polyester/pta industry adjust to changed demand drivers · trusted commercial intelligence 4 world...

Polyester/PTA Industry Adjust to

Changed Demand Drivers 10 August 2016, India

Trusted commercial intelligence www.woodmac.com


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Polyester F+S Cotton Cellulosic F+S Nylon F+S Polypropylene F+S Acrylic Wool

Polyester continues to dominate textile fibre growth

World – Fibre Mill Consumption


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Americas EE/WE/T AME/Aus S Asia India China/HK JKT

The majority of MMF production growth has been in China

World – MMF Production by Region


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World versus Asia Polyester Consumption Growth

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World(LHS) Asia(LHS) World Growth (%) Asia Growth (%)


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World Polyester Growth Forecast 2015-2019

(kton) 2015 2016 2017 2018 2019

Staple 15,798 16,098 16,485 16,952 17,376

Filament 31,873 33,440 34,976 36,827 38,407

Total Fibre 47,671 49,538 51,461 53,779 55,782

PET Resin 20,524 21,408 22,531 23,783 25,128

Film 3,824 4,123 4,397 4,578 4,829

Other Resins 2,126 2,205 2,402 2,485 2,528

Polymer Production 69,221 72,166 75,405 78,815 82,241

Polymer Capacity 89,124 92,397 95,274 100,150 103,672

Polymer Utilisation Rate 75.3% 75.7% 76.6% 76.2% 76.9%

Polymer Production Growth 5.7% 4.2% 4.4% 4.6% 4.4%

PSF 1.5% 1.9% 2.4% 2.8% 2.5%

PFY 6.1% 4.9% 4.6% 5.3% 4.3%

PET 5.9% 4.3% 5.2% 5.6% 5.7%


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China 13th 5-Year Plan objectives for chemical fibre industry

12th Plan 2010-2015 achieved +9.2% CAGR

13th Plan 2016-2020 targets +3.4-3.6% CAGR

» Reduce investment.

» Raise operating rates.

China unable to balance high company debt, non performing loans,

slower domestic growth and a competitive external environment with

employment objectives.

Government will allow bankruptcies among large petrochemical and

fibre enterprises.


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China Polyester Growth Forecast 2015-2019

(kton) 2015 2016 2017 2018 2019

Staple 9,636 9,685 9,872 10,022 10,167

Filament 23,305 24,566 25,778 27,325 28,600

Total Fibre 32,941 34,251 35,650 37,347 38,767

PET Resin 6,250 6,589 6,740 6,876 7,403

Film 1,313 1,513 1,653 1,760 1,907

Other Resins 284 320 437 479 503



Polymer Utilisation Rate 80.4% 80.2% 79.6% 78.9% 79.4%


PSF 0.7% 0.5% 1.9% 1.5% 1.4%

PFY 7.7% 5.4% 4.9% 6.0% 4.7%

PET 4.5% 5.4% 2.3% 2.0% 7.7%


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Staple Filament

PET Resin Film

Other Resins Chip

Utilisation (RHS) Real utilisation

China Polyester Production 2016-2019 : Likely scenario

2016 China polyester production

forecast at 39 mt, up 1.8 mt or 4.7%

growth.

2017-18 production growth severely

slows down to below 4% and

utilisation falls below 80% against

name plate.

China will tolerate defaults, close

failed capacities and let growth sag.


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From Ration to Fashion : China’s wardrobe is full!


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Sales of Major Global SPA Firms


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Asia Fibre Prices Comparison

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Acrylic Cotlook A Index Viscose Polyester


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India Polyester Forecast (Thousand Tonnes)

2014 2015 2016 2017 2018

Staple 1,310 1,375 1,424 1,505 1,570

Filament 3,055 3,160 3,317 3,542 3,763

Total Fibre 4,365 4,535 4,742 5,047 5,333

PET Resin 968 1,143 1,200 1,323 1,427

Film 410 460 500 540 560

Other Resins 10 10 10 11 13



Polymer Utilisation Rate 71% 69% 70% 76% 79%


PSF 6.5% 5.0% 3.6% 5.7% 4.3%

PFY 5.7% 3.5% 5.0% 6.8% 6.2%

PET 22.5% 18.1% 4.1% 10.3% 7.9%


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Global polyester demand growth forecast in 2016-2017 is lowered to 4.3%.

Textile consumption super cycle is over and growth forecast is moderate-wardrobe

in China is full, room to grow in India.

Natural fibre, recycled fibre, rPET are substituting virgin fibre demand.

Fast fashion creates new consumption through 52 micro-seasons per year rather

than S/S and F/W.

High cotton price keeps polyester staple in healthier demand.

Polyester Consumption Growth Scenario


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PTA


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World PTA Supply Demand

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Capacity Production Utilisation Rate

Post 2016 recovery in utilisation wholly dependent on China supply


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Capacity Increase Demand Increase

PTA demand increase versus capacity increase - the feedback

loop is working and capacity is being taken out

Builds have slowed and announcements fall

away…. but will idled capacity come back or

will it really be scrapped?

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Capacity Increase Demand Increase

12 Months Ago


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China India

Japan Korea

Taiwan Indonesia

Singapore Thailand

Total Net Growth Utilisation Rate

Asia PTA Supply Demand

Some recovery in operating rates partially offset by slower consumption growth

Annual Growth in Asia Production Annual Growth in Asia Consumption

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Japan Korea

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Total Net Growth


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China PTA excess capacity overhang set to last to 2020 and

beyond - now about survival

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Capacity Production

Consumption Utilisation Rate (RHS)

Capacity flat to 2017; first generation

plants phased out.

JVs and foreign owned assets exit

China.

New plants start up in 2018 but more

closures expected.

Margin compression is the standard

feature of the PTA business.


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India Oman

Japan Russia

Saudi Arabia Macau

United Arab Emirates Pakistan

Egypt Argentina

South Africa Other

Forecast

China PTA exports rise then consolidate at a time of key

exports they struggle to find a home….

Recent pick up in exports seen as a

worry for some.

Indian PTA builds threaten

Asian/Chinese exports.

China targets Middle East but

struggles with Europe.

Korean exports are going to find the

position more difficult : ADD, freight.

China has some of the newest

assets, but little PX feedstock benefit

and duty to deal with.

Source: GTT


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Country Location Company Capacity Effective Start up Remarks

Indonesia Karawang Asia Pacific Fibres 340 -340 Q1 2016 Mothball

China Jiangsu Luoyang 350 -350 Q2 2016

China Jiangsu Hanbang 2,200 1,467 Q2 2016

Netherlands Rotterdam Indorama 300 125 Q3 2016

India Mangalore JBF 1,200 300 Q4 2016

2016 Total 3,010 1,377

China Tianjin Tianjin Petrochem 350 -350 Q1 2017

China Nanjing Yangzi 600 -600 Q1 2017

China Jiangsu Yizheng 350 -350 Q1 2017

Taiwan Kuanyin OPTC 1,500 1,250 Q1 2017

Taiwan Kuanyin OPTC T9 450 -337 Q2 2017

USA Corpus Christi M&G 1,200 300 Q4 2017

2017 Total 145 157

China Zhapu Tongkun 2 2,500 2500 Q1 2018 ?

China Hainan Yisheng 2 2,000 2,000 Q1 2018 ?

China Jiangsu Yizheng 640 -323 Q3 2018

2018 Total 3,510 3,827

PTA New Capacities 2016-2018


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Production Capacity Utilisation Rate

India PTA Supply Demand

RIL investments drive India’s PTA business forward

Annual Growth in Production Annual Growth in Consumption

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Consumption


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Production Capacity Utilisation Rate

Korea PTA Supply Demand

Continuing production losses expected for S Korea’s PTA manufacturers

Annual Growth in Production Annual Growth in Consumption

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Consumption


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Korea in major fight for survival to find markets EU and Middle

East has become the target for Korean sellers… but US?

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China India Turkey Oman United Arab Emirates Lithuania United Kingdom Spain Other

….in the US logistics still proves to be very difficult and the investment hard to justify

Source: GTT


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1993 1996 2006 2016

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North America Europe Japan Korea Taiwan India China

Evolution of PTA Capacity

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Top 10 PTA Producers 2016 (‘000 tonnes)

13,220

6,900 6,720

4,950 4,500

3,670

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Yisheng Heng Li BP RIL Xianglu Indorama Hailun FCFC Hanbang MCC


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Global PTA Market Share (%)

China, 56.0

India, 9.0

Asia, 21.0 N. America, 7.0

Europe, 5.0

ME, 2.0

2016

China, 58.0

India, 9.0

Asia, 17.0 N. America, 8.0

Europe, 5.0

ME, 2.0

2020

World = 78,997 KT World = 83,425 KT


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PTA Bi Polarization in Asia

Yisheng, Dalian: 5.7 mt

Yisheng, Ningbo: 5.5 mt

Heng Li, Changxing: 6.9 mt

RIL, Dahej: 4.3 mt

Xianglu, Zhangzhou: 4.5 mt

JBF, Manglore: 1.2 mt


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Outlook for PTA

Global PTA business turns secular amid FTA and ADD.

Asia margins expected to remain compressed in a strategy to choke smaller

producers.

PTA capacity bi-polarisation has began in Asia with China in driving seat and

India pursuing.

Korea comes under pressure to expedite capacity restructuring : manufacturing

cost, freight, ADDs.

Japan exits overseas PTA business to streamline petrochemical focus.

polyester/pta industry adjust to changed demand drivers · trusted commercial intelligence 4 world...

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