Petrochemical Feed Stock, Global Olefin & Polyolefin Outlook

Transcription

1 Feed Stock, Global Olefin & Polyolefin Outlook Paul Joo S&P Global Platts Strategic Accounts APAC July 2017

2 Asian Petrochemical Industry = The Cow in the middle? Still be In a Fix between Middle East and North America? Not Any more. It was a story of 3 years ago when Oil was high Private & Confidential 2

3 Today s Key Issues in Petrochemical Industry 1. Crude Oil Forecast & US Export 2. Ethane and Propane Availabilities from US 3. Ethylene Cost Competitiveness by Region and by Feedstock 4. Is Iran Back on the Scene? 5. Are MTOP and CTO Keep Coming? 6. Global PE Market turns to Surplus and US is preparing to Export Private & Confidential 3

4 PIRA s Crude Oil Price Forecast

5 Growing US Crude Oil Production = More Exports

6 Yield (%) Growing Global Crude Oil supply like to get lighter, more naphtha; naphtha not as competitive in gasoline blending Eagle Ford (55 ) WCS (20 ) WTI (40 ) NA Blend (37 ) Arab Light (33.2) Arab Extra Light (39.6) Arab Heavy Urals (32.7) Dubai (31) (27.7) Resid VGO Kero/Diesel Heavy Naphtha Light Naphtha LPG Source: Haverly Source: S&P Global Platts Analytics 6

7 Million Metric Mmt / Ton yr / Year U.S. Natural Gas Liquids impact world trade Petrochemicals, Trade Flows US LPG Net Exports USA Saudi ME excl Saudi Source: EIA

8 $ / MT Million MT / Year US LPG continues to price itself into the global market, pressuring all global prices with enough export capacities Global propane prices USGC Saudi CP Northwest Europe Japan LPG Exports vs Terminal capacity 2Q2017 Capacity Source: S&P Global Platts Analytics 8

9 $ / MT VLGC Freight Rates and Panama Canal VLGC Freight Houston - Japan Source: S&P Global Platts Analytics

10 Mb/d Will incremental Ethane recovery need to be incentivized by higher prices? Permian, Rox will be the key Ethane Rejection by Region Rockies MAPL 15 /gal 9 /gal Bakken Lateral 11 /gal Williston Overland Pass 7 /gal Conway Sterling SW Marcellus/Utica ATEX 23 /gal PADD 1 Williston PADD 4 PADD 4 PADD 2 PADD 3 PADD 2 PADD 3 Mont Belvieu Source: Platts Analytics Bentek Energy Market Call: North American NGLs, 2Q2017

11 Key Takeaways - Feedstocks - US NGL production continues to surprise to the upside, helping to push down global prices. - US ethane remains oversupplied, but domestic projects will provide price floor, making export projects unattractive - In medium-term, few constraints on LPG availability to Asia. - Global naphtha oversupply will continue to provide competitive feedstock. - Feedstock decisions may be decided by olefins demand, especially in a low price environment. - Flexibility valuable in uncertain market

12 Ethylene Cost Competitiveness Ethylene from Ethane crackers is the most competitive $/MT 1,600 Production Cost 1,400 Jun-14 Jun-17 1,200 1, Middle East Ethane Saudi Ethane Iran Ethane US Ethane WE SE Asia NE Asia Naphtha Naphtha Naphtha NE Asia Gas Oil CTO MTO Platts Analytics Private & Confidential 12

13 US Ethane Crackers 4 crackers on stream in 2017 Private & Confidential 13

14 Ethane Cracker in Asia? Low Crude Oil price makes it not feasible Platts Analytics Private & Confidential 14

15 Iran is back on the Scene Plant Integration - new MANTRA for Middle East - Iran s nameplate ethylene capacity : 7.7 mmt/year over 11 mmt/year by In the best position to fulfil its petrochemical ambition - Ranks second in the world for conventional natural gas reserve - $30-70 billion of investment opportunities - West Ethylene pipeline partially operational 3 Phases Private & Confidential 15

16 Iran is Coming Too Iran s Push for Polymer Supremacy Platts Analytics Private & Confidential 16

17 Iran is back on the Scene ME Capacity Add-up Private & Confidential 17

18 Iran is back on the Scene Platts Analytics Private & Confidential 18

19 MTO/CTO Keep Coming? CTO/MTO ECONOMICS: HIT BY LOW PRICED NAPHTHA Inner Mongolia Self-owned mine Jun-17 Jun-14 Eastern China naphtha cracker Jun-17 Jun-14 Feedstock Cost Naphtha Feedstock Cost Coal Price ( ex-plant) $ 89 $ 91 Naphtha price (ex-plant) $ 411 $ 992 Coal Consumption per/ton MeOH Naphtha consumption per ton olefins 2 2 Methanol Consumption per/ton olefins 3 3 Total Feedstock Cost per ton olefins $ 261 $ 268 Feedstock cost per ton olefins $ 822 $1,983 Co-Products Co-Products Total co-product credits $ 98 $ 167 Total co-product credits $ 528 $ 879 Electricity Electricity Total electricity cost per ton olefins $ 104 $ 104 Total electricity cost per ton olefins $ 22 $ 22 Depreciation and Labor Depreciation and Labor Total depreciation and Labor $ 91 $ 91 Total depreciation and Labor $ 54 $ 54 Water cost Water Cost Total water cost $ 32 $ 32 Total water cost $ 5 $ 5 Effluent treatment cost Effluent treatment cost per ton olefins $ 17 $ 17 per ton olefins $ 2 $ 2 Others Others others $ 126 $ 126 others $ 159 $ 159 Transportation cost for olefins product Transportation cost for olefins product Transportation cost per ton olefins $ 86 $ 86 Transportation cost per ton olefins 0 0 Total production cost per ton olefins $ 619 $ 557 Total production cost per ton olefins $ 537 $1,348 Platts Analytics Platts Analytics Private & Confidential 19

20 MTO/CTO Keep Coming? Reasons and Challenges : CTO emits much less CO2 than Coal based power plant Platts Analytics Private & Confidential 20

21 MTO/CTO Keep Coming? Projects Private & Confidential 21

22 Polyethylene Global PE Balance Platts Platts Analytics Private & Confidential 22

23 Polyethylene Where will the PE in surplus go? Platts Analytics Private & Confidential 23

24 Polyethylene North America Where will ships load cargoes? Charleston Savannah Houston New Orleans Platts Analytics Private & Confidential 24

25 Polyethylene North America The US, Ready to export? Port of Houston Industry players say the Port of Houston faces congestion at times with fog, container availability and packaging holdups Port says such concerns are overstated; usually up to 10,000 containers on site and quick access to empties from Caribbean, Colombia Port investing in wharf and crane upgrades, dock additions, expanding truck gate hours; packaging expansions under way Platts Blog Private & Confidential 25

26 Polyethylene North America The US, Ready to export? Port of New Orleans Upgraded container terminal with new ondock railyard Added two post- Panamax cranes Increased TEU capacity by 52% to 800,000 Weekly shipments of empty containers via barge from Memphis and Baton Rouge TCI Plastics expanding packaging capacity Port of Charleston Building massive new three-berth container terminal Deepening harbor to 52 feet from 45 Added two new post-panamax cranes Multiple resin packaging companies Port of Savannah Four more ship-toshore cranes for a total of 26 Easy access to empty containers from vehicle imports Largest single terminal in the US Chevron Phillips Chemical planning to move resin to Savannah for export Private & Confidential 26

27 Polyethylene North Amercia The US, Ready to export? Railroads see opportunity in PE growth Union Pacific and Katoen Natie to open a new resin packaging center at the carrier s Dallas terminal in 3Q BNSF and Packwell are planning a similar facility at BNSF s Alliance terminal north of Fort Worth in 4Q 2017 Both carriers deliver import containers to those terminals for distribution, where empties pile up. Once filled with packaged resin, carriers would move cargoes to US West Coast for export Private & Confidential 27

28 Key Takeaways - North America will start to export huge volumes of Ethylene and Polyethylene - Iran will send their cargoes to Asia and Europe too - However, thanks to low crude oil price, petchem players in Asia can maintain margins for the time being (~ 2018?) - If MTO/CTO projects keep coming as planned, the story will be different - New project plans for CTO are on hold fortunately - Saudi Arabia and other middle east countries will not make any further impact - Market will make shift from surplus to deficit from 2022 Private & Confidential 28

29 Thank You!! Private & Confidential 29