8.0
9.0
10.0
0.0
5.0
10.0
15.0
20.0
25.0
2000 2002 2004 2006 2008 2010 2012 2014 2016
Regional Per Capita Demand, kg/person Global Per Capita Demand, kg/person
World United States West Europe
Northeast Asia South America
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Demand Not Expected to Catch Up,
Oversupply Conditions to Ensue
0%
3%
6%
9%
12%
15%
18%
21%
24%
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2000 2002 2004 2006 2008 2010 2012 2014 2016
Global Excess Capacity Growth Cumulative Global Excess Capacity Growth Global Excess Capacity as a % of Global Demand
Excess Capacity, Million Metric Tons Percentage of Global Demand
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Demand Not Expected to Catch Up,
Oversupply Conditions to Ensue
76.0
78.0
80.0
82.0
84.0
86.0
88.0
90.0
92.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2000 2002 2004 2006 2008 2010 2012 2014 2016
Global Excess Capacity Growth Cumulative Global Excess Capacity Growth Global Operating Rate
Excess Capacity, Million Metric Tons Global Operating Rate, %
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China Will Become Increasingly
Self Sufficient
0
10
20
30
40
50
0
5
10
15
20
25
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
China Domestic Demand Imports as a % of Domestic Demand
Domestic Demand, Million Metric Tons Imports as a % of Domestic Demand
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Trade Flows to Change
2011 Net Trade
-702 -663
2016 Net Trade
3622
-690
-1302
575
53
-893
-154
-524
2346
-1803
-38
-392
444
121
(Thousand Metric Tons)
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Prices to Converge, But Remain Expensive
441
661
882
1,102
1,323
1,543
1,764
1,984
20
30
40
50
60
70
80
90
1995 1998 2001 2004 2007 2010 2013 2016
North America Discounted West Europe Discounted China spot
Price, Dollars Per Metric Ton Price, Cents Per Pound
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• PP to remain expensive
• Developing economies will enjoy
most of the growth
• Consumer products/packaging to
drive growth
• Oversupply conditions expected in
next two years; benefits Asia
• Trade to become competitive; trade
flows to change
• Regional price disparities will ease,
longer term
• Short term price to affect demand;
versatility to help long term
Conclusions
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What May Change Outlook
• Economic Meltdown - China
• Rapid Increase in Oil Prices
• Weather issues affecting regional supplies
• Acceleration of demand destruction in North America
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