Mathew George Indian Oil Corporation Ltd. Global Propylene & Derivatives Summit Houston 2014

Transcription

1 Mathew George Indian Oil Corporation Ltd Global Propylene & Derivatives Summit Houston 2014

2 Agenda for the Presentation Acrylic Acid An Introduction Understanding Acrylic Acid Value Chain Global Market Overview Regional Acrylic Acid Market Overview Acrylic Acid Price Trend Key Price Determinant of Acrylic Acid Which Region is attractive to source Acrylic Acid? Industry Trends Bio-Acrylic Acid An Overview

3 Acrylic Acid - An Introduction Crude Acrylic Acid Market Size in 2012: 4.6 MMT Acrylate Esters 55% Glacial Acrylic Acid 45% Diversified end use industries Top five suppliers accounts to 50% of the global market, with 30-40% of suppliers backward integrated with its feedstock Top five paint companies accounts to 40-45% of the global market share of paints & coatings application 5% 4% 3% Demand Growth 5% 4% 3% Top four suppliers accounts to 47-50% of the global market share, with 90% of the suppliers backward integrated to acrylic acid and 50% with prime feedstock propylene. Top four diaper producing companies accounts to 65-70% of the GAA market share Key downstream industries FMCG Key downstream industries Construction & Automobiles Indicators: Housing Index, Automobile sales 2% 1% 2% 1% Indicators: Baby birth rate, low market penetration in emerging economics like China and India, increasing working women population, Purchasing Power Parity per capita 0% 0%

4 Understanding Acrylic Acid Value Chain Disposable Baby Diapers Feminine Hygiene Products Adult Incontinency Products Water Treatment Detergents 76% 15% 9% Caustic Soda Super Absorbent Polymers Polyacrylates Detergent Builders 1 Propylene 4 Feedstock Crystallization / Distillation Glacial Acrylic Acid 45% Production Routes Propylene Oxidation (Single / Two Stage Process) Crude Acrylic Acid 2 55% Derivatives Applications Demand by Application Butyl Acrylate + Butanol 3 + Ethanol Ethyl Acrylate + Methanol + 2-Ethyl Hexanol Methyl Acrylate 2-Ethyl Hexyl Acrylate Plastic Sheet Textiles Coatings Adhesives 55% Coatings Elastomers Adhesives Thickeners Amphoteric Surfactants Fibers Plastics Textiles Inks 27% Polymer Coatings & Finishes Adhesives Sealants Plastics Textiles 13% Paints Coatings Adhesives Inks Engineered Plastics Lubricating Oil Additives 5%

5 Global Market Overview Global acrylic acid demand to grow at 4.6% Y-o-Y till Construction, Automobiles & FMCG industries to remain the major demand sectors for acrylic acid. Global Acrylic Acid Market Dynamics Demand shifting towards emerging nations due to matured growth rates in developed economies China and India to witness maximum growth rates in terms of future consumption New capacity additions in emerging regions like Latin America, Saudi Arabia, China, etc. Global Acrylic Acid Demand by Application 5% 3% Construction, Automobile & Adhesives Industry penetration of diaper usage in developing economies Detergent industry shifting towards substitute markets % 57% 2016 (F) Sources: Analysis, Company Annual Reports, Expert Information Acrylate Esters Water Treatment SAP Detergent Co-builder

6 Regional AcrylicAcid Market Overview Developing economies to witness growth rates of above 5% in the next three years Western Europe 5 North America (F) Demand CAGR: 2.4% (F) 3.27 Asia Pacific 2.02 Demand CAGR: 2-3% Others (F) Demand CAGR: 5.8% (F) Demand CAGR: 6% Production Demand No.of.suppliers by region Sources: Analysis, Company Annual Reports, Expert Information

7 Acrylic Acid Price Trend Feedstock Propylene prices accounts for about 48-55% of the total production cost of acrylic acid. Global Acrylic Acid Price Trend Feedstock propylene prices started to rise due to tight supply weak macro-economic conditions impacted the demand for acrylic acid Stabilized market conditions as there are no major improvement from downstream industries Sources: Supplier Information Price Determinant Factors Impact Feedstock Price Macro-Economic Factors Downstream Demand

8 Feedstock Propylene Price Trend Global Propylene Price Trend Tight supply due to shale gas impact Seasonal demand coupled with supply shortage of propylene Major plant outages and hedging resulted in increase of propylene prices Sources: Supplier Information Price Determinant Factors Feedstock Price Volatility Major plant outages Supply Availability of propylene fluctuation in crude oil prices Seasonal Price fluctuations Impact

9 Which Region is Currently Attractive to Source Acrylic Acid? Propylene accounts for about 48-55% of the total production cost of acrylic acid Global Acrylic Acid Production Cost Sources: Beroe Analysis, Supplier Information Raw Material Cost Utility Cost Labor Cost Fixed Cost Asia is predominantly the best region to source acrylic acid due to: cost of production feedstock prices compared to the US & Europe Huge capacity additions in the next five years This may all change with advent of PDH Technologies

10 Industry Trends To reduce the greenhouse gas emissions and to obtain a better profit margin, suppliers have started to make their step towards bio-acrylic acid. Future Trends Shift from petro-based to bio-based acrylic acid Effect: Reduces the impact of crude oil price volatility Shift from PVA and Vinyl Acetate to Acrylic Emulsions. Effect: Increasing demand for acrylic acid Increasing diaper usage in developing economies Effect: Demand for SAP to grow at 4-5% across the globe Crackers switching towards lighter feedstock's in the US Effect: Fall in propylene supply resulting in propylene and acrylic acid price hikes 10

11 Bio-Acrylic Acid - An Overview Starch, Biomass Glucose 3 Hydroxy propionic acid Bioacrylic Acid Industry Players Upcoming Technologies Cargill/Novozymes Dow/OPXBio Nippon Shokubai/Arkema Genomatica Metabolix Propane Oxidation Glycerine toacrylic Acid Ethylene Oxide to Acrylic Acid Petro vs. Bio-acrylic acid 20% 33% 40% 48% Pros: Cost effective Best Quality Better margins for the suppliers Cons: investment cost Price volatility of bio feedstock Sources: Expert Information, Industry Magazines, Annual Reports

12 13