The changing C4 feedstock slate and the shifts in trade dynamics. Serena Seng Managing Editor S&P Global Platts APIC 2018

Transcription

1 The changing C4 feedstock slate and the shifts in trade dynamics Serena Seng Managing Editor S&P Global Platts APIC 218

2 Agenda Light feedstocks and the impact on butadiene supply China s olefins expansion and changes to the butadiene landscape Downstream synthetic rubber markets end of the good times?

3 Light feedstocks and the impact on butadiene supply The Global feedstock landscape US Oil and Shale Increase supply reduce energy prices Increase production of ethane and NGLs Middle East Oil and Gas Ethane and other NGLs Current competitive prices but prices may rise in future New plant startups focus on integration China Coal and Methanol Coal to chemicals production on the rise New refineries are integrated Multiple feedstock options Source: S&P Global Platts Analytics, Platts

4 Light feedstocks and the impact on butadiene supply Price comparisons of Global feedstocks $/mt 18 Crude ~$1/b Crude ~$5/b Crude ~$43/b Crude ~$55/b Crude hovers above $7/b MTO NE Asia Naphtha 6 CTO 4 US Ethane 2 Asian Ethylene ME Ethane Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17 Oct-17 Mar-18 Source: S&P Global Platts Analytics

5 Light feedstocks and the impact on butadiene supply Asian cracker feedstock patterns change, but naphtha still dominant Asian Ethylene Feedstock Slate % Asian Ethylene Feedstock Slate % 8% 12% 3% 2% 5% 5% 74% Naphtha Ethane Propane Butane Gas Oil Coal 3% 4% 6% 5% 69% Methanol Source: S&P Global Platts Analytics

6 Light feedstocks and the impact on butadiene supply Cracker product yield from different types of feedstocks Butane 5 Propane Ethane Gasoil Hydrogen and methane Ethylene Propylene Butadiene Mixed butenes C5+ Benzene Toluene Fuel Oil Naphtha Source: S&P Global Platts, Industry sources

7 Light feedstocks and the impact on butadiene supply a closer look at heavy feedstock vs light feedstock yields Naphtha 2% Butane 8% 5% 4% 26% Hydrogen and methane Ethylene 2% 6% 13% 24% Hydrogen and methane Ethylene 8% 5% 13% 3% Propylene Butadiene Mixed butenes C5+ Benzene VS 18% 37% Propylene Butadiene Mixed butenes

8 Light feedstocks and the impact on butadiene supply Asian crackers are mostly integrated with BDE/BTX units Asian cracker types % Butadiene extraction unit PLUS Aromatics extraction unit % 61% Butadiene extraction unit OR Aromatics extraction unit None Production costs by Asian cracker types $6 $5 $4 $3 $2 Naphtha C+F Japan Cargo $/MT (RHS) Butadiene CFR Taiwan Mavg $/MT Butadiene FOB Korea Weekly Mavg $/MT Butadiene CFR China Mavg $/MT $1 $ BDE/BTX Naphtha cracker Non-Integrated Naphtha Cracker Source: S&P Global Platts, Industry sources

9 China s olefins expansion and changes to the butadiene landscape the need to secure ethylene $1,8 $1,3 Global Ethylene Price Forecasts ($/mt) US Asia Europe $8 $ Source: S&P Global Platts Analytics, PIRA, Industry sources

10 China s olefins expansion and changes to the butadiene landscape ethylene via CTO New ethylene capacities from CTO/MTO in KT/Year Lower Chinese coal prices make an attractive option for CTO Company Location Process Capacity KT/Year Startup China Coal Mengda Inner Mongolia CTO Shenhua Group Xinjiang CTO SINOPEC Zhong Tian He Chuang Energy Inner Mongolia CTO Qinghai Salt Lake Qinghai CTO SINOPEC Zhong Tian He Chuang Energy Inner Mongolia CTO Jiutai Energy Inner Mongolia CTO Shenhua Group Ningxia CTO Connell Chemical Jilin CTO SXYCPC Yanan E&C Shaanxi CTO China Coal Yulin Shaanxi CTO SINOPEC-Wanbei Coal- Electricity Group Anhui CTO Shenhua Group Shaanxi CTO Yili Meidianhua Xinjiang CTO PCC Met Shandong Semi Soft Free-on-Rail Yuan/MT (LHS) 4 *PCC Met Shandong Semi Soft Free-on-Rail USD parity $/MT (RHS) 2 25/7/215 25/7/216 25/7/217 25/7/218 *PCC Met Shandong Semi soft Free-on-Rail USD parity calculated by applying an implied exchange rate of 1USD=6.5 Yuan China adds 13 new CTO plants over Most located in Inner Mongolia and Shaanxi where coal reserves lie Chinese coal prices highest in 3 years yet still cheaper than naphtha feedstock or methanol feedstock Source: S&P Global Platts Analytics, Platts, Industry sources

11 China s olefins expansion and changes to the butadiene landscape ethylene via MTO New Ethylene Capacities from MTO in KT/Year Firm Methanol prices unattractive to be used as C2 feedstock in MTO Methanol Domestic China (Ex-Tank) Yuan/mt (LHS) *Methanol Domestic China (Ex-Tank)USD parity $/MT (RHS) 25/7/215 25/7/216 25/7/217 25/7/218 *Methanol domestic China (Ex-Tank ) USD parity calculated by applying an implied exchange rate of 1USD=6.5 Yuan Company Location Process Ethylene Capacity KT/Year Startup Fund Energy Jiangsu MTO Sailboat Petrochemical Jiangsu MTO Shandong Lianhong MTO Expansion Shandong MTO Jiutai Energy Inner Mongolia MTO Nanjing Chengzhi Yongqing Jiangsu MTO China adds 5 MTO plants over Most located in Jiangsu region, easy access to coastal region and imported methanol Domestic Methanol prices remain firm from end 216 and at least $15-2/mt higher than coal prices Source: S&P Global Platts Analytics, Platts, Industry sources

12 1/6/217 1/7/217 1/8/217 1/9/217 1/1/217 1/11/217 1/12/217 1/1/218 1/2/218 1/3/218 1/4/218 1/5/218 1/6/218 1/7/218 MTO margin ($/mt) China s olefins expansion and changes to the butadiene landscape what happens to MEOH imports if MTO margins dive? 4 38 We re here! 2. Average MTO margins plunged May (assume PP/MEG downstream) Answer: MTOs shut, imports fall. H1 methanol imports down ~5-11% YOY Source: S&P Global Platts, Industry sources, China customs

13 China s olefins expansion and changes to the butadiene landscape ethylene right at the top of cost curve 1,2 1, 8 $/mt Global Ethylene Demand: 151 million mt/year Chinese MTOs WE Naphtha CTOs 6 4 US Ethane NE Asia Naphtha Russia average 2 - SE Asia Naphtha Saudi Ethane Cumulative Capacity (' mt) - 2, 4, 6, 8, 1, 12, 14, 16, 1,6 $/mt Ethylene production costs 1,4 1,2 1, 8 Jun-14 Jan Middle East Ethane Saudi Ethane Iran Ethane US Ethane WE Naphtha SE Asia Naphtha NE Asia Naphtha NE Asia Gas Oil CTO MTO Source: S&P Global Platts Analytics

14 China s olefins expansion and changes to the butadiene landscape Propylene via CTO/MTO New Propylene capacities from CTO KT/Year New Propylene capacities from MTO KT/Year Company Location Process Propylene Capacity KT/Year China Coal Mengda Inner Mongolia CTO Shenhua Group Xinjiang CTO Qinghai Salt Lake Qinghai CTO SINOPEC Zhong Tian He Chuang Energy Huating Zhongxu Coal Chemical Corp Startup Inner Mongolia CTO Gansu CTO Jiutai Energy Inner Mongolia CTO Shenhua Group Ningxia CTO China Coal Yulin Shaanxi CTO SINOPEC-Wanbei Coal-Electricity Group Anhui CTO Shenhua Group Shaanxi CTO 3 22 Yili Meidianhua Xinjiang CTO Company Location Process Propylene Capacity KT/Year Startup Fund Energy Jiangsu MTO Nanjing Chengzhi Yongqing Sailboat Petrochemicals Shenhua Group SINOPEC Zhijin, Zhijin Jiangsu MTO Jiangsu MTO Inner Mongolia MTO Guizhoy MTO Source: S&P Global Platts Analytics, Industry sources

15 China s olefins expansion and changes to the butadiene landscape Propylene via PDH Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Japan Propane Imports thousands/bbl (LHS) South Korea Propane Imports thousands/bbl (LHS) China Propane Imports thousand/bbl (LHS) US Propane Cracker Margin $/mt (RHS) Com pany Location Process Propylene Capacity KT/Year Start up Status Tianjin Bohai Chem ical Tianjin PDH Running Haiw ei Group Hebei (Hengshui) PDH Running Hebei (Huanghua) PDH 5 Planned Planned Ningbo Haiyue New Material Co Ningbo PDH Running Shaoxing Sanyuan Zhejiang PDH Running Zhejiang Satellite Energy Co Zhejiang (Pinghu) PDH Running Zhejiang (Pinghu) PDH Under construction Oriental Energy Zhejiang (Ningbo) PDH Running Zhejiang (Ningbo) PDH 66 planned planned Caofeidian PDH 66 planned planned Hebei (Tangshan) PDH 66 planned planned Yantai Wanhua Shandong PDH Running Zhangjiagang Yangtze River Petrochem ical Co Jiangsu (Zhangjiagang) Jiangsu (Zhangjiagang) PDH Running PDH 6 Planned Planned Fujian Meide Petrochem ical Fujian (Fuqing) PDH Under construction Fujian (Fuqing) PDH 66 Planned Planned Shenzhen Juzhengyuan Dongguan (Hum en) PDH Under construction Source: S&P Global Platts, EIA, Industry sources

16 China s olefins expansion and changes to the butadiene landscape CTO vs Naphtha production costs of olefins Source: S&P Global Platts, EIA, Industry sources

17 China s olefins expansion and changes to the butadiene landscape rise in BD imports over the past 1 years China automobile production growth surged 48% in 29, fueling a surge in BD imports World financial crisis lowered demand for automobiles and BD imports New Butadiene capacities start up resulting in less import demand Tight supply drives up import demand *218 Imports (LHS) Price CFR China $/MT(RHS) *218 data is up to March, S&P Global Platts CFR China price history starting from 213 Source: S&P Global Platts, China Customs

18 China s olefins expansion and changes to the butadiene landscape imports breakdown by countries *

19 China s olefins expansion and changes to the butadiene landscape overview of Chinese butadiene demand 16, 14, 12, 1, 8, Butadiene Demand in NE Asia KT/Year CAGR 3.42% 2.5 mnt NE Asia butadiene demand expected to rise from 1 million in 21 to 14 million tonnes by 22 SBR demand expected to see bigger growth than PBR at 4.3 million tonnes by 22 6, 4, Rise in China car sales and production to fuel butadiene demand in 22 2, China Car Production and Sales Figures from Butadiene downstream demand Demand in KT/Year 215 Demand in KT/Year SBR PBR Demand in KT/Year No of Cars Produced No of Cars Sold *Sales in RMB (Billion) (RHS) *Sales figures are estimates 4, 3,5 3, 2,5 2, 1,5 1, 5 Source: S&P Global Platts, China Association of Automobile Manufacturers, Industry sources

20 China s olefins expansion and changes to the butadiene landscape On purpose butadiene production the solution to Chinese BD supply woes? Imports KT/Year *Production KT/Year **Demand KT/Year Surplus/Deficit KT/Year Zibo Qixiang Tengda Chemical, ODH, 15 KT/year 213 Transfar Kaiyue, ODH, 5KT/Year 213 Petrochina Sichuan, BDX, 15KT/Year, 213 Sinopec Wuhan, BDX, 12KT/Year, 213 Sinopec Baling, ODH, 1KT/Year, 215 Sinopec Yangzi, BDX, 34KT/Year, 215 Sinopec Shanghai, BDX, 22KT/Year, 215 Shanghai SECCO Petrochemical BDX, 9KT/Year, 213 Yuhuang Chemical Co, ODH, 18KT/Year, 213 Wanda Group, ODH, 15KT/Year, 213 Zhuhai Zhongguan petrochemical, ODH, 7KT/Year, 214 China s BD capacities Fujian Refining & Petrochemical, BDX, 15KT/Year, 213 Source: S&P Global Platts, Industry sources 2

21 China s olefins expansion and changes to the butadiene landscape - new butadiene capacities Company Name Process Capacity KT/Year Shandong Kenli ODH Jiangsu Sailboat MTO/ODH Bluestar Puyang BDX Shenhua Ningmei CTO CNOOC / Shell NCC/BDX Completion Date Number of Butadiene Plants added Zhejiang PC (Rongsheng) NCC/BDX Nanjing Chengzhi Sinopec Fujian Gu Lei MTO/ODH NCC Jiutai Energy ODH Liaoning Bora NCC/BDX Sinochem Quanzhou NCC/BDX Sinopec Haijian NCC Hengli Petrochemical NCC/BDX Wanda Group NCC/BDX Sinopec / KPC NCC/BDX Wanhua NCC 1 22 Zhejiang PC (Rongsheng) NCC/BDX Sinopec Fujian Gu Lei NCC/BDX Total 2,173 Source: S&P Global Platts, Industry sources

22 Downstream synthetic rubber markets the end of the good times? Where is the demand coming from? *NE Asia butadiene demand 22 Typical Car tyre raw material composition 9% Polybutadiene (PBR) Natural Rubber 3% 1% 14% 6% 29% 29% Styrene Butadiene Rubber (SBR) Nitrile Butadiene Rubber (NBR) Polychloroprene (PCR) Acrylonitrile Butadiene Styrene (ABS) Styrene Butadiene Latexes 32% 16% 15% 37% Synthetic Rubber Fillers (Carbon black, silica etc) Others Others *Industry estimates based on 14 million metric tonnes of expected demand Source: S&P Global Platts, Industry sources

23 Downstream synthetic rubber markets the end of the good times? Synthetic Rubber Market World Synthetic Rubber Production in KT/Year Asia-Pacific Synthetic Rubber Supply/Demand Synthetic Rubber Production (KT/Year) Supply/Demand surplus or deficit (KT/Year) Synthetic Rubber Consumption (KT/Year) Americas Europe Asia-Pacific Asia is worlds largest producer of synthetic rubber at 52%, followed by Europe at 27% and Americas at 21% Asia synthetic rubber supply/demand at deficit year on year from In spite of rising synthetic rubber prices, global shortage of 137, mt in 217 Source: Rubber Statistical Bulletin

24 Downstream synthetic rubber markets the end of the good times? Natural Rubber Market World Natural Rubber Production in KT/Year Asia-Pacific Natural Rubber Supply/Demand Natural Rubber Production(KT/Year) Natural Rubber Consumption (KT/Year) Supply/Demand surplus or deficit (KT/Year) Americas Europe Asia-Pacific BD/SBR and Natural Rubber prices trend 215-Q Butadiene CFR SE Asia $/MT (LHS) ESBR 152 CFR SE Asia $/MT (LHS) Natural Rubber SGX TSR *Q1 218 Natural rubber production continues to exceed demand over the last 3 year period resulting in surplus supply and lower prices as compared to the synthetic rubber market Source: Rubber Statistical Bulletin, S&P Global Platts

25 Summary The shift to lighter feeds is inevitable amid cheaper raw material costs China s drive for self-sufficiency in olefins production sees new investments in CTOs and PDHs and on-purpose Butadiene production beyond 22 Growing Chinese consumer affluence will continue to drive automobile demand and in turn demand for tyres and tyre raw materials through 22 Regional short term butadiene supply shortages stemming from maintenance T/As and Japanese cracker issues will support firmer Butadiene prices Synthetic rubber consumption to outpace production leading to supply deficits till 22 Natural rubber prices in Asia expected to remain low amid supply glut

26 Thank You! Editor s contacts Managing Editor: Serena Seng, serena.seng@spglobal.com Ethylene &derivatives: Fumiko Dobashi, fumiko.dobashi@spglobal.com Propylene & derivatives: Melvin Yeo, melvin.yeo@spglobal.com Butadiene& derivatives: Elizabeth Low, elizabeth.low@spglobal.com