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Market intelligence for the energy, chemical and fertilizer - - PowerPoint PPT Presentation
Market intelligence for the energy, chemical and fertilizer - - PowerPoint PPT Presentation
Market intelligence for the energy, chemical and fertilizer industries www.icis.com 1 Market intelligence to support your commercial planning & decision making Pricing News intelligence Training and Analysis Conferences Supply and
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Plastics markets in transition – preparing for a new world
Malini Hariharan Head of South Asia Markets ICIS March 2018
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China
Trade issues Plant Inspections & closures Ban on plastic waste imports Strong demand New capacities Rise in imports
India
Start up of new plants Demand recovery Investment activity up
Rising crude oil prices US
New capacities Strong economy Trade war? 2nd investment wave
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Global upswing underway
Global GDP growth projections revised upwards - expected to hit 3.9% in 2018 & 2019, up from 3.7% in 2017 Big boost from acceleration in economic activity in the US, Europe PMI numbers from US, Europe and China support outlook Faster economic expansion will boost demand for oil and other commodities and also support higher interest rates and tighter monetary policies
30 35 40 45 50 55 60 65 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18
Global PMI
US Eurozone China US, Europe acceleration EXPANSION CONTRACTION
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Crude surges as supply and demand move closer to balance
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Petrochemical prices were up in 2017 and most markets have seen a strong start to 2018
Markets largely supported by demand and supply issues; Chinese buying and firmer crude oil prices
40 80 120 160 50 100 150 200 250 300 350 400 2006 2008 2010 2012 2014 2016 2017 2018 US$/bbl
Asia IPEX v Brent
Brent Crude Oil ($/bbl) Asia IPEX
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China crackdown on pollution – a game changer
April 2017 – China begins air pollution inspections in Beijing, Tianjin and 26 other cities in the Northeast (‘2+26 Plan’) – 25 rounds in 1 year, intensifying in the winter Ban on imports of waste plastics announced July 2017, went into effect end of 2017 More stringent environmental regulations have shut down chemical plants – some permanently Chemical markets have tightened. Only larger, well funded players can compete. China will export inflation vs deflation
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China imports show strong growth in 2017 even as the country adds new capacities
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2 3 4 5 6 7 LDPE LLDPE HDPE PP ABS PS
M tonnes
2017 2016 2015
5
2017 Vs 2016 LDPE 16% LLDPE 16% HDPE 21% PP 4% ABS 6% PC 5%
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Polymer markets
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A number of factors drive polymer prices
Costs
- Feedstock costs
- Freight rates
- Currency fluctuations
Demand
- Health of the economy
- Health of downstream sectors –
packaging, auto and construction
- Seasonal factors and holidays
- Trade policies
- Product substitution
- SENTIMENT
Supply
- Operating rates
- Shutdowns and outages
- New plant start-ups
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LLDPE - spread between India and China has widened
India has moved from net deficit to surplus Commissioning of new capacities has pushed Indian prices below China Spread has widened to ~US$70 this year
900 1000 1100 1200 1300 1400 1500 Jan-2015 Feb March April May June July Aug Sep Oct Nov Dec Jan-2016 Feb March April May June July Aug Sep Oct Nov Dec Jan-2017 Feb March April May June July Aug Sep Oct Nov Dec Jan-2018 Feb LLDPE Film CFR China USD/tonne LLDPE Film CFR India USD/tonne
Average 2015 USD 1180/cfr China USD 1230 cfr India Average 2016 USD 1110/cfr China USD 1150 cfr India Average 2017 USD 1130/cfr China USD 1150 cfr India
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Similar trend for HDPE but delta between India and China has narrowed
China-India spread widened to over US$80 end of last year but has since fallen Tight supply especially for pipe, blow moulding and film grades Pipe grade prices have increased by 30% in last year largely supported by China’s shift from coal to gas policy shift Prices currently at a 8- year high
Average 2016 USD 1070/cfr China USD 1140 cfr India Average 2017 USD 1120/cfr China USD 1130 cfr India
900 1000 1100 1200 1300 1400 1500 Jan-15 Feb March April May June July Aug Sep Oct Nov Dec Jan-16 Feb March April May June July Aug Sep Oct Nov Dec Jan-17 Feb March April May June July Aug Sep Oct Nov Dec Jan-18 Feb HDPE Blow CFR China USD/tonne HDPE Blow CFR India USD/tonne
Average 2015 USD 1160/cfr China USD 1230 cfr India
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PP capacity growth in China; India’s surpluses gradually getting absorbed
PDH/CTO/MTO led capacity growth in China
- ver the last few years
India surplus gradually easing as the country turns to a net importer With propylene prices also moving up, PP faces upward pressure
Average 2016 USD 950/cfr China USD 995 cfr India Average 2017 USD 1055 cfr China USD 1125 cfr India Average 2015 USD 1070/cfr China USD 1130 cfr India
700 800 900 1000 1100 1200 1300 1400 1500 Jan-2015 Feb March April May June July Aug Sep Oct Nov Dec Jan-2016 Feb March April May June July Aug Sep Oct Nov Dec Jan-2017 Feb March April May June July Aug Sep Oct Nov Dec Jan-2018 Feb PP Injection CFR China USD/tonne PP Injection CFR India USD/tonne
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India PE growth outlook robust but surplus likely to take few years to digest
200 400 600 800 1000 1200 2016 2017 2018 2019 2020
Polyethylene (‘000 tonnes)
Addition to Demand Addition to Capacity 100 200 300 400 500 600 2016 2017 2018 2019 2020
Polypropylene (‘000 tonnes)
Addition to Demand Addition to Capacity
PE capacity additions at GAIL, BCPL, OPaL and Reliance PP capacity additions at MRPL, OPaL, BCPL during 2016-2017 Due 2018-19: Indian Oil’s 700kta plant at Paradeep
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Polycarbonate at historic highs
Healthy global demand Multiple production issues (hurricane Harvey etc) tightened global supply Strong push from feedstock costs – bisphenol A prices also rose by 40% last year; but spread between PC and BPA widened to well above the typical US$900 level
800 1300 1800 2300 2800 3300 3800 4300 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Polycarbonate (USD/tonne)
GP Moulding CIF China GP Extrusion CIF Taiwan/China
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ABS has broadly followed styrene
500 1000 1500 2000 2500
Styrene Monomer and ABS price trend
Styrene Monomer CFR China USD/tonne ABS CFR India USD/tonne Source: ICIS
Robust ABS demand (China imports up 6% to 1.789m tonnes) Environmental controls in China/restriction on imports of waste plastics - impact on local industry
China imposes ADD on South Korea, Taiwan and the US 543% 627% 524% Styrene 2016 average: US$1055 Styrene 2017 average: US$1243 ABS 2016 average: US$1336 ABS 2017average: US$1800 540% 615% 517%
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ABS-styrene spreads widen
100 200 300 400 500 600 700 800 900 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD
ABS - Styrene spreads (US$/tonne)
ABS-Styrene spread has moved up sharply in 2017 Butadiene prices have been running below the high of US$2800 seen in early 2017; but volatile Supply constraints have pushed acrylonitrile higher
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19 800 1300 1800 2300 2800 3300 3800 4300 4800 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Nylon price trend (USD/tonne)
Nylon 6 Inj Mould Unfilled (industrial Grade) FD NWE Nylon 6,6 Virgin Polymer FD NWE
Supply issues in Europe and US spell trouble for nylon buyers
Global markets experiencing shortages amid plant shutdowns and force majeures across the value chain Demand has been good; tightness expected to persist in 2018 But threat of lower priced competitng materials for certain applications
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US capacity wave
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New US crackers complete, under construction, FID made
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 1,500 ELITE PE (400); LDPE (350) – Plaquemine, Louisiana; EPDM (200); elastomers (320) Freeport, Texas Q3 2017, LDPE Q4 2017, EPDM early 2018, elastomers late 2018 ExxonMobil Chemical 1,500 mLLDPE plus LLDPE (650 x2) at Mont Belvieu Baytown, Texas Q2 2018 Chevron Phillips Chemical 1,500 Bimodal HDPE (500), mLLDPE (500) both at Old Ocean Cedar Bayou, Texas Q1 2018 Formosa Plastics 1,200 HDPE (400), LDPE (400), EG (800) Point Comfort, Texas Q4 2018 Sasol 1,500 LDPE (450), LLDPE (450), EO/EG (300), ethoxylates, detergent alcohols (300) Lake Charles, Louisiana H2 2018, LDPE early 2019,
alcohols H2 2019
Shintech 500 VCM (300), PVC (300), caustic soda (200) Plaquemine, Louisiana 2018 Westlake/Lotte 1,000 MEG (700) by Lotte, feed into existing PVC for Westlake St Charles, Louisiana 2019 Shell 1,500 HDPE/LLDPE (550 x2), HDPE (500) Monaca, Pennsylvania Early 2020s
9 new crackers = 10.7m tonnes/year Through 2019 = 9.2m tonnes/year
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North America PE expansions
Company Cap apacity (kt kt/year) Grade, br breakdown Loc Location St Star art-Up Up
Dow Chemical 400 ELITE PE Freeport, Texas Q3 2017 Dow Chemical 350 LDPE Plaquemine, Lousiana Q4 2017 Chevron Phillips Chemical 1,000 Bimodal HDPE (500), mLLDPE (500) Old Ocean, Texas Q3 2017 ExxonMobil Chemical 1,300 mLLDPE plus LLDPE (2 x 650) Mont Belvieu, Texas End 2017 INEOS/Sasol 470 HDPE La Porte, Texas Q4 2017 Formosa Plastics 800 HDPE (400), LDPE (400) Point Comfort, Texas H2 2018 Dow Chemical 125 Bimodal HDPE/MDPE Seadrift, Texas; St Charles, Louisiana 2018 Sasol 890 LLDPE (470), LDPE (420) Lake Charles, Louisiana H2 2018 (LLDPE), 2019 (LDPE) LyondellBasell 500 HDPE La Porte, Texas Mid-2019 ExxonMobil Chemical* 650 PE (unspecified) Beaumont, Texas 2019 Total/Borealis/NOVA* 625 Borstar PE Bayport, Texas End 2020 Shell 1,600 HDPE/LLDPE (2x 550), HDPE (500) Monaca, Pennsylvania Early 2020s PTT Global Chemicals* 700 HDPE (2x 350) Belmont County, Ohio 2021 (FID Q4 2017) NOVA Chemicals* 430 LLDPE Sarnia, Canada Late 2021 SABIC/ExxonMobil* NA PE unspec (2 units) Corpus Christi, Texas NA Dow Chemical* 600 PE (unspec) US Gulf Coast 2020s Dow Chemical* 350 PE (unspec) Various debottlenecks 2020s
Through 2019 = 6.5m tonnes/year (+42% US capacity) Through 2022 = 12.1m tonnes/year** (+77% US capacity)
*No FID yet ** Assuming 1,300kt PE for SABIC/ExxonMobil, start-up by 2022
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+940 +450
*Volumes in ‘000 tonnes
Asia PE market competition set to intensify
Source: ICIS Supply and Demand Database
+1350
To NE Asia
+800 +700 North America South & Central America Africa Europe Former USSR NE Asia (China) South & Southeast Asia
To South & SE Asia
+600
From N America
+500 Middle East +400 +350 Global Polyethylene Trade Flow Key Development (2016 vs 2020) Note: potential to challenge positions of SEA Producers US PE coming to Asia
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2nd wave of US cracker projects
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 pending Shell 1,500 HDPE/LLDPE (2x 550), HDPE (500) Monaca, Pennsylvania Early 2020s Under construction SABIC/ ExxonMobil 1,800 PE (2 units), MEG Corpus Christi, Texas
- FID 2018
PTT Global Chemicals 1,000 HDPE (700), MEG (500), EO (100) Belmont County, Ohio 2021 FID Q1 2018 Formosa Plastics 1,200 LDPE (400), HDPE (400), EG (800) Louisiana
- Evaluating,
permitting
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China
Trade issues Plant Inspections & closures Ban on plastic waste imports Strong demand New capacities Rise in imports
India
Start up of new plants Demand recovery Investment activity up
Rising crude oil prices US
New capacities Strong economy Trade war? 2nd investment wave
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