Mr. Steve Jenkins Head Global PX and Derivatives PCI X&P Malaysia Recognized as a leading global authority in the commercial analysis of the paraxylene and derivatives industry sector, Mr. Steve Jenkins, has broad experience in the petrochemical industry gained during the past 28 years in a range of functional and product management roles within ICI and the specialist polyester and intermediates consultancy PCI. He has managed many assignments for clients in the petrochemical sector and works closely with producing and consuming companies in the fields of paraxylene and PTA, providing strategic, commercial and technical analysis and recommendations. A graduate from Oriel College Oxford, he has conducted several major industry-wide studies analyzing the commercial development of paraxylene and feedstock markets and their impact on future corporate operating strategies.
Paraxylene Is the Tail Wagging the Dog? IOC Petrochemical Conclave Steve Jenkins PCI Xylenes & Polyesters Asia Sdn Bhd March 18th, 213
About PCI Xylenes & Polyesters Formed in 1988, PCI Xylenes & Polyesters provides integrated consultancy services in the polyester and upstream raw material sector Team of 1 industry consultants, each with over 2 years industry experience in refining / aromatics / PTA / polyester EO and glycols Expertise in all aspects of the refinery/cracker polyester business (commercial/strategic/technical/investment) Located in Guildford, UK and Kuala Lumpur, Malaysia with representatives in India, Pakistan, Taiwan, Korea, China, USA and Brazil
Agenda Paraxylene Supply - Demand Review Paraxylene Trade Development Evolution of Aromatics Feedstocks Sources Polyester Chain and Refinery Challenges
Million Tonnes World Paraxylene Supply-Demand 211-217 Asset Utilisation 6 5 9% 88% Expect 213 to remain tight until new capacity coming on line is fully established. 4 3 2 1-211 212 213 214 215 216 217 North America Europe Asia/Far East South America Middle East/Africa Utilisation (RHS) 86% 84% 82% 8% 78% 214-217 forecast growth at trend level of 6 to 7% (approx 2.5 million tonnes per annum). Capacity additions in excess of demand growth from 214 onwards. Supply based on several varying sources of feed
Tonnes Asia Paraxylene Supply-Demand 211-217 Asset Utilisation 45 1% 4 35 95% 3 25 9% 2 85% 15 1 8% 5 75% -5-1 7% 211 213 215 217 Production Capacity Consumption Net Trade Utilisation (RHS) Asian system running hard until the end of 213 when more capacity fully on line. Most PX projects are major investments ($1bn+) usually associated with new or re-vamped refineries - inevitably taking longer than expected to completion The region will gradually import increasing quantities from the Middle East. Constraints on feedstocks supply currently encouraging JV s with existing mixed xylenes suppliers thus avoiding heavy investment in reforming.
Tonnes China Paraxylene Supply-Demand 211-217 25 1% 2 95% 15 1 9% 5 85% 8% -5-1 75% -15 7% 211 213 215 217 Production Capacity Consumption Net Trade Utilisation (RHS) Chinese paraxylene consumption continues to vastly outpace the ability to produce. Trade gap will grow to over 7 million tonnes in 213. Three major projects scheduled in 213 either linked to major refining project completions, have other significant feedstock supply challenges or are deploying new Chinese technology Trade gap filled by suppliers in South Korea and the Middle East. It remains challenging for Chinese private investors to fill the gap between the state run refining industry and a dynamic polyester chain.
Tonnes Middle East Paraxylene Supply-Demand 211-217 Asset Utilisation 9 8 1% 95% SATORP JV in 213 first new paraxylene unit in the region for 4 years - also slightly delayed into Q3 7 6 5 4 3 2 9% 85% 8% 75% 7% Four major investments scheduled from 216/17 by Saudi Arabia and Qatar adding almost 4 million tonnes of paraxylene capacity. Limited in-region demand growth with only one PTA project forecast to be completed by 217. 1 211 213 215 217 65% 6% Strategy of new paraxylene units aimed at the Asian deficit but capable also of servicing Europe and South America. Production Capacity Consumption Net Trade Utilisation (RHS)
Tonnes North America Paraxylene Supply-Demand 211-217 Asset Utilisation 6 5 4 3 2 1 1% 95% 9% 85% 8% North America assumed not to add any additional capacity through this period although BP is expected to restart Decatur. Trade flow from South America reverses from 213 with the start up of the PQS PTA plant. NA also assumed to export to Asia as and when economics will support. 75% -1 211 213 215 217 7% Production Capacity Consumption Net Trade Utilisation (RHS)
Tonnes EU27 Paraxylene Supply-Demand 211-217 Asset Utilisation 3 25 2 15 1 5-5 1% 95% 9% 85% 8% 75% Modest consumption growth in 213 but critically dependant on PTA exports. Net trade peaks at around.4 million tonnes by 214 with assets running relatively hard through the period. The region remains long on aromatics feedstocks providing an incentive to divert from a long gasoline market to a short paraxylene market. -1 211 213 215 217 7% Production Capacity Consumption Net Trade Utilisation (RHS)
Regional Paraxylene Net Trade 212-216 EU27 1 5-5 North America 1 5-5 -1 Middle East -3-6 -9-12 China -1 1 5-5 South America 8 6 4 2 8 6 4 2 Other Asia -1 212 213 214 215 216
OX Column Xylene Column Deheptanizer Reformate Splitter Benzene Column Toluene Column Aromatics Complex Hydrogen LPG C5 minus Raffinate Benzene Toluene Aromatics Extraction C7 & C9 Conversion Naphtha CCR Paraxylene Recovery Metaxylene Recovery Paraxylene Metaxylene Imported Mixed Xylenes Xylenes Isomerisation Orthoxylene Gasoline Blending Heavy Aromatics
Tonnes Cumulative Paraxylene Feedstock Trends 6 5 4 3 2 1 199 1993 1996 1999 22 25 28 211 214 Mixed Xylenes Existing Reformer Toluene Disproportionation Heavy Naphtha New Reformer C7/C9 Aromatics Transalkylation Condensate New Reformer Other
Polyester Fibre Mill Consumption Growth to 22
Ktes World Polyester Production Long-term Forecast (excludes Recycle) 18, 16, Long-term global growth trends towards approx 1.3x GDP 9% 8% 14, 7% 12, 1, 8, 6, 4, 2, 6% 5% 4% 3% 2% 1% 213 217 221 225 229 % Staple Filament PET Film Polyester Growth Rate (AAGR)
Polyester Polymer Production by Region 2-23 Asia continues to capture market share of global production 2 2% 23 18% 2% 5% 6% 4% 65% 12% 3% 83% North America Europe Asia/Far East South America Middle East/Africa
Tonnes Global Paraxylene Capacity & Consumption 212-23 - The Market Gap 1, 9, 8, Gap analysis indicates >3m tes new PX capacity needed in next 15 years (5% of current global capacity!) 7, 6, 5, 4, 3, 2, 1, 212 214 216 218 22 222 224 226 228 23 PX Capacity Speculative Capacity PX Consumption
New PX Capacity Development 212-23 C8 s now have to be created. Existing MX pools have dried up. Capex therefore much higher for new investment
Top 2 PX Producer Groups 212 ( Tonnes) Currently a relatively even spread of production
Top 2 PX Producer Groups 22 ( Tonnes) 9, 8, 7, 6, Chinese, Middle East and NE Asian producers exploiting growth by 22 5, 4, 3, 2, 1,
Paraxylene Conclusions Polyester chain set to deliver strong long-term growth Long-term issues regarding availability of feedstocks for the polyester chain in N Asia Opportunities exist to upgrade heavy naphtha and condensates to aromatics in South Asia The emergence of US shale oil & gas not as positive for the US Aromatics industry due to the impact on naphtha composition and reforming economics JV s currently being established between Japanese mixed xylenes aligning with new paraxylene capacity in South Korea, avoiding large capex and timing delays to plug short-term gap Most new projects will need significant access to feedstock (FRN/HVN/condensates) Investment options come with wide range of capex and risk
Steve Jenkins PCI Xylenes & Polyesters Asia Sdn Bhd sjenkins@thepcigroup.com