Chlor-Alkali Market Overview

Ramakant Bhat

Indian Petrochem 2014

Contents

• Chlor-Alkali introduction

• Global Chlor-Alkali Industry

• Chlor-Alkali Industry in China & India

• Outlook for the Industry

• About Tricon Energy Ltd

Chlor-Alkali Chemistry

Chlor-Alkali : key segment in Inorganic chemicals

Used in a wide array of sectors including chemicals & petrochemicals

Caustic & Soda Ash >60% of Inorganic Chemicals

Caustic Soda

Soda Ash

Aluminium Fluoride

Carbon Black

TiO2 Sulphuric Acid

Calcium Carbide

Others

Inorganic

Chemicals

Caustic Soda & Chlorine Applications

Global Chlor-Alkali Industry

China 40 46%

[VALUE] 2.4%

N. America 16 19%

Europe 12.6 15%

3.4 4%

2.5 3%

2.5 3%

2.5 3%

2.5 3%

1.7 2%

0.8 1%

0.1 0%

China

NE Asia ex-China

N America

W Europe

Indian Sub-continent

Middle East

L America

SE Asia

CIS & Baltic

E&C Europe

Africa

Oceania

Global Caustic Soda Capacity (MMTS)

101

204

37

157 205 25

51

41

80

75

7

14

6

13

10

93

98

86

65

75

226

367

170

315

365

U.S West Euro Mid East NEA China

Var. Exp. + Fixed Steam Salt Electricity

ECU COST REGION WISE (USD)

Pulp & Paper 15%

Alumina 12%

Organics 17%

Detergents/ Textiles

15%

Inorganics 13%

Water Treatment

5%

Others 23%

Pulp 25%

Other 15%

Alumina

60%

Growth in key user sectors likely to

continue to fueling demand

2013 Global Caustic Demand 70 MM MT

2013 Global Net Exports = 5.5 Mil DMT

driven by alumina & pulp sectors

CAUSTIC SODA SECTOR WISE CONSUMPTION

Segment Avg Growth 2010-15

Alumina 5.90%

Detergent & Textiles 5.50%

Organics 4.40%

Water Treatment 4.30%

Caustic Soda Total 4%

Inorganic 3.40%

Others 3.20%

Pulp & Paper 2.20%

CAUSTIC SODA – GLOBAL TRADE FLOW

Global Trade is approx. 13 Mil DMT

Caustic Soda movement within Asia

China Caustic Soda Capacity 40 MMTS

HEBEI

HEILONGJIANG

JILIN

LIAONING

SHANXI

TIANJIN

SHANDONG

NINGXIA

JIANGSU SHAANXI

INNER MONGOLIA

ANHUI

HENAN

FUJIAN

ZHEJIANG

JIANG XI

HUBEI

HUNAN

BEIJING

GANSU

QINGHAI

GUIZHOU

SICHUAN

YUNNAN

GUANGXI

GUANG DONG

HAINAN

XIZANG (TIBET)

MACAU

HONGKONG

TAIWAN

XINJIANG

SHANGHAI

Port

Manufacturer

QINGDAO

TIANJIN

NINGBO

SHANGHAI

HONGKONG

HEBEI

HEILONGJIANG

JILIN

LIAONING

SHANXI

TIANJIN

SHANDONG

NINGXIA

JIANGSU SHAANXI

INNER MONGOLIA

ANHUI

HENAN

FUJIAN

ZHEJIANG

JIANG XI

HUBEI

HUNAN

BEIJING

GANSU

QINGHAI

GUIZHOU

SICHUAN

YUNNAN

GUANGXI

GUANG DONG

HAINAN

XIZANG (TIBET)

MACAU

HONGKONG

TAIWAN

XINJIANG

Domestic Producer

1995 – 5.82 m dmt

2000 – 8.00 m dmt

2005 – 14.70 m dmt

2010 – 30.00 m dmt

2012 – 37.36 m dmt

2013 – 40.00 m dmt

Total: 185 producers

Capacity in 2013: 40 million DMT

Capacity over 400,000dmt: 22 producers

Capacity between 100,000 and 400,000dmt: 107 producers

Capacity below 100,000dmt: 56 producers

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

7.3 8.2 9.4 10.6 12.4 15.1 17.6 18.5 18.9 20.9 24.7

27.0 8.5

9.8 10.7 11.9 14.7 18.1

19.7 24.8

27.9 30.2

34.0 37.4

China Production China Capacity

China Caustic Soda Production (MMTS)

Chlor-Alkali Industry in India

India Caustic Soda capacity

2011-12 000’DMT

2012-13 000’DMT

2013-14 000’DMT

Capacity 3126 3126 3202

Production 2555 2540 2614

Demand 2774 2841 2914

Imports 219 301 300

2014 -15 Capacity estimated 3.4 MMTPA

Caustic Soda Major Producers in India

Company Capacity (kT)

Aditya Birla Group 493

Gujarat Alkali 413

DSCL 275

Reliance Industries 168

Sree Rayalaseema 124

The Andhra Sugars 132

Kanoria Chemicals 128

DCW Ltd. 100

Others 1,369

Total 3,202

PULP & PAPER 15%

ALUMINA 14%

ORGANICS 12% INORGANICS

8%

SOAPS & DETERGENTS

7%

TEXTILES 21%

WATER TREATMENT 3%

DYES & INKS 3%

PESTICIDES 1%

PHARMACEUTICALS 0%

OTHERS 16%

CAUSTIC SODA - SECTOR WISE CONSUMPTION (%)-INDIA

INDIA ALUMINA

20142016

capacity

6820

10070

ALUMINA CAPACITY ‘000 MT 2014 2016

2014

2016

DEMAND

670

930

CAUSTIC DEMAND FOR ALUMINA ‘000 DMT 2014 2016

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010-11 2011-12 2012-13 2013-14

134,190

112,699

126,439

153,327

17,230 72,143

92,716

90,700

34,858

7,352

82,630 62,627

Other Iran Saudi Arabia

186,279 DMT 192,194 DMT 301,275 DMT 300,635 DMT

Antidumping Duty on Caustic Soda in India

Countries on which antidumping duty applicable USA : $ 55.96/DMT

EU : If landed value below $415.46/DMT

South Korea : Nil to landed value below $366/DMT

China : If landed value below $401/DMT

Saudi Arabia : Nil to $ 133.6/DMT

Thailand : If landed value below $379

Norway : If landed value below $379

Taiwan : If landed value below $361

Iran : Nil to $8.75/DMT Countries on which antidumping duty was applicable in past but currently exempt; Japan

Qatar

Indonesia

Indian Caustic Soda Scenario

The major end-users of Caustic Soda in India are paper/pulp/manmade fibers/alumina

25% of total installed capacity of 3.20 MMT per annum is used captively while rest are for merchant trade

There are around 37 caustic soda units spread across India and most of it under 100,000 MTPA

All Mercury plants excepting one have been successfully converted to Membrane in line with pollution requirements

The level of integration in India is very low as compared to West Europe and North America, which have an integration

level of about 86% and 52%, respectively. While plants outside India are Chlorine centric, plants in India are

Caustic centric.

Outlook for the Industry

- North America : Shale gas low energy cost will bring new capacities and expansions of Chlor alkali

- South America : New capacities/expansion of Alumina, Paper/Pulp capacities will increase demand for Caustic Soda

- Europe : Outlook not good due high production cost and weak economy.

- Asia : Few regional expansions expected to cover the regional demand increase in Chlorine (As EDC) and Caustic Soda

- China : Will remain burdened due high capacity, low operating rate, slowing economic growth. Will need a boost to turnaround.

GLOBAL OUTLOOK AND CONCLUSION

- Middle East : New Alumina capacities in that region will consume part of Caustic produced and reduce export volume. For Iran, due to sanctions India will continue to remain the best netback market.

- India: No new major Chloralkali capacity expected due lack of Chlorine outlet. With increasing Alumina capacity in Eastern India and insufficient local availability, there will be a major import demand for Caustic Soda in that region.

- Antidumping duty on most of the logistically competitive sources will add burden to the Alumina industry.

Founded in 1996

30 Local Offices

280+ Employees

28 nationalities speaking 22 languages

Trading & Distribution of Chemicals & Polymers

Leader in Caustic, Styrene, Xylenes & Pygas

About Tricon

Global Coverage – Local Presence

Curiosity for new products Passion for new places Creativity for new services

“Tricon’s evolution is the result of the commitment of its partners to expand into additional markets

and support new product lines and industries, but always keeping our people as the core of our strategy. As a result, the employee base, the

number of offices, and the quantity and quality of our business keeps growing year after year.”

Ignacio Torras, CEO

Future

Thank you

Dhanyawad