Chemical Feedstocks: Heavy Squeeze, All Light Long JIWON CHUNG DIRECTOR, ASIA BUSINESS DEVELOPMENT & CONTENT JCHUNG@OPISNET.COM
BRENT SEP 2014-OCT 2016 $/barrel 125 100 75 50 25 0 September 2014 February 2015 July 2015 December 2015 May 2016 October 2016
DAILY NAPHTHA CFR & CRACK PRICES SEP 2014-OCT 2016 160 C+F JAPAN CRACK 1,000 120 750 80 500 40 250 0 0
DAILY CFR NAPHTHA DIFF. SEP 2014-OCT 2016 16.00 8.00 0.00-8.00-16.00-24.00
CARGO FLOW SUGGEST WEAK ASIA UNIT: 1,000 MT Vessels Charterer Vol. Load Port Arrival Port SKS DEE GLENCORE 55 7 Aug 2016 YANBU 27 Aug 2016 ANTWERP NEW CHALLENGE BP 55 27 Aug 2016 RABIGH 10 Sep 2016 ROTTERDAM ARDMORE SEAMARINER TOTAL 35 24 Sep 2016 PARADIP 26 Oct 2016 ANTWERP SITEAM EXPLORER GLENCORE 35 15 Sep 2016 PARADIP 10 Oct 2016 ROTTERDAM BW SHINANO TOTAL 55 26 Sep 2016 RABIGH 14 Oct 2016 ANTWERP NAVIG8 EXCEL BP 55 18 Sep 2016 RABIGH 5 Oct 2016 ROTTERDAM ADVANCE VICTORIA BASF 55 20 Oct 2016 RABIGH Nov 2016 ANTWERP
NAPHTHA SUPPLY SEP 2014-OCT 2016 7,000 MIDDLE EAST INDIA ARBITRAGE UNIT: MT 5,250 3,500 1,750 0 September 2014 February 2015 July 2015 December 2015 May 2016 October 2016
NAPHTHA IMPORT SEP 2014-AUG 2016 KOREA JAPAN TAIWAN CHINA SINGAPORE UNIT: MT 7,000,000 5,250,000 3,500,000 1,750,000 0 September 2014 February 2015 July 2015 December 2015 May 2016
JKT NAP IMPORT SEP 2014-AUG 2016 6,000,000 KOREA JAPAN TAIWAN UNIT: MT 4,500,000 3,000,000 1,500,000 0 September 2014 February 2015 July 2015 December 2015 May 2016
105% 98% 90% 83% 75% JKT OP RATE SEP 2014-AUG 2016
CHINA NAP IMPORT SEP 2014-SEP 2016 1,250,000 UNIT: MT 1,000,000 750,000 500,000 250,000 0 September 2014 February 2015 July 2015 December 2015 May 2016
JKT LPG CRACKING SEP 2014-NOV 2016 500 KOREA JAPAN TAIWAN UNIT: 1,000 MT 375 250 125 0 September 2014 February 2015 July 2015 December 2015 May 2016 October 2016
NE ASIA LPG IMPORT SEP 2014-SEP 2016 4,000 JAPAN CHINA KOREA TAIWAN UNIT: 1,000 MT 3,000 2,000 1,000 0 September 2014 February 2015 July 2015 December 2015 May 2016
CHINESE PDH UNIT: 1,000 MT Company Location Propylene Capacity Propane Demand Wanhua Yantai 750 900 Oriental Energy Zhangjiagang 600 720 Haiyue Ningbo 600 720 Bohai Chemicals Tianjin 600 720 Sanyuan Shaoxing 450 540 Satellite Jiaxing 450 540 Haiwei Hengshui 500 600 China Soft Packaging Fuqing 660 792 Oriental Energy Ningbo 660 792
US LPG EXPORT SEP 2014-AUG 2016 3,000 UNIT: 1,000 MT 2,250 1,500 750 0 September 2014 February 2015 July 2015 December 2015 May 2016
NAPHTHA SUPPLY HIGHLIGHTS Indian refiners crude runs hitting record-high in 2016 and its monthly average naphtha exports up (2016: 660kt, 2015: 560kt) Regional refiners also hike naphtha output > Reduce imports demand Korean splitters running reduce local naphtha imports demand) Korea monthly NAP exports rose in 2015 and steady in 2016 (2016 Jan-Jul: 423kt, 2015: 431kt, 2014: 318kt) Hyundai Chemical has started up 130,000-b/d splitter > Lotte Daesan naphtha demand will go down by 60kt/month Qatar No.2 146,000-b/d splitter has become on-stream in Oct 2016 > Additional naphtha supply of 200-250kt/month > Qatar naphtha exports to reduce at the end of 2017 or 2018 with BTX & gasoline plants coming online Russian refinery upgrade > Fuel Oil exports reduced and naphtha exports up > Russian naphtha exports surge > Part of it going to splitters and more light naphtha produced
NAPHTHA DEMAND HIGHLIGHTS Petchem demand continues to be good > Cracker running at high rates, but more LPG going into petchem pool on cheaper prices JKT LPG cracking (As of Oct 2016: 2.4 mil mt, 2015: 1.7 mil mt, 2014: 2.0 mil mt) Korea monthly naphtha imports (H1 2016: 1.79 mil mt, 2015:1.92 mil mt, 2014: 1.96 mil mt) Japan monthly naphtha imports (H1 2016: 1.37 mil mt, 2015: 1.63 mil mt, 2014: 1.47 mil mt) Taiwan monthly naphtha imports (Steady at 1.0-1.1 mil mt for 2014-2016) China monthly naphtha imports Up (H1 2016 : 674kt, 2015: 553kt, 2014: 308kt) Part of naphtha imported into China re-exported as gasoline > China gasoline exports skyrocket in 2016 Gasoline demand badly hit by reduced imports demand from Indonesia due to higher domestic production
NAPHTHA OUTLOOK Saudi, Kuwait, UAE T/A in Nov-Dec 2016 Less LPG in petchem pool in winter Refiners changing crude oil slate to boost middle distillates Reliance to start up a new PX plant (1.1 mil mt/year) in Nov > another 1.1 mil mt/year will start up in Feb, 2017) > New HVN demand of 300-400kt/month to widen HVN-LVN spread Sadara started dual-feed cracker (ethane, naphtha) in Jubail in Aug > Naphtha demand in Saudi can go higher by up to 2.2 MM mt/year) OPAL cracker (1.1 mil mt/year, Dahej) likely to start up in Nov-Dec, 2016 > to be fed with ONGC Hazira NAP New splitters starting up (Hyundai Chem, Tasweeq, CPC) will create additional supply Iranian South Pars Condensate temporarily replaces DFC demand, but Iran s condensate demand is also set to increase with splitters set to come in, starting from late 2016 or early 2017
LPG OUTLOOK Korean crackers had increased their usage of LPG this year with new LPG storage tank added this year, and they have the option to crack LPG throughout the year, even in winter. Hanwha Total, Lotte Chemicals & YNCC all have term LPG deals. SK PDH plant and the Hyosung PDH plant will continue to consume propane. The increase in Korean petchem imports growing compared to last year, which offsets the falling consumption from residential and transport. However, Saudi Nov CP was set at $390/mt for propane $440/mt for butane, the highest this year, which trimmed the margins for LPG cracking. LPG cracking demand had dwindled particularly for butane due to the unfavourable economics. Depending on how low naphtha prices will fall over winter, LPG cracking should be minimal, most if not all term.
LPG OUTLOOK - CONTINUED Taiwan - FPCC will have term of between 80-100 kt of LPG each month and spot demand will likely be ~22-44 kt per month after its No. 2 cracker restart in October. It bought two 22kt propane lot for November on spot basis. December LPG cracking looked minimal Nap-LPG spread lower than $40/mt. China has grown to the largest LPG importer as the PDH projects brought imports up by several notch, but high US prices hurt many importers. There had been lawsuits due to non-performance already and some PDH operators had already liquidated their PDH assets due to bad propane-propylene margins Yet Chinese imports will still grow this year optimistically to 15 million mt, meaning Chinese market would be driven by spot demand as they have been delaying/defaulting on their term cargoes. Winter spot demand will still be driven Chinese imports with Korean and Japanese importers holding on to high stocks.
THANK YOU! JIWON CHUNG DIRECTOR, ASIA BUSINESS DEVELOPMENT & CONTENT JCHUNG@OPISNET.COM