analyst briefing presentation fy11 ... - ptt global...

INVESTORS PRESENTATION Thailand Conference 2013 Hosted by JP Morgan Sukhothai Hotel Bangkok Jan 29, 2013

Disclaimer

This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand.

PTTGC has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements.

Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and PTTGC does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.

2

Agenda

Business Profile Strategy and Growth Target Market Outlook Financial Status Appendices

3

4

PTTGC at a GlanceA Chemical Flagship of PTT Group

Incorporated on October 19, 2011 from the

amalgamation of PTTAR and PTTCH

Foreign Limit <= 37%

Dividend Policy >=30%

F i Li it 37%

Registered capital 45,129 million baht

Paid-up capital 45,088 million baht as of Oct 2012

Strategic location of each plant in Map Ta Phut Industrial Complex creates proximity to suppliers and customers

5

Organization Chart and Business Units

6

Flexible Feedstock and Highly Competitive Cost Structure

7

Flexible Feedstock and By-Product Enhancement

PTTGC's refinery business is able to process a variety of crude oil at a competitive cost due to high complexity Availability of feedstock along the whole carbon chain enhances the value of PTTGC by offering increased flexibility for better optimization, resulting in further cost advantages – Olefins can be produced from naphtha or ethane directly

from the Gulf of Thailand – Aromatics can be produced from condensate or reformate

from the Refinery Value enhancement from by-product exchange among Olefins, Aromatics and Refinery units for upgrading at the other unit highlights operational integration and efficiency, for instance – Refinery unit can use condensate residue and hydrogen

from Aromatics unit – Aromatics unit can use pygas from Olefins unit – Olefins unit can use offgas and C3, C4 from Refinery and

Aromatics units, respectively

Feedstock Supply Product Marketing

Refinery

Aromatics

Olefins / Polymers

Others

Condensate

Crude Oil

Others

Ethane, Propane, LPG

C5-C9

C10-C25

C2-C4

Olefins

100% Polymers (1)

47% (2)

53% (2)

Feedstock Supply Commercial Agreements Product Marketing Commercial Agreements

Customers

Others

71% (2)

29% (2)

103

318

799 824 830 883

951 967 1,006

-

200

400

600

800

1,000

1,200

MDEEthane

NAMEthane

NEA LPG NAMNaphtha

MDE LPG MDENaphtha

NEANaphtha

SEANaphtha

WEPNaphtha

Global Ethylene Cash Cost by Region

USD/Ton

2012E (4)

1. PTT owns 50%, PTTGC and IRPC each owns 25% in PTTPM. 2. Six month period ended 30 June 2012.

MDh h

NN

DE(5)

Source: IHS (formerly CMAI) as of July 2012. Note: MDE = Middle East, NAM = North America, NEA = Northeast Asia, SEA = Southeast Asia, WEP = Western Europe.

3. PTTGC ethylene cash cost is based on Company estimate and ethane cracker only. 2012E PTTGC cash cost takes into account the effect of the renewal of gas price agreement. 4. MDE cash costs are average values of Iran and Saudi Arabia.

MDDE LPG(5)

D NEth

DE N(5)

Natural Gas

Crude Palm Oil

Crude

Condensate

Cracker

Aromatics Plants

Refinery

Ethylene

HDPE

LLDPE

LDPE

MEG

Propylene

Oleochemicals

Paraxylene

Benzene

PTAPET Fiber/Resin

EO

Ethanolamine

Ethoxylate

Cyclohexane

CumenePhenol

Acetone

EB/SM

PS

BPA

Methyl Ester(B-100)

PC

Caprolactam Nylon 6

Fatty Alcohol

MMA PMMA

Epoxy Resins

ABS

SBR

PP

PTT Phenol

Petroleum Products- LPG- Reformate- Light Naptha- Jet Fuel- Diesel- Fuel Oil

Reformate, Heavy

Naphtha

Pygas

Condensate Residue,

Hydrogen

Light Naphtha

C3,C4

OffGas Mixed C4 Butadiene

PO

PUTDI/HDI

Toluene

Polyols

Orthoxylene

Cracker Bottom,

Hydrogen

PA Plasticizer

1. PTTGC does not currently produce these products.

REFINERY & SHARED FACILITIES AROMATICS OLEFINS POLYMERS EO-BASED

PERFORMANCE GREEN CHEMICALS HIGH VOLUME SPECIALTIES

Feedstock Upstream Intermediates Downstream Proximity to Suppliers and Customers

Exchange Stream Products By-Products

Potential Product Opportunities (1)

Petroleum Products - LPG - Reformate - Light Naphtha - Jet Fuel - Diesel - Fuel Oil

Fully Integrated Petrochemical and Refinery Operations with Diversified Product Portfolio

8

Diversified Product Portfolio and End Markets

9

Full range of product offering reduces business volatility and provides future opportunities to expand to High Volume Specialties and other new products

Potential Product Opportunities (1)

PMMA

Nylon 6

ABS

SBR

PP

PC

Epoxy Resins

Polyester Fiber

PET Resin

Automotives, Electronic and Electrical Appliances, Packaging, Construction, Paints

Automotives, Textiles, Agriculture

Textiles, Packaging, Furniture,

Isocyanates, PU

New Investments

PLA

Foams, Coatings, Elastomers

Films/Cards, Durables, Beverages, Non-Wovens/Fibers

Current Downstream Products New and Potential Downstream Product Opportunities

Packaging, Films, Toys, Furniture, Construction

Health and Personal Care Products, Pharmaceutical

Packaging, Electronic and Electrical Appliances, Automotives

Biodiesel

HDPE

LDPE

LLDPE

PS

Biodiesel

Ethoxylate

Ethanolamine

1. PTTGC does not currently produce these products.

Agenda


10

Strategic Directions

“In 2012, we achieved EBITDA uplift of USD 87 million from operational excellence, marketing excellence, and synergy projects”

11

1. Operational Excellence

12

------- LAGGARDS-------- -------- LEADERS ---------

To achieve 1st quartile of energy efficiency and reliability

Refinery

- Alternative feedstock - Opportunity crude and

condensate - Processed high tan crude

- Reliability Improvement - Catalyst improvement - Yield improvement - Plant flexibility improvement

- New feedstock sourcing (Condensate)

- Yield Improvement - Shutdown I-4/1 in Nov for

Quench Tower Modification - Variable cost improvement

- Energy saving program for HDPE I-1

- Hexane/nitrogen recovery unit installation

Aromatics Olefin and Olefins Derivatives Major Activities in 2012

By 2017 Benefit Uplift CAPEX

~91 MUSD ~150 MUSD

2012 Achievement

EBITDA uplift 53 MUSD

2. Marketing Excellence

13

By 2017 Benefit Uplift CAPEX

~85 MUSD ~10 MUSD

2012 Achievement

EBITDA uplift 25.1 MUSD

- Expanded domestic sales portion of - LLDPE product 30% (2012 target = 27%) - LDPE product 33% (2012 target = 30%) - Total PE product: 33% (2012 target = 32%)

- Increased portion of high value products (HVP) from 7% to 10% of total polymers revenue, and expanded 7 grades of HVP

Major Activities for Polymers BU in 2012

Natural Gas

Crude

Condensate

Cracker

Aromatics Plants

Refinery

Reformate, Heavy

Naphtha

Pygas

Condensate Residue,

Hydrogen

Light Naphtha

C3,C4

OffGas

Cracker Bottom,

Hydrogen

3. Synergy Projects from Amalgamation

14

Exchange Stream Products By-Products

2012 Achievement

EBITDA uplift 9.07 MUSD Synergy Projects

Expected Investment

(M. USD)

Expected Benefit per

year (M. USD)

Target Completion

Progress

1.Product upgrade

1.1 Offgas 177.7 76.7 4Q/14

- BoD approved additional budget for enclosed ground flare, pipe-rack and pipeline around 35.7 MUSD.

- Tie-in works in each plant are on going.

1.2 C3/C4 Stream 5.5 35.1 End of 2012

- Completed. - Benefit capture depends on economic

and supply availability of each feed type. (subject to HDPE spread)

1.3 Heavy Aromatics 0.0 1.3 Jan. 1, 2012

- Completed.

1.4

Heavy Gasoline, Light Cracker Bottoms and Cracker Bottom

5.7 28.8 End of 2012

- Completed. - 1st batch of 3-stream was transferred

to refinery on Dec 20th, 2012.

1.5 Pure H2 via New PSA 19.8 6.6 2Q/14

- Construction is 24%- on schedule - Completed commercial negotiation for

PSA package. - BOI approved PSA project to get investment promotion.

2. Cost Saving from share tanks and jetty 0.0 0.6 2Q/12

- Signed contract with Thai Tank Terminal to maximize utilization of existing idle facility – completed.

3. Stream cost reduction

Under Study

Under Study

4Q/14

- Construction permit for box culvert is on going to discuss with external related parties, plan to get permit within Q1/2013.

Total 208.7 149.2

15

Opportunities for Debottlenecking • Debottleneck - PTTPE Cracker

Under study of plant configurations Subject to gas availability

• Debottleneck - Polymer Plants In accordance with additional feedstock from PTTPE cracker debottlenecking

• I4-1 Liquid Vapor To reduce minimum liquid portion used in I4-1 (mixed feed cracker)

• Debottlenecking - PX capacity Enhance reformate value to produce more PX Expected volume increase by 10 – 15%

• C4 Value Enhancement ST: Export mixed C4 to maximize value LT: To complete BV Project (C4 upgrading to Butadiene/Butene-1) by end of 2013

4. Debottleneck / By-Product Value Enhancement

5. CAPEX Excellence

16

2011 Target2017

Target2022

Operational Excellence, Marketing Excellence, Capital Expenditure Excellence

Endeavour for Strong Profitable Growth

17

Synergy Project Excellence Debottleneck

~ 550 - 600

500

~ 700 - 800

HVS Green

Sales in THB Bn

Phase 1: Foundation for Growth Phase 2: The Growth Mode

We aim to grow ~5 percent p.a. in the next ten years

HVS

Green

New Global Hub

Expected EBITDA Benefit Uplift 15-30%

Business Platform

18

Agenda


19

Key Trends for Petrochemical Industry in 2013 Oil prices slightly depressed by oversupply

Global oil demand 90.5 MBD (+0.865 MBD) with high growth from Asia Global oil supply 90.6 MBD from Non OPEC (US, UK, Brazil)

PX and MEG market strongly supported by outpacing derivatives demand of new PTA and polyester capacity, mainly from China

PX demand growth of 10% as against supply growth of 9.8% MEG demand growth of 7% against 5% supply growth

BZ supply remains pressured by feedstock shortage Demand growth 3.2% outpacing supply growth of 2.6% Pygas and reformate are the main source of supply for BZ

Olefins market will be driven by derivatives demand mainly from PE Ethylene demand growth of 4% higher than supply growth of 3% Propylene market slightly oversupply from new units startup

PE market expected to recover with average global operating rates of 85%

Total PE demand growth 3.8 Mton Total PE new capacity 3.5 Mton from ME and China

20

Agenda


21

A Highly Competitive Cost Structure Revenue Breakdown, Adj. EBITDA breakdown, and EBITDA Margin

3Q/12 3Q/11 2Q/12

Refinery 4% 3% 3%

Aromatics 8% 3% 4%

Olefins and Derivatives 27% 28% 27%

3Q/12 Revenue Breakdown 3Q/12 Adjusted EBITDA* Breakdown

Adjusted EBITDA* Margin by Group Performance Center

Refinery 47%

Aromatics 20%

Olefins and Derivative

21%

Phenol 3%

Green 2%

Others 7%

Refinery 20%

Aromatics 16%

Olefins and Derivative

55%

Phenol 2%

Green 1%

Others 6%

Note* Exclude impact of inventory value 22

35.3

237.5

226.7

105.7 140.1

46.2 57.8

Strong Financial Position

23

• Free Cash Flow for Investment

• Key Financial Ratios

• Dividend – Solid Payout Ratio

32.4

235.3

208.5

82.6

120.2

22.6 44.3

As of 31 Dec. 2011 As of 30 Sep. 2012

THB 425 Billion THB 373 Billion

Cash

CA

PPE

Non CA

Share holders’ Equity

Loan

Liab.

• Balance Sheet

3Q/12 2Q/12

ROA 6.51% 5.33%

ROE 12.20% 9.54%

Net IBD / Equity 0.41 0.46

Net IBD / EBITDA 1.94 2.38

FY2011 6M/12

EPS (Baht/Share) 6.66 2.37

Dividend (Baht/Share) 2.98 0.98

Payout Ratio (%) 45% 41%

FCF for Inv. 7,428

FCF for Inv. 9,908 FCF for Inv.

5,992

2,003

8,146

26,795

9,431

18,054

32,787

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

1Q/12 2Q/12 3Q/12

FCF for Inv. Debt Service and Dividend

Cash from OperationMTHB

38.0

2.5

13.6 15.4

9.3 11.1

20.5

12.3 9.1

13.1

1.5

31.6

Cash 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

PTTGC PPCL PTTUT Others

2011 3Q/12

PTTGC Debts ~ THB 140 Billion

Unit : THB Billion

120

29 (24%)

91 (76%)

140

As of 30 Sep. 12 - Debt Structure & Cost Cost of long term debts ~ 5.0% (Include W/H Tax) % Total fixed-rate long term debt ~ 62%

(THB fixed-rate debt ~ 44%, Int. ~ 5.4%, USD fixed-rate debt ~88%, Int. ~ 5.0%)

Average loan life after refinancing - 5.5 Years

THB USD & Foreign

56 (40%)

84 (60%)

PTTGC Repayment Schedule (after Refinancing)

24

Loan 46%

By Type By Currency By Rate

Bond 54%

Thai Baht 60%

Foreign Currency 40%

Variable Rate 38%

Fixed Rate 62%

Liquidity Headroom Maturity of Financial Debt Unit : THB Billion

As of 31 Dec. 2011 As of 30 Sep. 2012

PTTGC has a five-year (2012-2016) uncommitted capital expenditure plan of up to USD 4.5bn – If fully funded, USD 2.5bn will come from operational

cashflow and the remaining USD 2.0bn from debt

Capital Expenditure Plan

Treasury policy Net IBD to Equity ratio of ≤ 0.7x Net IBD to EBITDA ratio of ≤ 2.4x

Debt Structure

FY12 Business Operations at a Glance

25

Dubai price remains high throughout the year, with FY12 averaged at 109 USD/bbl, and 4Q12 averaged at 107 USD/bbl

Better gas flow from GSP – 3.1 Mton, increased 10% from year 2011 at 2.81 Mton

Volume driven thus higher utilization rates

CDU 100%, BTX 86%, Olefins 88%, HDPE 102%, MEG 88%

Price/spread in mixed performance compared to previous year HDPE 1,380 USD/ton +1% YoY PX-Condensate 553 USD/ton - 11% YoY BZ- Condensate 263 USD/ton + 45% YoY Gasoil- Dubai 17 USD/bbl - 6% YoY

Agenda


27

2012 Target Sales by Business Unit

28 * Sold within AEC

Refinery Business GRM improved from better middle distillates

29

• Refinery : Domestic / Export

• Adjusted EBITDA

• Margin

• Intake and CDU Utilization Rate

1,999 2,226 2,921

3Q/11 2Q/12 3Q/12

Export

Domestic

Factors Sales Volume Spread

3Q/12 vs. 3Q/11 +6% +19%

32%

68%

• Price and Spread

Unit: THB Million

146 142 147

35 58 55

101% 98% 101%

79%

84%

89%

94%

99%

104%

0

50

100

150

200

250

3Q/11 2Q/12 3Q/12

Crude Condensate Residue CDU Rate

USD/BBL 3Q/12 3Q/11 2Q/12 % YoY % QoQ

Market GRM 5.94 4.98 4.32 19% 38%

Hedging Gain/(Loss)

0.02 0.05 0.58 (64%) (97%)

Stock Gain/(Loss) Net NRV

3.74 0.18 (8.79) 1980% 143%

Accounting GRM 9.71 5.21 (3.89) 86% 349%

USD/BBL 3Q/12 3Q/11 2Q/12 % YoY % QoQ

Dubai crude 106 107 106 (0.7%) 0.0% Jet/Kero 20.21 18.78 15.96 8% 27%

Diesel 19.27 17.62 15.39 9% 25%

Fuel Oil (2.48) (3.23) (1.34) 23% (85%)

% KBD

Aromatics Business The return of Benzene

30

• Adjusted EBITDA

• Margin

• Intake, Production and CDU Utilization Rate

• Aromatics : Domestic / Export

1.45 1.52 1.57

0.53 0.52 0.53

91% 90% 90%

75%77%79%81%83%85%87%89%91%93%

00.20.40.60.8

11.21.41.61.8

3Q/11 2Q/12 3Q/12

Condensate + Other feedstock BTX Products BTX Rate

1,080 1,263

2,334

3Q/11 2Q/12 3Q/12

Export

Domestic

Factors Sales Volume Spread

3Q/12 vs. 3Q/11 3% +37%

35%

65%


Unit: THB Million

USD/Ton 3Q/12 3Q/11 2Q/12 % YoY % QoQ

Market P2F 243 178 191 37% 28%

Hedging Gain/(Loss)

0 0 (2) 0 100%

Stock Gain/(Loss) Net NRV

64 (6) (72) 1,227% 189%

Accounting GRM 308 172 116 79% 164%

USD/Ton 3Q/12 3Q/11 2Q/12 % YoY % QoQ

PX - Condensate 430 590 568 (27%) (24%)

BZ - Condensate 263 184 178 43% 48%

Nap - Condensate 0.9 15.0 (36) (94%) 102%

MTon %

USD/Ton

Olefins and Olefins Derivatives Business Better Utilization Rate

31

• Performances

• Price and Spread • Olefins Intake

409 Kton 55%

531 Kton 60%

534 Kton 57%

34% 28% 29% 11%

12% 14%

0100200300400500600700800900

1000

3Q/2011 2Q/2012 3Q/2012

Ethane Other Gas Naphtha

3Q/12 3Q/11 2Q/12 Sales Volume

Sales Volume (K.Ton)

Utilization Rate


Utilization Rate


Utilization Rate

% YoY % QoQ

Olefins1 188 91% 190 72% 217 89% (1%) (13%) HDPE 198 92% 175 90% 197 101% 13% 0% LLDPE 111 113% 81 95% 70 77% 37% 60% LDPE 96 113% 37 12% 54 98% 157% 76%

Total Polyethylene 404 102% 294 76% 320 94% 38% 26% MEG2 91 93% 64 60% 90 85% 41% 1%

Note: 1. Sales of olefins are net sales to external entities 2. MEG utilization calculated from capacity of 395 KTA

USD/Ton 3Q/12 3Q/11 2Q/12 %YoY %QoQ

Ethylene 1,200 1,160 1,146 3% 5% Naphtha 915 956 894 (4%) 2% HDPE 1,343 1,399 1,376 (4%) (2%) HDPE-Naphtha 428 443 482 (3%) (11%) LLDPE 1,341 1,338 1,342 0% 0% LDPE 1,327 1,586 1,349 (16%) (2%) MEG 1,065 1,343 1,149 (21%) (7%) MEG-0.65 Ethylene 285 589 404 (52%) (29%)

KTon

32

66%

34%

30%

70%

3%

97%

• Olefins : Domestic / Export Export

Domestic

• Polymer : Domestic / Export

Domestic

Export

• EO/EG : Domestic / Export

Export

Domestic

• Olefins and Derivatives Adjusted EBITDA

6,996

7,662

8,318

3Q/11 2Q/12 3Q/12

Factors PE Sales Volume HDPE Price

3Q/12 vs. 3Q/11 38% -4%

• Driven Factors

Olefins and Olefins Derivatives Business (cont.)

Unit: THB Million

Phenol Business

33

• Phenol : Domestic / Export

Export

Domestic

• Intake, Production and Utilization Rate

31,592 31,081 34,407

29,105 29,160 32,880

114% 122% 128%

72% 82%

102%

0%

20%

40%

60%

80%

100%

120%

140%

-

20,000

40,000

60,000

80,000

100,000

3Q/2011 2Q/2012 3Q/2012

Phenol Sales Volume BPA Sales Volume

Phenol Urate BPA Urate

3Q/12 3Q/11 2Q/12 YoY QoQPhenol-BZ 264 571 335 -54% -21%BPA-Phenol 212 344 211 -38% 0%

USD/TonPeriod % + / (-)

• Adjusted EBITDA


1,110

241 294

3Q/11 2Q/12 3Q/12

84%

16%

Unit: THB Million

Ton %

851

12,910

23,614

2,983

1,117 1,066 531

7,240

2,222

2,027 1,102 831

-

5,000

10,000

15,000

20,000

25,000

Net Profit2Q/12

Volume Spread VC FC StockGain

NRV FX CIT Others Net Profit3Q/12

Net Profit9M/2012

2,222

34

23,614

Net Profit9M/2012/

2012 Analysts Consensus NP THB 28,000 million*

2011 Net Profit THB 30,033 million 4Q/11 : Flood impacted gas feed volume and domestic sales

Outstanding Business Performance 9M12 is within a reach to beat FY consensus

2 983

1,117

2Q/12 Stock loss of 5,073 MB 3Q/12 Stock gain of 2,167 MB

Overall u-rate increased

2,027 ,1,,2

2Q/12 NRV loss 1,114 MB 3Q/12 NRV gain 1,108 MB

4,386MB

* Bloomberg Consensus

Operating Performance

35

MB % MB % MB % MB % MB % MB %

1 Sales Revenue 145,309 100 137,289 100 139,241 100 8,020 6 6,068 4 418,216 100

2 Feedstock Cost -120,046 83 -118,310 86 -118,078 85 1,736 1 1,968 2 -352,674 84

3 Product to Feed Margin 25,263 17 18,979 14 21,163 15 6,284 33 4,100 19 65,541 16

4 Variable Cost -4,892 3 -2,890 2 -3,826 3 2,002 69 1,066 28 -11,744 3

5 Fixed Cost -4,039 3 -2,634 2 -3,508 3 1,405 53 531 15 -10,806 3

6 Stock Gain/(Loss) & NRV 3,275 2 81 0 -6,187 4 3,194 3,943 9,462 153 498 0

7 Gain/(Loss) Hedging Commodity -30 0 24 0 302 0 -54 -225 -332 -110 368 0

8 Other Income 1,311 1 680 0 1,283 1 631 93 28 2 3,347 1

9 SG&A -2,606 2 -2,057 1 -2,522 2 549 27 84 3 -7,605 2

10 EBITDA 18,282 13 12,183 9 6,705 5 6,099 50 11,577 173 39,598 9

11 Depreciation & Amortization -3,982 3 -3,515 3 -3,697 3 467 13 285 8 -11,206 3

12 EBIT 14,300 10 8,668 6 3,008 2 5,632 65 11,292 375 28,392 7

13 Financing Expenses -1,438 1 -1,422 1 -1,373 1 16 1 65 5 -4,136 1

14 FX Gain/(Loss) 746 1 -245 0 -1,281 1 991 404 2,027 158 502 0

15 Shares of gain/(loss) from investments 25 0 185 0 101 0 -160 -86 -76 -75 84 0

16 Corporate Income Tax -570 0 -671 0 532 0 101 15 -1,102 -207 -722 0

17 Net Profit After Income Tax 13,063 9 6,515 5 987 1 6,548 101 12,076 1,224 24,120 6

18 Minorities -153 0 -475 0 -136 0 322 -68 17 13 -506 0

19 Net Profit 12,910 9 6,040 4 851 1 6,889 114 12,078 1,417 23,614 6

20 Adjusted EBITDA 15,007 10 12,102 9 12,892 9 2,905 24 2,115 16 39,100 9

9M/123Q/12 3Q/11 2Q/12 YoY QoQ

Key Trends for Economy in 2013 2013 The Year of Recovery

36

4.1

2.72.3

3.0

1.6 1.3

7.4

5.9

5.1

2.4 3.1

1.3

2.0

5.5 5.7

-

1

2

3

4

5

6

7

8

2010 2011 2012 2013 2014

Gross domestic product (% change YoY)

Source: World Bank, Jan.13 Report

The global economy in 2013 is expected to recover slowly in the first half and the expansion will become more materialized in the later half of the year

The US growth will be limited and the EU crisis remains a threat to the world economy

China growth continues to track higher supported by government stimulus policy to boost domestic consumption and increasing of export volume supported by the recovery of US and EU

Asian economies have robust domestic demand growth while exports growth is gradually improving

8586878889909192939495

-1,000

-500

0

500

1,000

1,500

2,000

2,500

2010 2011 2012 2013 2014 2015 2016

kbd Expected crude distillation expansion Africa

Middle East

Asia

FSU East

Europe

C&S America

North America

Net Addition

World Demand

Refining Capacity Additions 2013-2016

37

2010 2011 2012 2013 2014 2015 2016North America -359 75 19 0 70 50 20C&S America 70 0 -225 0 150 230 250Europe -402 -45 -586 -170 40 60 214FSU East 210 30 332 115 50 50 148Asia 853 841 1,315 1,121 742 521 965Middle East 20 261 0 145 817 510 146Africa 0 20 93 36 48 0 0World 393 1,182 948 1,247 1917.10 1421.00 1743.00Net Addition 393 1,182 948 1,247 1,917 1,421 1,743World Demand 88.33 89.15 89.77 90.88 91.94 92.89 93.75

MBD

398 408 287 300 349

414 357 335

933 872 843 842

1,331 1,280 1,130 1,142

1,282 1,287 1,200 1,177

0

200

400

600

800

1,000

1,200

1,400

1,600

1Q/13F 2Q/13F 3Q/13F 4Q/13F

Olefins Improved derivatives demand will affect Olefins market

USD/Ton

1 287

Short-term Price Forecast Short-Term • Olefins prices were expected to remain high in 1H13

due to improving derivatives demand mainly from PE, PP and MEG market - in line with the global economic recovery

• However the market will be pressured from

1) Additional new supply in Middle East and Asia (especially in China and Singapore) in the second half of the year

2) Lighter turnaround plan at Asia cracker in 2013

Long-term Supply/Demand

38

Additional (2012-2017) (Unit : MMT)

Supply Demand 36.13 32.67

America16%

Middle East20%

Europe2%

China40%

Other Asia22%

Source: CMAI January 2013

-2,0000

2,0004,0006,0008,000

10,00012,000

2012 2013 2014 2015 2016 2017America Europe Middle East China Other Asia Additional demand

Unit : KMT

Saudi Polymers Saudi 1,200 KMT Q3-11 to Q3-12

Reliance India 1,350 KMT Q1-16 to Q3-16

SINOPEC Wuhan CH 800 KMT Q1-11 to Q3-13

SINOPEC W h C

ExxonMobil SG 1,000 KMT Q3-11 to Q2-13

Shanghai PC China 600 KMT Q3-12 to Q1-14

Saudi Polymers Sau

Daqing PC China 600 KMT Q1-11 to Q3-12

Daqing PC China

Fushun PC China 800 KMT Q1-10 to Q3-12

ExxonMobil SG

Sichuan PC China 1,000 KMT Q3-11 to Q4-13

Ilam Iran 458 KMT Q1-15 to Q1-16

Kavyan PC Iran 1,000 KMT Q1-13 to Q3-15

CNOOC & Shell China 1,000 KMT Q1-16 to Q1-17

-5000

5001,0001,5002,0002,5003,000

2012 2013 2014 2015 2016 2017 America Europe Middle East China Other Asia Additional demand

519 519456

525 507 449 441 497 489 496 439 485

933 872 843 842

1,452 1,392 1,298

1,367 1,440 1,377

1,283 1,339

1,422 1,368 1,281 1,327

0

200

400

600

800

1,000

1,200

1,400

1,600

1Q/13F 2Q/13F 3Q/13F 4Q/13F

1,392298377

11111 393939393922222Short-term Price Forecast USD/Ton

Short-Term • PE prices will show the sign of recovery

according to the global economic

• However, new PE supply in Asia (Mainly from China) and strong buying resistance from end-use producers due to squeezed margin will weigh on PE markets especially in the second half of the year

Polyethylene The market will be recovered in the short term

HDPE Long-term Supply/Demand

39



America19%

Middle East24%

Europe1%

China42%

Other Asia14%


Saudi Polymers Saudi 550 KMT Q3-11 to Q3-12

Ilam Iran 300 KMT Q1-14 to Q1-15 SINOPEC Wuhan CH

300 KMT Q1-11 to Q3-13

SINOPEC W h CH

Saudi Polymers Saudi 550 KMT Q3-11 to Q1-13

BPCL India 110 KMT Q3-13 to Q4-14

udi Polymers Saudi

Daqing PC China 400 KMT Q1-11 to Q3-12

d

OPAL India 350 KMT Q1-13 to Q3-14


Saudi Polymers Saud

Sichuan PC China 300 KMT Q3-11 to Q4-13

Il I

Sinopec Yanchang China 250 KMT Q3-14 to Q1-16

Unit : KMT

LLDPE & LDPE New Capacities and Closures

40 Source: CMAI January 2013

LDPE Long-term Supply/Demand

LLDPE Long-term Supply/Demand





America19%

Middle East30%Europe

0%

China40%

Other Asia33%

America12%

Middle East30%Europe

13%

China36%

Other Asia8%

-500

0

500

1,000

1,500

2,000

2,500


Unit : KMT

SINOPEC Wuhan China 300 KMT Q1-11 to Q3-13

ExxonMobil Sing. 1,300 KMT Q1-11 to Q4-12


Sichuan PC China 300 KMT Q3-12 to Q4-13

OPAL India 350 KMT Q1-13 to Q3-14

Yulin Energy China 300 KMT Q2-13 to Q1-14

CNOOC & Shell China 300 KMT Q1-16 to Q1-17

-500

0

500

1,000

1,500

2,000


Unit : KMT QAPCO Qatar 300 KTA Q1-12 to Q3-12

Borouge UAE. 350 KTA Q1-14 to Q3-14

Reliance India 400 KTA Q1-15 to Q3-16

Short-term Price Forecast USD/Ton Short-Term • Buying sentiment is expected to be driven up

from stronger demand in the downstream textiles and fabrics sectors in China due to more new Polyester supply will start up in year 2013

• However, more additional new MEG supply in the second half of the year will affect the market

432 501 542 548

933 872 843 842

1,331 1,280 1,130 1,142

1,297 1,333 1,277 1,290

0

200

400

600

800

1,000

1,200

1,400

1,600

1Q/13F 2Q/13F 3Q/13F 4Q/12F

MEG The market will be robust due to strong derivative demand

MEG Long-term Supply/Demand



America7% Europe

8%Middle

East7%

India6%

China65%

Other Asia7%


01,0002,0003,0004,0005,0006,0007,000

2012 2013 2014 2015 2016 2017 America Europe India Middle East

China Other Asia Additional demand

PetroChina China 380 KTA Q1-12 to postpone

Tongliao Jinmei China 400 KTA Q1-13 to Q3-13

Tongliao Jinmei China 400 KTA Q1-13 to Q4-12

Qianxi Coal Chem China 400 KTAQ3-13 to Q1-14 Heyuan Chem China

500 KTA Q4-12 to Q2-13

Unit : KMT

Short-term Price Forecast Short-Term • PX demand in year 2013 will be supported

from new PTA plants in Asia (especially in China) will start up in and high manufacturing season in textile and fabric sectors in China

• However, additional new supply in Asia and squeezed PTA margins and high inventory levels among downstream Polyester market will affect the PX market

USD/Ton

716 748 714 708

933 872 843 842

1,648 1,620 1,557 1,550

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1Q/13F 2Q/13F 3Q/13F 4Q/13F

Paraxylene Tight supply will affect PX market

PX Long-term Supply/Demand

42




America2% Europe

4%

Middle East30%

India15%

China17%

Other Asia32%

01,0002,0003,0004,0005,0006,000

2012 2013 2014 2015 2016 2017 America Europe India Middle East China Other Asia Additional demand

PetroRabigh Saudi. 1,400 KTA Q3-15 to Q3-16

Sinopec Hainan Ref. China 600 KTA Q1-15 to Q4-14

Unit : KMT

Tenglong Aromatics1 China 800 KTA Q2-12 to Q3-12

Tenglong Aromatics2 China 800 KTA Q3-12 to Q2-13

Short-term Price Forecast USD/Ton Short-Term • Supply continue to be short due to many

refineries and Aromatics plants in Asia will shutdown for maintenance

• In addition, Benzene market will be depend on volatile crude and feedstock prices and derivatives demand 505 553 580 549

933 872 843 842

1,438 1,425 1,423 1,391

0

200

400

600

800

1,000

1,200

1,400

1,600

1Q/13F 2Q/13F 3Q/13F 4Q/13F

Benzene the market will still be driven by the main products



BZ Long-term Supply/Demand

America1%

Middle East6% Europe

2%

China35%

Other Asia55%


-500

0

500

1,000

1,500

2,000

2,500

2012 2013 2014 2015 2016 2017

America Europe Middle East China Other Asia Additional demand

Daqing PC China 150 KTA Q1-13 to Q3-12

Anqing PC China 54 KTA Q3-12 to Q1-13

Samsung Total PC S. Korea 422 KTA Q4-14 to Q1-15

Nghi Son Vietnam 246 KTAQ1-15 to Q1-16 Anqing PC Chinah

ExxonMobil Sing. 340 KTA Q1-13 to Q2-13 Unit : KMT

Short-term Price Forecast USD/Ton

Short-Term • Phenol market would continue to face

rising cost and weak supply/demand balances

• Additionally, Phenol market will be pressured from new additional supply in Asia, mainly from China and S. Korea in 2013

219 188 189 316

1,438 1,425 1,423 1,377

1,484 1,442 1,441 1,527

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

1Q/13F 2Q/13F 3Q/13F 4Q/13F

Phenol Will be pressured from high feedstock prices and new additional supply



Phenol Long-term Supply/Demand

America1%

Europe2%

China68%

Other Asia55%


-500

0

500

1,000

1,500

2012 2013 2014 2015 2016 2017

America Europe Middle East China Other Asia Additional demand

Unit : KMT Lihuayi Group Taiwan 217 KTA Q1-13 to Q4-12

SSMC China 300 KTA Q2-13 to Q4-13

SSMC Chinah

Changchun PC China 400 KTA Q3-13 to Q4-13

INEOS/Yangzi PC China 400 KTAQ3-14 to Q1-15

INEOS/Yangzi PC China

CEPSA Quimica China 250 KTAQ3-14 to Q1-15

PX and MEG market strongly supported by tight supply mainly from China

45

PX and MEG Capacity Additions in 2013

1,587 1,625

3,124

4,022

0500

1,0001,5002,0002,5003,0003,5004,0004,500

2012 2013

PX PTA

Unit : KTA

New (Effective) Capacity

Conversion 0.66*PX to 1 PTA

355 760

4,203

6,024

01,0002,0003,0004,0005,0006,0007,000

2012 2013

MEG Polyester

New (Effective) Capacity

Conversion 0.86*PTA and 0.34*MEG to 1 Polyester

Unit : KTA

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