rubber market overview
DESCRIPTION
Rubber Market Overview. Chicago Rubber Group September 23 , 2010. Bill Hyde Director C 4 Olefins and Elastomers [email protected]. Bangkok. Singapore. Shanghai. Houston. New York. London. Düsseldorf. Dubai. CMAI’s Global Consulting Business . Business Advisory Services. - PowerPoint PPT PresentationTRANSCRIPT
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Rubber Market Overview
Bill HydeDirector C4 Olefins and Elastomers
Chicago Rubber GroupSeptember 23, 2010
Singapore Shanghai Houston New York London Düsseldorf Dubai Bangkok
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September 2010
Commercial Strategy Transaction Legal
Olefins & DerivativesPolymers &
Plastics
Methanol
Aromatics
Chlor-alkali & Vinyl
Fibers & IntermediatesEngineering
ResinsC4s and
ElastomersOther
Intermediates & Specialty Chems
Project EconomicsAsset ValuationsTechnical AnalysisDue Diligence M&A
CMAI’s Global Consulting Business Business Advisory Services
Mar
ket/P
lann
ing
Adv
isor
y Se
rvic
es
Corporate & Business Planning SupportMarket, Value Chain Competitive Analyses Feasibility Studies
Legal Strategy, Expert Analysis & Testimony, Damage Assessment, Valuation & Arbitration Support
Focused Multi-client
Publications, World
Analyses, Daily, Weekly,
Monthly Services, Training
Corporate Strategies Business Unit Strategies Functional Strategies
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Chicago Rubber Group
CMAI Tire Raw Material Index
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-1080%
100%
120%
140%
160%
180%
200%
West Europe Asia North America
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Chicago Rubber Group
What’s Next?
• Fundamental Drivers
• Synthetic Rubber
• Natural Rubber
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Chicago Rubber Group
Fundamental Influences
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Chicago Rubber Group
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Economic Growth Comparison(Constant 2007 U.S. Dollars)
World N. America S. America W. Europe SE Asia NE Asia
Percent Change
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Chicago Rubber Group
2007 2008 2009 2010 2011 2012 2013 2014 201550%
75%
100%
125%
150%
175%
200%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Base Energy Price Outlook
WTI Natural Gas NG as % of Crude
January 2007 = 100 Gas to Oil Ratio
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Chicago Rubber Group
The Synthetic Rubber Future• Asia is the dominant
factor and China dominates Asia
• Market limits vary by region– Supply/Demand– Feedstock availability
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Chicago Rubber Group
Global Synthetic Rubber Market
NAM23%
West Europe11%
Central Europe13%
Northeast Asia42%
Other11%
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Chicago Rubber Group
Is There Enough Capacity?
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015-400
-200
0
200
400
600
800
1000
1200
1400
1600
Demand Growth Capacity Additions Surplus CapacityCumulative Surplus
Thousand Tons
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Chicago Rubber Group
China Dominates Asia
China19%
Other81%
2010 Synthetic Rubber Capacity
China59%
Other41%
2010 - 2014 Synthetic Rubber Capacity Additions
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Chicago Rubber Group
What is China’s Future?
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
500
1000
1500
2000
2500
3000
70%
75%
80%
85%
90%
95%
100%
Production Demand Capacity Self Sufficiency
Thousand Tons
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Chicago Rubber Group
North America is Underutilized
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
500
1000
1500
2000
2500
80%
85%
90%
95%
100%
105%
110%
115%
120%
125%
130%
Production Demand Capacity Self Sufficiency
Thousand Tons
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Chicago Rubber Group
Cost Differentials Also Drive Prices• Rubber raw material
prices have been historically high, but regional differentials have been even worse
• Rubber producers in North America can expect more of the same
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Chicago Rubber Group
BASE PETROCHEMICALS
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Chicago Rubber Group
Surplus Ethylene Peaks In 2010
04 05 06 07 08 09 10 11 12 13 140
5
10
15
20
25
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Annual Cumulative Surplus, Tons Surplus As % of Demand
Percent Ethylene, Million Metric Tons
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Chicago Rubber Group
On-Purpose Propylene Production
01 02 03 04 05 06 07 08 09 10 11 12 13 14024
68
1012
141618
0%200%400%
600%800%1000%1200%
1400%1600%1800%
Dehydro Metathesis Olefin Cracking Gas-to-Olefins HS FCC
Others % Total Production
Million Metric Tons Percent
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Chicago Rubber Group
Evolving Trends in U.S. Butadiene Feedstock Production
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201450%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Ethylene B/E Ratio Crude C
2004 = 100%2004 = 100%
4
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Chicago Rubber Group
New Extraction Capacity
World China India Southeast Asia
Other Northeast
Asia
North America
Other-0.5
0.0
0.5
1.0
1.5
2.0
2.5
BD Expansions and Closures 2010 – 2014Million Metric Tons
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Chicago Rubber Group
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Styrene Capacity Expansions
Americas Europe Middle East Asia CIS & Baltic States World
Million Metric Tons
Average Demand
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Chicago Rubber Group
2007 2008 2009 2010 2011 2012 2013 2014 2015(500)
(400)
(300)
(200)
(100)
0
100
200
300
400
North America PBR Cost Dis-advantage Relative to 2007
vs WEP vs NEA
$ per Ton
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Chicago Rubber Group
2007 2008 2009 2010 2011 2012 2013 2014 20150
50
100
150
200
250
North America SBR Cost Disadvantage Relative to
2007
vs WEP vs NEA
$ per Ton
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Chicago Rubber Group
Natural Rubber
• Demand is recovering
• Market balance tightening
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Chicago Rubber Group
Natural Rubber Demand in China
2002 2003 2004 2005 2006 2007 2008 2009 2010*0
500
1000
1500
2000
2500
3000
3500
4000
0%
10%
20%
30%
40%
50%
60%
70%
80%
Demand Percent of Global Demand
ThousandMetric Tons
Percent of Global Demand
* ForecastSource: International Rubber Study Group
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Chicago Rubber Group
Natural Rubber Inventory
2002 2003 2004 2005 2006 2007 2008 2009 2010*0
20
40
60
80
100
120
140Days Supply
* Forecast
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Chicago Rubber Group
Conclusions• Fundamentals
– Stabilizing• Synthetic Rubber
– China will be biggest market driver
– Cost differences will cause price differentials and North America will have the highest of both
• Natural Rubber– Tightening
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Houston
London
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Dubai
New York
ShanghaiDuesseldorf
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petrochemicals market analysis
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