PTA - Retrospection & Way Ahead

Transcription

1 Growing together beyond Chemistry PTA - Retrospection & Way Ahead Presented By Mr. Amitava Banerjee General Manager Marketing & Raw Materials 5 th Aug, 2014

2 Contents PTA Capacity (World / Asia / China). Demand Supply Balance of PTA (World / Asia / China). Historic Price Trend (Asia). PTA Demand Supply Scenario in India. Sector Wise Growth of Polyester in India. Barriers to Growth in India PTA Outlook

3 PTA CAPACITY

4 World PTA Capacity 2011 N.America 2014 N.America 11% 8% 2% S.America 7% 1% 6% 2% S.America EU EU 79% Middle East/Africa Asia/Far East 84% Middle East/Africa Asia/Far East 7% 2017 N.America 1% 6% 3% S.America EU Asia dominates the PTA market. 83% Middle East/Africa Asia/Far East

5 Asia PTA Capacity 13% 16% 4% 2% 7% 2% 1% 10% 2011 China 45% India Pakistan Japan Korea Taiwan Indonesia Malaysia Thailand 2% 1% 11% 6% 3%1% 4% 9% 2014 China India Pakistan Japan Korea 63% Taiwan Indonesia Malaysia Thailand 1% 1% 9% 10% 9% 2017 China 3% 1%4% India 63% Pakistan Japan Korea Taiwan China s share in Asia continues to grow. Indonesia Malaysia Thailand

6 China PTA Capacity 2011 BP Zhuhai 4% 2014 BP Zhuhai 32% 8% 9% 22% Hengli Xianglu Yisheng 9% 25% 13% 15% Hengli Xianglu Yisheng 19% 11% Yuandong 8% 26% Yuandong Sinopec Sinopec Others Others 9% 7% 20% 2017 BP Zhuhai 7% Hengli 14% Xianglu 13% Yisheng 3 Major PTA makers share more than 60% of China PTA capacity. 31% Yuandong Sinopec Others

7 PTA Capacity Expansion Plan in Asia

8 DEMAND SUPPLY BALANCE OF PTA

9 World Supply Demand Balance MMT 100 PTA Capacity PTA Demand PTA O/R 110% % 90% 92% 96% 90% 85% 100% 90% % 74% 73% 73% 74% 80% 70% 60% Huge capacity expansion from 2013 increased the Supply-demand gap thereby reducing PTA operation rates significantly 50%

10 Asia Supply Demand Balance MMT 80 PTA Capacity PTA Demand PTA O/R 110% % 60 93% 92% 50 88% 85% 85% 86% 90% % 70% 68% 68% 71% 80% 70% % Asian PTA oversupply followed the same trend 50%

11 China Supply Demand Balance MMT 50 PTA Capacity PTA Demand PTA O/R 110% % 94% 94% 100% 35 87% 87% 88% 90% % 80% % 68% 66% 71% 70% 10 60% Huge capacity additions in China reducing overall operation. 50%

12 PTA Trade Balance Country Wise KT/Y Oversupply situation peaks in onwards trade deficit reduces. China Korea Taiwan Thailand India

13 HISTORIC PRICE TREND

14 Jan Aug Feb Oct PX/MX Price Trend ($/T) 2,000 1,800 1,600 1,400 1,200 1, PX-MX PX CFRT MX FOBK Average Spread ($/T) 1, Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul PX/MX spread is getting squeezed due to PX overcapacity.

15 Jan Aug Feb Oct PX/Naphtha Price Trend ($/T) 2,000 1,800 1,600 1,400 1,200 1, PX-MOPJ PX CFRT MOPJ Average Spread Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul ($/T) 1, From 2014 onwards PX / Naphtha spread reduces because of new PX capacities.

16 JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL SEP NOV JAN MAR MAY JUL SEP NOV JAN MAR MAY JULY SEP NOV Jan Mar May PTA & PX Price Trend In China $/MT Spread China PTA PX China Avg Spread (Yearly) Avg. PTA 818$/T PX 912 $/T SPREAD 207$/T 2010 Avg. PTA 946$/T PX 1,037 $/T SPREAD 262$/T 2011 Avg PTA 1,277$/T PX 1,541$/T SPREAD 245$/T 2012 Avg PTA 1,001$/T PX 1,510$/T SPREAD 90$/T 2013 Avg PTA 1,074$/T PX 1,490 $/T SPREAD 75$/T Whereas PX enjoyed hefty margins, PTA suffered.

17 PTA Supply & Demand Scenario - India

18 (MMT/Y) 8 PTA Supply Demand Balance in India Growth Rate 13.5%/Y JBF MCPI IOC RIL Domestic Demand as PTA 7 Capacity in SEZ unit India Economy Slowdown (High inflation, High interest, Low GDP growth) Lehman Shock '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17

19 MCC PTA Production History KT MCPI has been a partner to the growth of Polyester industry in India. Currently the biggest PTA merchant seller in India (Est)

20 MMT 8.0 India PTA Production Matrix PTA Capacity PTA Demand PTA O/R 110% % 98% 97% 99% 100% % 89% 85% 82% 85% 90% 93% 90% % % % %

21 India Immense Potential for Growth

22 GDP Vs Polyester Growth - India 13.5% Polyester Growth Estimated from Strong Co-relation with GDP Actual Polyester Growth 10% in General Election Year General Election Year General Election Year 2014 GDP Growth Estimate 5.4% GDP growth (%) Polyester growth Source : IMF

23 Polyester Demand - India India has witnessed a steady polyester growth in the last decade. PET is witnessing the fastest growth. Yarn & Film are also growing at a reasonable pace, while PSF is flat.

24 Per Capita Fibre Consumption (kg) KG/Capita World Average: Huge potential for growth

25 India offers immense growth potential Per Capita PET Consumption (kg) KG/Capita World Avg:

26 Barriers to Growth - Disproportionate duty structure - hindrance to growth. - Disproportionate duty structure for Virgin and Re-cycled Staple Fibre. - India s power cost is 30-75% higher compared to other countries. Need to select cheap source of fuel. Coal based power & Hot Oil heating system introduced by most of the polyester makers. - Stringent labour law & lack of skilled manpower. - Unorganized downstream. Less number of integrated players having the entire chain up to dying and processing.

27 Retrospection - Asia Huge capacity addition in China led to PTA oversupply situation. However PX expansions could not catch up with PTA. Polyester growth also could not catch up with the huge PTA capacity. PTA faced historically low spread from November Operation cuts of many PTA plants started from Taiwan has been the biggest sufferer till now.

28 Future Ahead - Asia Tight PX situation to ease in 2H 2014 after planned PX start ups in Asia leading to long PX situation. PTA manufacturers suffering for last two years because of poor PX-PTA spread expect recovery of spread to better levels. All countries in Asia already introduced PX link price for PTA. India need to follow soon. PTA is one of those few commodities in the world which is growing at 5~6%.

29 Ray of Hope India holds huge potential for Polyester Growth. Polyester to grow in line with positive GDP. Recent investment in Yarn & Fibre to get absorbed in near future, although PET will be in excess. New investments expected in polyester in near future. Introduction of GST should make tax laws simpler. PTA producers shall continue to operate & maintain healthy operation in view of robust domestic demand.

30 THANK YOU