2014 Asia Olefins & Aromatics Market Review and Outlook Peh Soo Hwee and Ong Sheau Ling

Transcription

1 2014 Asia Olefins & Aromatics Market Review and Outlook Peh Soo Hwee and Ong Sheau Ling 16 May 2014 PEACH Hall, Pattaya, Thailand General Matter and Raw Materials Committee, Asia Petrochemical Industry Conference (APIC)

2 ICIS has the expertise to support you from the latest news and trading prices to long-term forecasts Pricing information Reliable chemical price assessments and analyses, including price history, enabling you to understand price drivers and to settle your contract prices more confidently. Real-time news service Breaking news and analyses across the global petrochemical markets. Be the first to find out about market-moving news, including production updates, plant capacities, output and shutdowns. Request your free sample price report today >> Request your free trial today >> Supply and demand data Access data on petrochemical supply and demand, imports and exports, as well as production capacity over a 6-11 year time span. Online interface is customisable, enabling you to create a view of trade patterns according to your needs. In-depth market analysis Our expert insight delivers the information and data you need to understand short, mid- and long-term trends (up until 2025) as well as informed commentary and analysis on the market outlook all of which enables you to plan for the future with confidence. Read more about ICIS supply and demand data >> Read more about our in-depth analysis services >>

3 Agenda Asia ethylene and propylene price trends Jan-May 2014 Factors shaping the outlook for the Asia olefins markets Challenges ahead for cracker operators in Asia

4 Asia olefins price trends from Jan-early May 2014 Highest since Aug 2008 NE Asia C2 at multiyear high in Jan 14 as tight supply offset soft Chinese derivative demand Near 10- mth low C3 down in Q1 14, hurt by ample supply, slowdown in end-user demand in China Source: ICIS

5 Drivers behind Asia Olefins Market Outlook Three main areas: Upstream naphtha costs and impact on C2 margins Supply side factors Demand side factors

6 Short-term NE Asia ethylene margins

7 Short-term SE Asia ethylene margins

8 Drivers behind Asia Olefins Market Outlook Three main areas: Upstream naphtha costs Supply side factors Demand side factors

9 2013 World Ethylene Production NE Asia capacity growth driven by MTO, cracker projects in China; some capacity losses in Japan Source: ICIS Consulting

10 2013 World Propylene Production NE Asia capacity growth to be driven by PDH projects in China Source: ICIS Consulting

11 At least 20 Asian crackers will be shut for maintenance in 2014, mostly in H1

12 2014 Asia propylene plant turnaround schedule Month Company Location C3 unit Capacity Turnaround dates Feb PTTGC Map Ta Phut, Thailand PDH 100,000 9 Feb to week of 24 Mar Taekwang Industrial Ulsan, South Korea PDH 300, Feb to 10 Mar JX Nippon Oil & Energy Marifu, Japan FCC 50, Feb to 1 Apr Mar JX Nippon Oil & Energy Mizushima, Japan FCC (B) 90, Mar to 19 May JX Nippon Oil & Energy Kawasaki, Japan OCU 140, Mar for around 50 days FPCC Mailiao, Taiwan No 1 RFCC 375, Mar to early Jul FPCC Mailiao, Taiwan OCU 250, Mar to end-may Apr GS Caltex Yeosu, South Korea FCC 250,000 Mid-Apr to 10 May May SK Energy Ulsan, South Korea FCC No 1 150, May to mid-jul Supply from Japan, Taiwan and South Korea in Q2 14 likely constrained by several maintenance shutdowns Source: Industry

13 Cracker projects in Asia & Middle East Over 15m tonnes of new cracker capacities coming on stream in Asia & Mideast Source: Industry

14 MTO/MTP projects in China Company Location C2 ( 000 t/yr) C3 ( 000 t/yr) Source: Industry Start up schedule Ningbo Heyuan Chemical Zhenhai, Zhejiang province Feb 2013 Wison (Nanjing) Clean Energy Nanjing, Jiangsu province Sept 2013 Yunlin Energy Chemical Co Yulin, Shaanxi province Q Shenhua Ningxia Coal Industry Ningdong, Ningxia province 500 Jun 2014 Shandong Shenda Chemical Co Tenzhou, Shandong province Q Shandong Yangmei Hengtong Chemical Linyi, Shandong province Sept 2014 Pucheng Clean Energy Chemical Pucheng, Shaanxi province Dec 2014 Zhengda (Changzhou) New Material Changzhou, Jiangsu province End-2014 Qinghai Salt Lake Industry Golmud, Qinghai province Q Ningxia Baofeng Energy Group Co Ningdong, Ningxia province Q Zhejiang Xingxing New Energy Technology Jiaxing, Zhejiang province Q Shanxi Coking (Group) Co Hongdong, Shaanxi province Q Mengda New Energy Chemical Base Development Co Erdos, Inner Mongolia Q Shaanxi Shenmu Chemical Shenmu, Shaanxi province Q XinAo Group Erdos, Inner Mongolia Q Coal-based methanol to be an important alternative feedstock to naphtha; 15 projects to start up during

15 Propylene projects in Asia Company Location Facility Completion schedule (C3 capacity in '000 tonnes/yr) Tianjin Bohai Chemical Industry Group Tianjin, China PDH 600 Ningbo Haiyue New Materials Co Ningbo, Zhejiang province, China PDH 600 (mid-h2) Zhejiang Satellite Energy Co Pinghu, Zhejiang province, China PDH 450 (mid-h2) Shaoxing Sanyuan Petrochemical Shaoxing, Zhejiang province, China PDH 450 (mid-h2) Yantai Wanhua Group Yantai, Shandong province, China PDH Zhangjiagang Yangzijiang Petrochemical Zhangjiagang, Jiangsu province, China PDH 750 (yearend) 600 (yearend) Haiwei Group Hengshui, Hebei province, China PDH 500 Fujian Meide Petrochemical Fuqing, Fujian province, China PDH SK Gas /Advanced Petrochemical Ulsan, South Korea PDH 600 Hyosung Petrochemical Ulsan, South Korea PDH 300 Pertamina Cilcap, Indonesia RFCC 115 Pertamina Balongan, Indonesia ROPP 178 GS Caltex Yeosu, South Korea RFCC 250 Asia s C3 capacity growth to be driven by PDH projects in China; up to 2.85m tonnes/year to start up in 2014 Source: Industry

16 Drivers behind Asia Olefins Market Outlook Three main areas: Upstream naphtha costs Supply side factors Demand side factors

17 2013 World Ethylene Consumption NE Asia made up 26% of global demand totalling m tonnes in 2013, driven by strong downstream expansions in China Source: ICIS Consulting

18 2013 World Propylene Consumption Backed by strong downstream growth in China, NE Asia made up 38% of global demand totalling 85.71m tonnes in 2013 Source: ICIS Consulting

19 China PE/PP capacity to grow at slower pace from ,000 tonnes/yr 2,500 2,000 1,500 1, Source: ICIS Chemease LDPE HDPE LLDPE PE PP Granule

20 Ethylene downstream projects Company Location Product Capacity ( 000 tonnes/yr) Start up schedule Samsung Total Daesan, South Korea EVA/LDPE 240 Feb 2014 USI Corp Kaohsiung, Taiwan EVA/LDPE 2x45 Q FPC Ningbo, Zhejiang province, China EVA 72 (first phase) Q Saudi International Petrochemical Jubail Industrial City, Saudi Arabia EVA/LDPE 200 Apr 2014 SK Global Chemical Ulsan, South Korea MLLDPE/elastomer /plastomer 230 (MLLDPE) May 2014 SK Global Chemical Ulsan, South Korea SM 300 Apr 2014 Abel Chemical Taixing, Jiangsu province, China SM 500 End 2014 Shandong Yuhuang Chemical Heze, Shandong province, China SM 200 End 2014 Shandong Dongming Petrochemical Heze, Shandong province, China SM 100 End 2014 Leasty Chemical Jiangyin, Jiangsu province, China SM Oxiranchem Yangzhou Yangzhou, Jiangsu province, China EO 200 Q4 2014/Q Jiangsu Jurong Chemical Taixing, Jiangsu province, China EO 200 End-2015 Korea Petrochemical Industry Onsan, South Korea EO/EG 200 (EG) Oct 2014 Sanjiang Fine Chemicals Jiaxing, Zhejiang province, China EO/EG 380 Early 2015 PT Asahimas Chemical Cilegon, Baten province, Indonesia PVC 250 End 2015 Ningxia Younglight Energy Chemical Yinchuan, Ningxia province VAM 450 Q Exports from South Korea to fall from 2014 due to new domestic downstream capacity Source: Industry

21 Propylene downstream projects Company Location Product Capacity ( 000 Start up schedule tonnes/yr) Chang Chun Petrochemical Panjin, Liaoning province, China ECH Kingboard Chemical Huizhou, Guangdong province, China Phenol/acetone 75/45 Q Formosa Chemicals & Fibre Corp (FCFC) Ningbo, Zhejiang province, China Phenol/acetone 300/180 Early Q Kumho Yeosu, South China Phenol/acetone 300/180 H PTT Phenol Map Tap Phut, Thailand Phenol/acetone 250/155 Q Wanzhou Petrochemical Nantong, Jiangsu province, China AA 160 Q (phase 1) BASF-YPC Nanjing, Jiangsu province, China AA 160 Q Zhejiang Satellite Pinghu, Zhejiang province AA 320 H (phase 1 started up in Q1) Jiangsu Sanmu Taixing, Jiangsu province, China AA 160 Mid-H Formosa Plastics Corp (FPC) Ningbo, Zhejiang province, China AA 160 Q Jiangsu Jurong Chemical Taixing, Jiangsu province, China AA 160 Q4 2014/Q12015 Shanghai Huayi Shanghai, China AA 320 Partial start up in 2015 Yantai Wanhua Yantai, Shandong province, China AA 300 Q Nippon Shokubai Himeiji, Japan AA 80 H Showa Denko/Toa Gosei Oita, Japan AA 80 Q Jishen Chemical Jilin, Jinlin province, China PO 300 One of three lines started up in Q Shandong Sanyue Chemical Binzhou, Shandong province PO 80 Q Yantai Wanhua Yantai, Shandong province, China PO 240 End 2014/early 2015 Nanjing Jinling Huntsman New Materials Nanjing, Jiangsu province, China PO Luxi Petrochemical Liaocheng, Shandong province, China 2-EH China s C3 downstream markets to see continued strong expansion, particularly in acrylic acid (AA) and phenol sectors Source: Industry

22 Asia cracker operators face challenging 2014 Heavy turnaround season in Asia and a structurally tighter balance in South Korea could continue to lend support to olefins markets In the longer term, new olefin capacities balanced somewhat by demand from China, South Korea Downstream markets in China face uncertainty amid a weak economic climate More olefins and downstream projects may face delays Volatility in upstream naphtha and crude markets as well as the global economic outlook to weigh on olefins and derivatives

23 Agenda Benzene 2013-Q market review Key price driver change in Asia s supply-demand balance in Shift of trade flow for South Korean and Japanese origins heading to either the US or China Toluene 2013-Q market review Price drivers TDP margin, paraxylene (PX) price correlation, China s supply-demand balance in Market outlook price trend, trade flow changes

24 BENZENE (BZ) Net exporters: South Korea, Japan, Thailand, India, Iran Net importers: China, Taiwan, Singapore, Indonesia, GCC *Figures for the year of 2013 Import (Japan, South Korean origins): 640kt US Import (South Korean origin): 102kt EU ME Import: 54kt Export: 1.395m t Import: 885kt Export: 31kt China South Korea Japan Import: 121kt Export: 767kt India Thailand Taiwan Import: 709kt Import: 464kt Export: 68kt Singapore Source: customs, KITA, IE Singapore

25 USD/tonne Asia s BZ hit a 45-week high in mid-jan and plunged to a four-month low in mid-mar Historical peak in end week high Brief recovery week low Four-month low Europe - CIF ARA US - FOB USG Asia - FOB Korea Source: ICIS

26 Nameplate capacity (m tonnes/year) Asia s BZ capacity above 31m tonnes in 2014; China, South Korea, Japan at 75% of total Indonesia Malaysia Annual growth rate (%) India Singapore Thailand Taiwan S Korea Japan China Growth (%) (E) 2015 (E) 2016 (E) 2 0 *exclude China s coal-based BZ capacities in : 4.5-5m t/a : 5.5-6m t/a Source: market

27 Asia & Mideast new BZ capacities at 2.805m tonnes in 2014 Company Location Benzene (kt/year) Scheduled date Sinopec Hainan Yangpu, China 150 Qingdao Lidong Qingdao, China 30 (expansion) End-Jan 2014 PetroChina Sichuan, China Mar 2014 Saudi Aramco Total Refining and Petrochemical (Satorp) Trial run on 9 Dec 2013, 27 Dec 2013 on-spec, 2 Jan 80-90% Al Jubail, KSA 140 Mid-Mar 2014 (first cargo) Sinochem Quanzhou, China 150 End Apr 2014 ONGC Mangalore Petrochemical Ltd (OMPL) Mangalore, India 270 End Jun or Jul 2014 (first cargo) Ulsan Aromatics Ulsan, South Korea st week June 2014 (first cargo) Jurong Aromatics Corp (JAC) Jurong Island, Singapore 400 H2 July 2014 (first cargo) Samsung Total Daesan, South Korea st week Jul 2014 (first cargo) SKGC Incheon, South Korea st week Jul 2014 (first cargo) Zhongjin Ningbo, China Reliance Industries Ltd (RIL) Jamnagar, India 500 H Petro Rabigh II Rabigh, KSA 170 End H Saudi Aramco Ras Tanura, KSA GS/Shell/Taiyo Yeosu, South Korea Saudi Aramco Jazan, KSA Source: Industry sources

28 Nameplate capacity (m tonnes/year) Half of Asia s BZ used in SM, followed by phenol; Downstream average operating rates to slip 13% 12% 6% 5% 4% 11% 2013 at 30.9m 10% tonnes 55% 15% 17% 3% 2016 at 36.75m tonnes 49% (E) 2015 (E) 2016 (E) <downstream operating rates> (%) Source: market

29 (m (m tonnes/year) Asia s BZ production to outstrip demand, despite estimated exports at 1.4m-1.5m t/year in BZ demand from vast downstream capacity additions in is estimated to be reduced by lower average run rates of % < s level at %. High BZ run rates at % is estimated for > s level of 84-86%. Supply will outstrip demand in , despite an estimated Asia s overall exports staying at 1.4m-1.5 m tonnes/year. In , Asia BZ is balanced by exports at 1m-1.2 m tonnes/year. 90 excess production 25 exports (E) 2015 (E) 2016 (E) Production Production Demand (from (from 6 downstreams) 6 <BZ <BZ run run rates> <operating rates> (%) *inclusive of China s coal-based BZ production in : m t/a : 2m t/a *run rates at around 50% Source: market

30 USD/tonne Asia s BZ-naphtha spread to hover at around $300/tonne for H Ave~ $186/t Ave~ $160/t Ave~ $257/t Ave~ $371/t Breakeven level Price difference (USD/tonne) 0 0 BZ- Naphtha spread BZ FOB Korea Naphtha CFR Japan Source: ICIS

31 tonnes/month S Korea, Japan s BZ exports to the US resume in 2014; volumes peaked in Mar ~ 761kt/a, 63.4kt/mth ~ 636kt/a, 53.0kt/mth Breakeven level USD/tonne FOB Korea-US Gulf price gap South Korea Japan Source: customs, ICIS

32 Jan/12 Mar/12 May/12 Jul/12 Sep/12 Nov/12 Jan/13 Mar/13 May/13 Jul/13 Sep/13 Nov/13 Jan/14 Mar/14 tonnes/month China BZ imports sharply declined into 2014 on lower-priced domestic lots ~438kt/a, 36.5kt/mth ~885kt/a, 73.8kt/mth Others (Philippines, Indonesia, Turkey) Middle East India Singapore USD/tonne Thailand Malaysia Taiwan Japan South Korea FOB Korea Equivalent import parity from east China ex-tank Source: China customs

33 TOLUENE (TOL) Net exporters: South Korea, Japan, Singapore, Thailand, Taiwan Net importers: China,, India, Indonesia, Vietnam, GCC *Figures for the year of 2013 Import (Japan, South Korean origins: 126kt US US Africa EU ME Import (Kandla port): 174kt India Import: 21kt Export: 327kt Import: 812kt Export: 0.8kt China Thailand Singapore Import: 105kt Export: 1.063m t South Korea Source: customs, KITA, IE Singapore, industry sources Taiwan Japan Import: 69kt Export: 327kt Import: 24kt Export: 325kt

34 USD/tonne Asia s TOL tracks downstream PX closely in 2014; TDP run rates cut from Mar 2014 on eroded margins CF = 0.83 CF = 0.91 CF = 0.86 CF = CF = Breakeven level Historical peak in end 2012 Six-month high Nine-month high TDP spread (USD/tonne) TDP spread (average of PX-TOL and BZ-TOL) TOL FOB Korea PX CFR China Source: ICIS *CF = correlation factor

35 kilotonnes China stays as a net TOL importer and feeds primarily to TDP, followed by solvent, gasoline blending 8,000 7, TDP/STDP/HDA Petrochemical products 6,000 5, Others (solvent, gasoline blending etc) 4,000 3,000 2, % 46% % 45% 1, (E) Production Demand Self-sufficiency (%) 13% 12% China s downstream distribution 2013 Source: ICIS

36 Jan/12 Mar/12 May/12 Jul/12 Sep/12 Nov/12 Jan/13 Mar/13 May/13 Jul/13 Sep/13 Nov/13 Jan/14 Mar/14 tonnes/month China imports increased in early 2014 on slipping inventories; forward imports will subject to demand ~660kt/a, 55kt/mth ~812kt/a, 68kt/mth 1600 Europe US Malaysia USD/tonne Philippines Singapore Thailand Taiwan Japan South Korea 0 0 Equivalent import parity from east China ex-tank FOB Korea Source: China customs

37 Inventories (kilotonnes) China s TL inventories rose above 150kt post-lunar New Year, but declined beginning Apr 250 Ave~ 181kt Ave~ 98.15kt Ave~ 73kt Ave~ 138kt Healthy consumption Typical stock level USD/tonne south China east China Source: ICIS

38 PX capacity expansion to accelerate in Asia, adding 4.02m tonnes in Q2-Q *tonnes/year Source: Industry sources

39 Asia s TOL to track weak PX on vast expansions in 2014; BZ maybe supported despite capacity additions - May lower TDP run rates or shut TDP units on squeezed PX margins BZ prices - Low Chinese domestic BZ stock levels - BZ downstream post-turnaround schedule for phenol and SM to end in H2 May-Jun - Asia-US BZ arbitrage remains open - Opportunistic Asia-EU BZ arbitrage opens - Lower-than expected BZ downstream demand - Absence of Chinese BZ import window m t of new BZ capacities in Jun-Jul - High run rates of existing aromatics units - Overall light Asian aromatics shutdown schedule - Tighter regulation to issue credit terms in China, gloomy macroeconomics - Competitively-priced alternative blending components - Less US BZ import demand on recent hefty Asian, European arrivals - Overall TDP run rates high, despite PX cuts m t of new PX capacities in Jun-Jul TOL prices - Asia summer blending season approaches by end Q2 BZ factors BZ/TOL factors TOL factors

40 Conclusion Operating rates of BZ units to stay high, while downstream maybe supressed A change in trade flow of Asian BZ exports to ship to China, instead of the US Limited BZ price upside in H Less spot TOL sales volume from South Korea Poor solvent and gasoline blending in H TOL FOB Korea prices may stay high amid low CFR Asia levels

41 ICIS has the expertise to support you from the latest news and trading prices to long-term forecasts Pricing information Reliable chemical price assessments and analyses, including price history, enabling you to understand price drivers and to settle your contract prices more confidently. Real-time news service Breaking news and analyses across the global petrochemical markets. Be the first to find out about market-moving news, including production updates, plant capacities, output and shutdowns. Request your free sample price report today >> Request your free trial today >> Supply and demand data Access data on petrochemical supply and demand, imports and exports, as well as production capacity over a 6-11 year time span. Online interface is customisable, enabling you to create a view of trade patterns according to your needs. In-depth market analysis Our expert insight delivers the information and data you need to understand short, mid- and long-term trends (up until 2025) as well as informed commentary and analysis on the market outlook all of which enables you to plan for the future with confidence. Read more about ICIS supply and demand data >> Read more about our in-depth analysis services >>