Wim Van de Velde, Director of Marketing, Plastic Additives business

Transcription

1 Examining The Competiveness Of North American Polypropylene And The Role Of Increased Propylene Supply To Allow For Improved Economics And Greater Derivative Market Penetration, an additives approach Wim Van de Velde, Director of Marketing, Plastic Additives business Global Propylene & Derivatives summit 2014, Houston, January 26 th 2014

2 Agenda Who we are: our legacy of innovation Polypropylene: versatility & sustainability Polypropylene vs PET/PS: shale gas development in North-America and how it effects polypropylene economics Replacement of PET/PS by ultra-clear polypropylene: detailed case studies Inter-material replacement: other applications 2

3 Who we are 3

4 Milliken chemical global presence Milliken s supply chain infrastructure meets your customer service and distribution needs. 4

5 Milliken Chemical: innovation Millad NX8000 Hyperform HPR-803i Hyperform Liquitint Reactint Vivitint 3 core platforms: Silicone chemistry Polymeric bound chemistry Performance plastic additives Performance plastic additives R & D projects Silicone Stiffness/impact balance Scratch resistance Crystallization speed Crystallization orientation Barrier Shrinkage Opticals 2012 Milliken & Company 5

6 Polypropylene Versatility & sustainability 6

7 Polypropylene Properties PP is a functional alternative to other materials options Desired property PS PC PMMA SAN PET PVC Glass Density Design flexibility Scratch resistance Relative cost per unit volume Chemical resistance O 2 Barrier properties + + H 2 O Barrier properties Key PP is Superior +++, Much Better ++, Better +, Worse, Much Worse

8 Polypropylene A sustainable solution Low carbon footprint during production of the granulate Polypropylene is recyclable High energy recovery values for polypropylene Confidential 8

9 Polypropylene vs PET/PS Shale gas development in North-America and how it effects polypropylene economics 9

10 Feedstocks: Olefins & Aromatics The feedstocks used to make these polymers are classified as either olefins or aromatics Feedstock Petrochemical Classification Xylene Aromatic Ethylene Olefin Ethylene Olefin Ethylene Olefin Propylene Olefin Benzene, Ethylene Aromatic, Olefin Confidential 10

11 Source of Feedstocks Ultimately, all of these polymers and their feedstocks are derived from crude oil or natural gas, and made by one of two processes. PROCESS 1 Crude Oil Oil Refinery Fractional Catalytic Cracker (FCC) Olefins Aromatics PROCESS 2 Chemical Plant Natural Gas Liquids (NGL) Steam Cracking Naptha (oil derived) Olefins Aromatics Confidential 11

12 Steam Cracked feedstocks Heavy feeds Historically (before ~2010/11), steam crackers used heavy feed (naptha) to produce olefins and aromatics. This produced abundance of olefins and aromatics (good for all polymer types). PROCESS 2 Chemical Plant Steam Cracking Naptha (oil derived) Olefins Aromatics Cracker yield from different feedstock (light vs. heavy feed) Ethane E/P Mix Propane Naptha Ethylene (olefin) 78% 66% 42% 31% Propylene (olefin) 3% 7% 17% 16% Aromatics (benzene, xylene) 2% 3% 7% 17% Confidential 12

13 Shale Gas: A Game Changer The US was supposed to be importing PE by now Led by new applications of hydraulic fracturing ( hydro-frac ) technology and horizontal drilling, development of new sources of shale gas has offset declines in production from conventional gas reservoirs. Confidential 13

14 The Shale Gas Effect Shale gas, while predominantly comprised of methane, is also ethane rich. The natural gas liquids (NGLs) from these shale plays are almost all ethane (56%) and propane (24%). Source: Confidential 14

15 Steam Cracked feedstocks Light feeds With the recent discovery of shale gas reserves in the US, Natural Gas Liquids, in particular ethane, have become extremely inexpensive and the feedstock of choice for steam crackers. Result is abundance of ethylene. PROCESS 2 Chemical Plant Natural Gas Liquids (NGL) Steam Cracking Naptha (oil derived) Olefins Aromatics 15 Cracker yield from different feedstock (light vs. heavy feed) Ethane E/P Mix Propane Naptha Ethylene 78% 66% 42% 31% Propylene 3% 7% 17% 16% Aromatics (benzene, xylene) 2% 3% 7% 17% Confidential 15

16 Jan-1999 May-1999 Sep-1999 Jan-2000 May-2000 Sep-2000 Jan-2001 May-2001 Sep-2001 Jan-2002 May-2002 Sep-2002 Jan-2003 May-2003 Sep-2003 Jan-2004 May-2004 Sep-2004 Jan-2005 May-2005 Sep-2005 Jan-2006 May-2006 Sep-2006 Jan-2007 May-2007 Sep-2007 Jan-2008 May-2008 Sep-2008 Jan-2009 May-2009 Sep-2009 Jan-2010 May-2010 Sep-2010 Jan-2011 May-2011 Sep-2011 Jan-2012 May-2012 Sep-2012 Jan-2013 May-2013 Sep-2013 Jan-2014 May-2014 $/lb Material Pricing From mid-2010, rationalized feedstock availability for PET, PP & PS is reflected in market pricing. However, PP continues to be volatile Resin pricing in North-America PET PP PS Confidential I.H.S. 01/26/2014 NA Contract Pricing Cents/lb delivered

17 Steam Cracked feedstocks Light feeds When the price of propylene gets high enough, these chemical plants will switch from cracking ethane to propane. Refineries opt to make more polymer grade propylene as well. Oversupply rapidly drives the price down. PROCESS 2 Chemical Plant Natural Gas Liquids (NGL) Steam Cracking Naptha (oil derived) Olefins Aromatics 17 Cracker yield from different feedstock (light vs. heavy feed) Ethane E/P Mix Propane Naptha Ethylene 78% 66% 42% 31% Propylene 3% 7% 17% 16% Aromatics (benzene, xylene) 2% 3% 7% 17% Confidential 17

18 A 3 rd feedstock source: On purpose! A bright future for PP in North America North America will have an abundant supply of propane from shale gas plays for long-term future. This propane can be converted into propylene via propane dehydrogenation (PDH). Confidential 18

19 Source of Propylene Feedstock Polypropylene dynamics The source of propylene feedstock has changed dramatically over the past 5 years, and is poised for continued evolution over the next 5 years. PAST PRESENT FUTURE ~18.5 B lbs PP ~17.5 B lbs PP ~20-22 B lbs PP Oil Refineries 35% Oil Refineries 60% Oil Refineries 55-60% Steam Crackers 65% Steam Crackers 35% Steam Crackers 17-25% On Purpose <1% On Purpose ~5% On Purpose 15-20% Confidential 19

20 Jan-1999 May-1999 Sep-1999 Jan-2000 May-2000 Sep-2000 Jan-2001 May-2001 Sep-2001 Jan-2002 May-2002 Sep-2002 Jan-2003 May-2003 Sep-2003 Jan-2004 May-2004 Sep-2004 Jan-2005 May-2005 Sep-2005 Jan-2006 May-2006 Sep-2006 Jan-2007 May-2007 Sep-2007 Jan-2008 May-2008 Sep-2008 Jan-2009 May-2009 Sep-2009 Jan-2010 May-2010 Sep-2010 Jan-2011 May-2011 Sep-2011 Jan-2012 May-2012 Sep-2012 Jan-2013 May-2013 Sep-2013 Jan-2014 May-2014 $/lb Resin Price Volatility Polypropylene (for now) is the most susceptible to price volatility due to ability of crackers to switch from ethane to propane feeds Resin pricing in North-America PET PP PS Confidential I.H.S. 01/26/2014 NA Contract Pricing Cents/lb delivered

21 (g/cm^3) Material Density PP has a density advantage compared to other materials Density Matters PET 44% more dense than PP PS 16% more dense than PP 21 Confidential

22 Jan-1999 Jun-1999 Nov-1999 Apr-2000 Sep-2000 Feb-2001 Jul-2001 Dec-2001 May-2002 Oct-2002 Mar-2003 Aug-2003 Jan-2004 Jun-2004 Nov-2004 Apr-2005 Sep-2005 Feb-2006 Jul-2006 Dec-2006 May-2007 Oct-2007 Mar-2008 Aug-2008 Jan-2009 Jun-2009 Nov-2009 Apr-2010 Sep-2010 Feb-2011 Jul-2011 Dec-2011 May-2012 Oct-2012 Mar-2013 Aug-2013 Jan-2014 Jun-2014 Nov-2014 $ per volumetric basis Density Effect on Resin Pricing PP has a tremendous economic advantage when adjusting for density Resin pricing in North-America density adjusted PET PP PS 22 Confidential I.H.S. 01/26/2014 NA Contract Pricing Cents/lb delivered

23 Replacement of PET/PS by ultra-clear polypropylene Detailed case studies 23

24 Current market situation PET PS PET PP PP PP X X Confidential 24

25 Clarifying Agent Performance Evolution of Polypropylene Clarifying Agents 25

26 What if PP can be ultra clear? Sheet thickness : 470 µm Sheet thickness : 600 µm Weight : 17,4 g PET PP Weight : 14,3 g Confidential 26

27 What if PP can be ultra clear? Sheet thickness : 470 µm Weight : 17,4 g Sheet thickness : 600 µm Weight : 14,3 g PET Ultra Clear PP Confidential 27

28 What if PP can be ultra clear? PS Ultra Clear PP Confidential 28

29 Polypropylene Heat resistance - microwaveability Confidential 29

30 Polypropylene Heat resistance - microwaveability Hot water (temp > 80 C, 176 Fahrenheit) is poured in the trays Confidential 30

31 Polypropylene Easy seal, Easy peal Confidential 31

32 Polypropylene Other parameters Desired property PET PS PVC Density Heat resistance Chemical resistance O ² Barrier properties H ² O Barrier properties Stiffness Impact Ductility +++ Key PP is Superior +++, Much Better ++, Better +, Worse, Much Worse Confidential 32

33 Clarity and Aesthetics PP clarified with Millad NX 8000 Confidential 34

34 Clarity and Aesthetics...Millad NX 8000 allows the ability to tune clarity as needed Millad NX 8000 : medium range Improved Aesthetics Improved Quality and consistency Clear Material Substitution Millad NX 8000 : high range Excellent Aesthetics Ultra Clear Material Substitution Confidential 35

35 Light weight material PP clarified with Millad NX 8000 is lighter than PET, with equal stiffness Sheet thickness: 470 µm Weight : 17,4 g Sheet thickness: 600 µm Weight : 14,3 g PET 18 % weight reduction PP clarified with Millad NX kg PET = 57 containers 1 kg PP = 70 containers Confidential 36

36 Light weight material PP clarified with Millad NX 8000 is lighter than PET, with equal stiffness Part thickness: 0,20 mm Weight : 4,6 g Part thickness: 0,30 mm Weight : 3,8 g PET 17 % weight reduction PP clarified with Millad NX kg PET = 217 lids 1 kg PP = 263 lids Confidential 38

37 Cost efficiency PP clarified with Millad NX 8000 is less expensive than PS PS PP clarified with Millad NX 8000 Estimated Sheet Costs 3250 $/Ton 26 % * cost reduction Estimated Sheet Costs 2405 $/Ton * Costs reduction calculated for this case study and based on price comparison Oriented PS sheet versus Ultra Clear PP sheet. Confidential 39

38 PP clarified with Millad NX 8000 Clear packaging Cost efficient Lightweight material Confidential 41

39 Thermoforming/sheet ultraclear PP Commercial cases replacing PS or PET Confidential 42

40 Inter-material replacement through ultra-clear polypropylene Other applications 43

41 Ultra-clear polypropylene Other commercial successes TWIM 6% EBM 26% IM 40% ISBM 9% Milliken, Private & Confidential Confidential internal only

42 Ultra-clear polypropylene Other commercial successes Forensic vials (IM) Jars (IM) Dome lid (IM) Tubing & IV bags (Extrusion) Housewares (IM) Dishware (IM) Bottle (EBM) 2013 Milliken, Private & Confidential 45

43 Summary Polypropylene s future for North-America looks bright for 3 reasons: 1. Polypropylene is well positioned from an economic point of view due to the shale gas developments and investments into on purpose PDH units 2. Polypropylene remains a versatile, recyclable material with a low carbon footprint, making it well positioned to compete against other plastics 3. As a result we expect polypropylene s growth rates and new applications to continue to prosper for the foreseeable future 4. Milliken & Company remains committed to continue to invest in research & development of new chemistries to enhance the physical properties of polypropylene and to allow it continue to grow at the expense of other materials Confidential

44 Wim Van de Velde Director of Marketing, Plastic Additives Milliken & Company 920 Milliken Road M-209 Spartanburg,SC T / C wim.vandevelde@milliken.com 47