cpmai - chemicals petrochemicals manufacturer’s ......(1) synthetic resin [status of 2014] the...

Asia Petrochemical Industry Conference 2015

May 7∼8, 2015

Seoul, Korea

C o u n t r y R e p o r t

F r o m

K O R E A

Korea Petrochemical Industry Association(KPIA)

C O N T E N T SⅠ. Country Report ·························································· 1

Ⅱ. For Committee Meeting ········································· 16 1. General Matters & Raw Materials Committee ····· 16 2. Polyolefins Committee ··············································· 27 3. Styrenics Committee ·················································· 32 4. PVC Committee ···························································· 36 5. Synthetic Rubber Committee ··································· 39 6. Synthetic Fiber Raw Materials Committee ········· 42 7. Chemicals Committee ················································· 47

- 1 -

Ⅰ . Country Report

PETROCHEMICAL INDUSTRY OF KOREA

Country Report

- 2 -

1. Status and Prospect of Korean Economy

The growth rate of the gross domestic product in 2014 showed that the

global economy, around the US, experienced moderate recovery. Facilities

investment also improved, it increased to three point three percent from two

point nine percent in the previous year. Overall domestic demand showed

vulnerable recovery, with the private consumption slowing down, and other

market interactions.

The Korean economy this year has a low price increase rate due to the

decrease in oil prices but the employment increase has been expanded within

the industrial production making the recovery a sign of moderate improvement.

There are a number of positive factors growing towards economic recovery,

such as, recovery of housing and stock markets, tentative agreement on

Iranian nuclear issues and so forth.

However, there are uncertainties overseas, including the possibility of the

US increasing the prime rate, the weakening of the Yen, a possibility of

additional slow down in China and other countries. Similarly, if domestic

consumption does not make a significant improvement, the domestic growth

rate, this year, is expected to be at a similar level with the previous year,

below the rate initially presented by the government of three point seven

percent.

Overall domestic exports are not expected to increase substantially due to

the influence of price declines in petroleum and petrochemical products.

2015 Asia Petrochemical Industry Conference - Korea

- 3 -

<Status and Prospect of Major Indices of Domestic Economy>

(Unit : %)2014 2015 2016

Annual First half Second half Annual Annual

GDP 3.3 3.0 3.7 3.4 3.7

Private consumption 1.7 2.3 2.8 2.6 2.9

Facility investment 5.9 7.0 5.0 6.0 5.7

Construction investment 1.1 2.7 3.8 3.3 2.3

Product export 2.1 △0.2 7.0 3.4 3.9

Data: Bank of Korea (Jan. 2015)

2. Status and Prospect of Petrochemical Industry

[Status of 2014]

The demand and supply of domestic petrochemical industry (based on 3

major fields) in 2014 has production decreasing 2.7% compared to the

previous year for 21.2 million tons and demand decreasing 2.6% compared to

the previous year for 10.48 million tons.

Production of synthetic resin has slightly increased for 0.6% compared to

the previous year, but synthetic fiber raw materials and synthetic rubber have

greatly decreased due to the operation rate following the slow down in export

that the three major fields have shown decreasing rate for the first time after

2012.

Export has recorded decreasing trend for each field because of the slow

down of economy in China, the largest exporting market, and increase of

self-sufficiency rate in petrochemical while domestic demand has shown to decline

2.6% compared to the previous year due to the influence of slowing down in

plastic product production and construction business, and reduction of chemical

fiber production. For a reference, reduction of the overall demand increase rate in

the 3 major fields was the first time since the reduction of 2008 (△2.6% compared

to the previous year).

Country Report

- 4 -

<Supply and demand of major petrochemical products>

(Unit: 1,000 tons)

1H 2H Total 1H 2H Total

G.R G.R G.R G.R G.R G.R

Pro 6,332 9.0% 6,347 3.1% 12,680 6.0% 6,374 0.6% 6,376 0.5% 12,750 0.6%

Exp 3,802 12.7% 3,789 0.9% 7,591 6.5% 3,785 -0.4% 3,793 0.1% 7,578 -0.2%

Imp 160 11.8% 146 -5.6% 306 2.7% 179 11.9% 176 20.3% 354 15.9%

Dem 2,691 4.4% 2,704 5.7% 5,394 5.0% 2,767 2.8% 2,759 2.0% 5,526 2.4%

Pro 3,974 -8.1% 4,103 0.6% 8,078 -3.9% 3,854 -3.0% 3,583 -12.7% 7,437 -7.9%

Exp 1,795 -11.4% 1,952 0.4% 3,747 -5.6% 1,830 2.0% 1,680 -13.9% 3,510 -6.3%

Imp 296 -0.6% 305 -0.9% 601 -0.7% 288 -2.7% 300 -1.7% 588 -2.2%

Dem 2,475 -4.7% 2,457 0.5% 4,932 -2.2% 2,312 -6.6% 2,203 -10.3% 4,515 -8.5%

Pro 540 8.0% 497 -1.7% 1,037 3.1% 529 -2.0% 480 -3.5% 1,009 -2.7%

Exp 363 19.4% 334 -1.3% 697 8.5% 351 -3.2% 306 -8.5% 657 -5.7%

Imp 43 29.2% 41 11.1% 84 19.7% 43 -1.2% 40 -2.4% 83 -1.8%

Dem 220 -4.1% 204 -0.1% 425 -2.2% 221 0.3% 214 4.9% 435 2.5%

Pro 10,847 2.0% 10,948 1.9% 21,795 2.0% 10,757 -0.8% 10,439 -4.6% 21,196 -2.7%

Exp 5,959 4.5% 6,075 0.7% 12,035 2.5% 5,966 0.1% 5,779 -4.9% 11,745 -2.4%

Imp 499 5.2% 493 -1.5% 991 1.8% 509 2.1% 516 4.7% 1,025 3.4%

Dem 5,386 -0.3% 5,365 3.0% 10,751 1.3% 5,300 -1.6% 5,176 -3.5% 10,477 -2.6%

20142013

Syn.

Resin

Syn.FiberRaw

Mat'ls

Syn.

Rubber

Total

Data: KPIANote: Production is based on sales

[Prospect of 2015]

In 2015, the demand and supply of domestic petrochemical (3 major

fields) has production increased 0.9% compared to the previous year for 21.38

million tons and demand increased 0.5% compared to the previous year for

10.53 million tons.

Production is expected to be expanded with the new facilities of high

added value of PE (230KT) for SK Global Chemical and Korea Petrochemical

Ind. Co., Ltd. EG (200KT) as operated at the end of 2014.


- 5 -

Export is expected to increase the synthetic resin-led export following the

facilities expansion and the reduction trend of the synthetic rubber is likely to

continue, but the reduction range compared to the previous year is expected

to be moderated.

Domestic demand is expected to make small-scale increase with the base

effect following the minus growth and increase of facility capability of major

demand industry in 2014, as well as the expansion of domestic production and

investment. In particular, the construction order after the first half of 2014 has

been continued for recovery trend in the construction field as the major front

line industry, and in addition, SOC budget increase and so forth by the

government in 2015 would be positive factor. Due to the facility increase of

high added value chemical fiber, it is partially expected to increase the

domestic demand of synthetic fiber raw materials.

<Trend of Fluctuation Rate of Demand for Major Petrochemicals>

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

'05 '06 '07 '08 '09 '10 '11 '12 '13 '14

Total

Syn. Resin

Syn. Fiber Raw Mat'ls

Syn. Rubber

Data: KPIA

Country Report

- 6 -

<Status and Prospect of Demand and Supply of Major Petrochemicals>

(Unit: 1,000 tons)

'07 '13 '14 G.R '15(F) G.RAAGR

('07~'15)

Syn. Resin Product 10,704 12,680 12,750 0.6% 12,992 1.9% 2.5%

Import 135 306 354 15.9% 373 5.2% 13.5%

Sub-Total 10,839 12,985 13,104 0.9% 13,365 2.0% 2.7%

Export 6,041 7,591 7,578 -0.2% 7,752 2.3% 3.2%

Sub-Total 4,799 5,394 5,526 2.4% 5,620 1.7% 2.0%

self-effic. (%) 223 235 231 231

Syn. Fiber Product 7,311 8,078 7,437 -7.9% 7,370 -0.9% 0.1%

Raw Mat'ls Import 662 601 588 -2.2% 521 -11.4% -3.0%

Sub-Total 7,973 8,679 8,026 -7.5% 7,891 -1.7% -0.1%

Export 3,519 3,747 3,510 -6.3% 3,433 -2.2% -0.3%

Sub-Total 4,454 4,932 4,515 -8.5% 4,465 -1.1% 0.0%

self-effic. (%) 164 164 165 165

Syn. Rubber Product 677 1,037 1,009 -2.7% 1,020 1.1% 5.3%

Import 45 84 83 -1.8% 83 0.1% 7.9%

Sub-Total 722 1,121 1,092 -2.6% 1,103 1.0% 5.4%

Export 461 697 657 -5.7% 656 -0.1% 4.5%

Sub-Total 262 425 435 2.5% 446 2.6% 6.9%

self-effic. (%) 258 244 232 229

Product 18,692 21,795 21,196 -2.7% 21,382 0.9% 1.7%

Import 842 991 1,025 3.4% 976 -4.7% 1.9%

Sub-Total 19,534 22,786 22,222 -2.5% 22,359 0.6% 1.7%

Export 10,020 12,035 11,745 -2.4% 11,841 0.8% 2.1%

Sub-Total 9,515 10,751 10,477 -2.6% 10,532 0.5% 1.3%

self-effic. (%) 196 200 202 203

Total

Data: KPIA


- 7 -

□ Trend of Supply and Demand for Each Field (1) Synthetic resin

[Status of 2014]

The demand and supply of the domestic synthetic resin in 2014 has production increased of 0.6% compared to the previous year for 12.75 million tons and demand increased of 2.4% for 5.53 million tons.

<Status of Synthetic Resin Demands and Supply>

(Unit: 1,000 tons)

Total 1H 2H Total Total

G.R G.R G.R G.R G.R

Pro 12,680 6.0% 6,374 0.6% 6,376 0.5% 12,750 0.6% 12,992 1.9%

Exp 7,591 6.5% 3,785 -0.4% 3,793 0.1% 7,578 -0.2% 7,752 2.3%

Imp 306 2.7% 179 11.9% 176 20.3% 354 15.9% 373 5.2%

Dem 5,394 5.0% 2,767 2.8% 2,759 2.0% 5,526 2.4% 5,620 1.7%

2013 2014

Syn.

Resin

2015


Notwithstanding the increased facilities

of Samsung Total of LDPE/EVA (240KT)

in the 1Q and the high added value of

SK Global Chemical of LDPE (230KT) at

the end of the year, the operation rate

following the slow down of export for

all synthetic resins excluding LDPE (2013

for 95.1% → 2014 for 93.9%), an

increase of 0.6% compared to the

previous year.

2013

2014

85%

90%

95%

100%

1 2 3 4 5 6 7 8 9 10 11 12

Synthetic Resin O/R

Country Report

- 8 -

Looking into the operation rate for each major product, LDPE and PP recorded high operation rate of 106% and 97%, respectively while HDPE (84.6%), PS (86.9%), PVC (89.9%), ABS (90.7%) and the like have shown relatively lackadaisical trend.

In spite of find export record of LDPE, export in HDPE, PP, EPS, PVC, ABS and so forth have shown slowing down in most cases and the export of overall synthetic resins has declined for 2.2% compared to the previous year. In particular, HDPE, PP, EPS, PVC and others have shown the trend of reducing 10% or more compared to the previous year and this is attributable to the fact of reduction of import market of the same products in China.

The domestic demand recorded lower growth rate of 2.4% (2.6%p↓ compared to the previous year) with the lackadaisical growth in plastic products (chemical construction materials, synthetic leathers and so forth), electronics, construction industry, automobile and so forth as major demand industries.

<Production of chemical construction materials>(Unit: 1,000 tons)

<Production of synthetic leather>(Unit: million ㎡)

-10.1%

19.3%

4.8%

1.4%

3.7%1.5%

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

400

450

500

550

600

650

700

750

800

'09 '10 '11 '12 '13 '14

-10.5%

-1.9%

2.7%

-2.9%

-5.5%

-2.4%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

60

65

70

75

80

85

90

95

100

'09 '10 '11 '12 '13 '14

Data: Statistics Korea Data: Statistics Korea

<Electronic product production amount>(Unit: 100 billion won)

<Automobile production>(Unit: 1,000 cars)

8.3%

22.9%

1.5%0.1%

6.3%

1.6%

-5%

0%

5%

10%

15%

20%

25%

1,500

2,000

2,500

3,000

3,500

'09 '10 '11 '12 '13 '14

-8.2%

21.6%

9.0%

-2.0%-0.9%

0.1%

-10%

-5%

0%

5%

10%

15%

20%

25%

-

1,000

2,000

3,000

4,000

5,000

'09 '10 '11 '12 '13 '14

Data: KEA Data: KAMA


- 9 -

[Prospect of 2015]

The demand and supply of domestic synthetic resin in 2015 has production to increase 1.9% for 12.99 million tons and demand to increase 1.7% compared to the previous year for 5.62 million tons.

In spite of the facilities increase of Samsung Total in the 1Q of 2014 for LDPE/EVA (240KT) and SK Global Chemical in the end of 2014 for high added value for LDPE (230KT), it is expected to record a limited increase rate of 1.9% in accordance with the increase in NCC T/A (2 cases in 2013 → 4 cases in 2014). With the naphtha partially recovering its export competitiveness in major markets of China and others due to the reduction of material competitiveness with the Middle East, US (gas), China (coal) following the vulnerable trend, it is expected to rebound to "+" increase rate from the “-” export increase rate of the previous year.

Domestic demand is expected to make the recovery for economic rebound and export increase following the recovery of the advance economic regions, but due to the increase in possibility for additional slow down in China, the growth of industries related to domestic synthetic resin has slightly slowed down to have the demand increase rate of synthetic resin to decline 0.8%p compared to the previous year to 1.7%.

(2) Synthetic Fiber Raw Materials

[Status of 2014]

The demand and supply of domestic synthetic fiber raw materials in 2014

has production with decrease of 7.9% compared to the previous year for 7.44

million tons and demand with decrease of 8.5% compared to the previous

year for 4.52 million tons.

Country Report

- 10 -

Status and Prospect of Supply of Synthetic Fiber>

(Unit: 1,000 tons)


G.R G.R G.R G.R G.R

Pro 8,078 -3.9% 3,854 -3.0% 3,583 -12.7% 7,437 -7.9% 7,370 -0.9%

Exp 3,747 -5.6% 1,830 2.0% 1,680 -13.9% 3,510 -6.3% 3,433 -2.2%

Imp 601 -0.7% 288 -2.7% 300 -1.7% 588 -2.2% 521 -11.4%

Dem 4,932 -2.2% 2,312 -6.6% 2,203 -10.3% 4,515 -8.5% 4,465 -1.1%

2013 2014

Syn.FiberRaw

Mat'ls

2015


Due to the prolonged suspension of operation that leads to excessive

supply in the region mainly from the large-scale new facility increase for

China's TPA, CPLM and so forth as well as conversion into facilities, production

has continued its trend of reduction following 2013. It is attributable to the

influence of production reduction following the prolonged stoppage of operation

for SK Petrochemical (TPA 520KT ’14.7~), Samnam Petrochemical (TPA 350KT

’12.4Q~), Capro (CPLM #1 55KT ‘13.10~/#2 60KT ‘14.6~) and so forth along

with the facility conversion of Lotte Chemical (TPA #2 350KT → converted

into PIA in June 2014).

Accordingly, the overall operation rate of synthetic fiber raw materials has

declined for 3.5% from 85.4% in 2013 to 81.9% in 2014, and in particular,

CPLM has drastically decreased from 87.1% to 52.9%, showing substantial

weakening of productivity. The TPA operation rate also showed substantial

reduction of operation rate from 86.2% in 2013 to 81.8% with the suspension

of additional facility operation of SK Petrochemical in 2014.

Export has continued its decrease trend following the previous year with

the slow down of export in TPA, AN, and CPLM excluding EG and DMT.


- 11 -

Domestic demand has continued its decrease trend following the previous

year with the demand for synthetic fiber raw materials reduced due to the

reduction of production following the slow domestic demand in chemical fiber

as the upstream industry. Production of domestic chemical fiber in 2014 was

1,367,000 tons, a reduction of 6.2% compared to the previous year and

demand with the reduction of 10.2% for 754,000 tons. Production for each

chemical fiber item has shown slowing down trend for most categories in

polyester F 659KT (△11.2%), polyester SF 543KT (1.9%), nylon F 115 (△10.5%), and Acrylic SF (△9.1%).

[Prospect of 2015]

The demand and supply of domestic synthetic fiber raw materials in

2015 has production decreased 0.9% compared to the previous year for 7.37

million tons and demand decreased 1.1% compared to the previous year for

4.47 million tons.

Production has reduced with the influence of continued production

slowing down following the long-term prospect of low operation rate of TPA

and CPLM. However, the EG production is likely to recover some reduction

range of overall synthetic fiber raw materials as it was increased in accordance

with the facility increase of Korea Petrochemical Ind. Co., Ltd. (200KT, Dec.

2014).

Export is expected to continue with the export reduction rate, following

the previous year, thanks to the large-scale supply expansion of China and

import regulations of the alternative markets for major exports, such as, India

and others.

For a reference, the annual production capability for China's TPA in 2014

was 43.6 million tons, an increase of 10 million tons or more compared to the

previous year. It is scheduled for additional new facilities of around 10 million

tons as similar to the previous year in 2015 that the excessive supply in the

Country Report

- 12 -

region is even more deepened and the export market in the region is

expected to be more fierce. China has secured production capability much

more than its own demand in TPA, CPLM and others and AN is likely to have

a great reduction of import in accordance with the new operation of 600,000

tons this year.

With the continuance of slow down in production following the depressed

demand in domestic chemical fiber, the reduction trend is expected to continue

with the domestic demand on chemical fiber and the range of reduction

compared to the previous year will be moderated to a degree with the

expansion of partial production capability of high added value of chemical

fiber.

(3) Synthetic Rubber

[Status of 2014]

The demand and supply of domestic synthetic rubber of 2014 has

production to record 1.01 million tons with the reduction of 2.7% compared to

the previous year and demand to record for 440,000 tons, an increase of

2.5% compared to the previous year.

<Status and Prospect of Supply for Synthetic Rubber>

(Unit: 1,000 tons)


G.R G.R G.R G.R G.R

Pro 1,037 3.1% 529 -2.0% 480 -3.5% 1,009 -2.7% 1,020 1.1%

Exp 697 8.5% 351 -3.2% 306 -8.5% 657 -5.7% 656 -0.1%

Imp 84 19.7% 43 -1.2% 40 -2.4% 83 -1.8% 83 0.1%

Dem 425 -2.2% 221 0.3% 214 4.9% 435 2.5% 446 2.6%

2013 2014

Syn.

Rubber

2015

Data: KPIA,Note: Production is based on sales

Notwithstanding the expansion of supply capability following the new

facility increase (LG Chemical SSBR 60KT, November 2013) and increase of

domestic demand for the synthetic rubber following the increase of domestic


- 13 -

tire production, production is expected to be slowed down with the weakening

of market status for exporting.

Export has recorded for reduction of

a great range for △5.7% compared

to the previous year and it works as

a main factor for slowing down of

the tire production of China, resulting

in slowing down of demand for

synthetic rubber and progress of self

supply to reduce the export to

China.

2013

2014

50%

60%

70%

80%

90%

100%

1 2 3 4 5 6 7 8 9 10 11 12

Synthetic Rubber O/R

In addition, the SBR export of ASEAN and so forth has the decrease of

15% compared to the previous year with significant weakening of major

export market environment. For a reference, China's SBR and BR increase

recorded high decrease rate of △8.8% and △11.3% compared to the

previous year respectively.

Domestic demand was converted to the "+" growth in 2014 under the

"-" demand growth in 2013 in accordance with the domestic tire production

increase. According to the announcement of the Korea Tire Industry

Association, the domestic tire production increase rate in 2014 has increased

for 0.5%p compared to the previous year as 1.3% (99,714,000 units).

[Prospect of 2015]

The demand and supply of the domestic synthetic rubber in 2015 has

production to increase 1.1% compared to the previous year for 1.02 million

tons and demand to increase 2.6% compared to the previous year for

450,000 tons.

Country Report

- 14 -

Export is continued to have the import demand reduction of the major

export region, such as, China and others, to continue the lackadaisical export.

With the increase of domestic tire production with the demand increase

of OE (Original Equipment) tire following the release of number of new

domestic cars and tire of export to the US by Korea following the import

restrictions of the US on tires from China, the domestic demand of the

synthetic rubber is expected to increase for 2.6% compared to the previous

year.

(4) Export

[Status of 2014]

Export of entire petrochemical industry in 2014 recorded 48.2 Billion

Dollars, a decrease of 0.3% compared to the previous year. While the export

to major export countries (regions) of China (△6.2%), India (△4.1%), ASEAN

(△5.3%) and others was reduced, export to the US (51.9%), EU (30.5%),

Turkey (42.9%) and others has shown significant increase.

On the basis of volume, intermediates material (22.4%) and basic diary

products (2.3%) have led the increasing trend while synthetic fiber raw

materials (△6.3)% and synthetic resin (0.2%) showed adverse impact. For a

reference, the export volume was expanded for 4.5% compared to the

previous year with 30.75 million tons in 2013 to 4.5% increase for 32.13

million tons.


- 15 -

<Trend of Exporting petrochemical Products for Each Year>

-20

-10

0

10

20

30

40

50

0

100

200

300

400

500

600

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14

Amount YoY(%)USD 100 miilion %

Data: KOTIS

[Prospect of 2015]

Export in 2015 is expected to be 42.1 Billion Dollars, a decrease of

12.6% compared to the previous year. With the expansion of supply following

the facility increase for PX, NCC, and EG in the second half of 2014 and SM

and propylene in 2015, the export volume is to be increased for

approximately 6.2%, but the amount is expected to reduce due to the decline

of export price following the weakened materials.

For each country, it is expected to increase the export to China for base

effect and intermediary material as well as the increase of the export to the

US for benzene, butadiene base diary product and ABS, PS and other

non-ethylene synthetic resin (Based on volume).

For each item, the export expansion of intermediary material and

synthetic resin is expected following the facility expansion, but the synthetic

fiber raw materials is expected to reduce the export availability due to the

reduction of facility capability, base diary product with the increase of

domestic demand (Based on volume).

- 16 -

Ⅱ. For Committee Meeting

1. General Matters & Raw Materials

Committee


- 17 -

General Matters & Raw Materials Committee

1. Olefins (Ethylene, Propylene, Butadiene)

ITEM : Ethylene

1) The 2014 Results

With the influence of capacity expansion of ethylene derivatives in Korea

that have been undertaken from the end of 2013, such as, capacity

expansions of EVA for LG Chemical (140KTA) and Samsung Total (230KTA),

m-LLDPE (230KTA) of SK Global Chemical, and new establishment of EO/EG

(200KTA) of KPIC, the supply situation compared to the previous year has

become tightened and the supply situation has become more worsened with

the supply reduction following the T/A of Crackers of Japan beside YNCC of

Korea.

With the expansion of the ethylene demand following the facility increase

of the derivative, the ethylene-PE spread showed fluctuation of marginal level

following the change of the ethylene price, but the overall spread of the base

material in naphtha-PE has continuously increased to show outstanding

economic feasibility. In particular, the oil price/naphtha price has drastically

decreased from 4Q of 2014, but the polyolefin profitability has made great

improvement from the price regression of the PE price.

2) The 2015 Forecast

While the tight supply situation following the increased facility of

derivative is processed in 2014 LG Chemical (760KTA), Samsung Total

(850KTA), YNCC (850KTA), Lotte Chemical (1,000KTA) and other crackers

planned for 2Q and 4Q of 2015 are expected to deepen its tightness

compared to the previous year for the supply situation in Korea with the

influence of T/A.


- 18 -

With the expected booming trend for the derivative with the influence of T/A

of SM, the polyolefin profitability is expected to be fine, but the main export

market, China, has the uncertain economic prospect that would work as the

restricting factor.

ITEM: Propylene

1) The 2014 Results

The propylene capacity of the Korean domestic market of 2014 has

increased for 62kt compared to the previous year due to the revamping of LG

Chemical NCC. While the capacity has slightly increased, the domestic and

export demand has made substantial increase (480kt) due to the outstanding

PP market.

After the second half, due to the suspension of operation for LCY of Taiwan

and new facility of China's PDH, the market has sustained its declining trend,

but the operation rate has been maintained at high level due to the entirely

outstanding cracker economic feasibility.


In the event that Hyosung PDH is completed this year, it is scheduled to

have substantial capacity increase of 300kt. The operation rate is expected to

decline due to the worsening market situation of propylene downstream, such

as, AN, AA and so forth, and the export demand also is expected to have

significant downfall due to the increase of self-sufficiency rate of China.

In the first half, thanks to the influence of stable oil price/naphtha price and

T/A within the region, relatively fine price and spread is expected to maintain,

but it is inevitable to convert into weak trend due to the influence of supply

increase with additional S/U of PDH in China, operation of Hyosung PDH and

so forth.


- 19 -

ITEM: Butadiene

1) The 2014 Results

While there is no change of production capacity of butadiene and its

derivative in Korea, such as, BR/ SBR/ ABS and others, relatively stable market

situation is sustained in the second half due to the influence of reduction in

supply following the expansion of LPG cracking. Spread compared to the

previous year is reduced

엳 to the weakening natural rubber production,

decline in operation rate for downstream plants of China.


Following 2014, there is no change of production capacity in Korea, but

due to the T/A of Korean crackers, such as, LG Chemical (760KTA), Samsung

Total (850KTA), YNCC (850KTA), Lotte Chemical (1,000KTA) and so forth, the

supply situation is expected to make slight improvement compared to the

previous year.

However, because of slow down of global economy, sustained over-supply of

rubber in the Chinese market, continued weakening of natural rubber price

and so forth.


- 20 -

(Unit: 1,000MT)2013 2014

2015(Prospect)

Ethylene

Supply

Production 8,135 8,294 8,428

Import 144 170 270

Total 8,279 8,464 8,698

Demand

Domestic 7,047 7,361 7,493

Export 1,117 1,071 1,205

Total 8,164 8,432 8,698

Year-end Capacity 8,290 8,313 8,430

Propylene

Supply

Production 6,596 6,922 6,754

Import 434 438 430

Total 7,030 7,360 7,184

Demand

Domestic 6,153 6,541 6,384

Export 1,208 1,300 800

Total 7,361 7,841 7,184


Butadiene

Supply

Production 1,110 1,131 1,194

Import 381 400 177

Total 1,491 1,531 1,371

Demand

Domestic 1,269 1,295 1,275

Export 184 170 96

Total 1,453 1,465 1,371



- 21 -

2. Aromatics(Benzene, Toluene, Xylene)

ITEM: Benzene (Unit: 1,000MT)

2013 20142015

(Prospect)

Supply

Production 4,902 5,362 5,950

Import 89 67 50

Total 4,991 5,429 6,000

Demand

Domestic 3,503 3,531 3,500

Export 1,399 1,898 2,500

Total 4,902 5,429 6,000

1) The 2014 Results

In 2014, with the expansion of large-scale production capacity with the

operation of new facilities for Samsung Total, SK Incheon Petrochem, UAC and

others, the domestic PX production capacity has expanded to 6,448KT, an

increase of 1,430KT compared to the previous year. Following the increase in

facility scale, production recorded for 5,362KT, an increase of 9.4% compared

to the previous year, and following the increase in domestic production, the

import was declined to 67KT, a decrease of 24.7% compared to the previous

year.

Notwithstanding the outstanding production increase of main downstream,

such as, SM, phenol, and others, the CPLM production had drastic decrease of

approximately 40% compared to the previous year that the domestic demand

of benzene increased only 0.8%. The export has expanded to 1,898KT, an

increase of 9.4% compared to the previous year due to the great expansion

of the US export and expansion of domestic supply.


- 22 -


The domestic benzene production in 2015 is expected to expand to

5,950KT, an increase of 11% compared to the previous year due to the

large-scale facilities increase in the previous year. In spite of SM capacity

expansion by Samsung Total in the first half of this year, the domestic

benzene demand is likely to decrease 1% compared to the previous year for

3,200KT with the decline of operation rate from a number of T/A on SM, slow

down in domestic Phenol production and so forth. The export is expected to

expand to 2,500KT, an increase of 32% compared to the previous year with

the increase of export from reduction of domestic demand, increase of export

to China, US and others.

ITEM: Toluene(Unit: 1,000MT)

2013 20142015

(Prospect)

SupplyProduction 2,290 2,078 1,950

Import 186 588 800

Total 2,476 2,666 2,750

DemandDomestic 1,406 1,897 2,050

Export 1,071 769 700

Total 2,477 2,666 2,750

1) The 2014 Results

With the increase in toluene self-consumption following a number of

increased facilities of PX in 2014, the production was decreased to 2,078KT, a

reduction of 9.3% compared to the previous year, but import was expanded

to 588KT, an increase of 216% compared to the previous year. The domestic

demand was expanded to 1,897KT, an increase of 34.9% compared to the

previous year and, following the domestic production reduction and increase in

domestic demand, export was reduced to 769KT, a decrease of 28.2%

compared to the previous year.


- 23 -


With the increase in toluene self-consumption following the expansion of

PX production in 2015, production is expected to be 1,950KT, a reduction of

6.2% compared to the previous year. The domestic demand is expected to

increase to 2,050KT, an increase of 8.1% compared to the previous year, and

the export is expected to continue its decrease after the previous year in

accordance with the reduction of domestic production and increase of demand.

ITEM: Mixed Xylene(Unit: 1,000MT)

2013 20142015

(Prospect)


Import 1,656 1,552 1,700

Total 4,762 4,621 4,500

DemandDomestic 3,707 3,271 3,500

Export 1,055 1,349 1,000

Total 4,762 4,620 4,500

1) The 2014 Results

Domestic MX production showed an reduction of 1.2% compared to the

previous year due to the influence of expanding self-consumption following the

PX production increase. For the MX domestic demand, it was reduced for

11.8% compared to the previous year due to the influence of MX demand

reduction and others following the reduction of the 800KTA facility operation

rate of Hyundai Cosmo.


- 24 -


Production is expected to decrease 8.8% compared to the previous year

with the increase of the self-consumption by expanding the PX production. On

the other hand, the MX domestic demand is expected to increase 7.0%

compared to the previous year due to the influence of MX demand increase

following the re-operation of the 800KTA facilities of Hyundai Cosmo, and

accordingly, the import is expected to increase for 9.5% accordingly.

ITEM: Para Xylene(Unit: 1,000MT)

2013 20142015

(Prospect)

SupplyProduction 6,403 7,374 8,600Import 611 126 100Total 7,014 7,500 8,700

DemandDomestic 3,970 3,528 3,200Export 3,045 3,972 5,500Total 7,015 7,500 8,700

1) The 2014 Results

With the expansion of large-scale production capacity by the operation of

many new facilities, such as, Samsung Total, SK Incheon Petrochem, UAC in

2014, the domestic PX production capacity has increased for 3,460KT

compared to the previous year to 10,080KT. Following the increase of facility

scale, the production was recorded for an increase of 15% compared to the

previous year for 7,374KT and the import was drastically declined from 611KT

in 2013 to 126KT in 2014 in accordance with the increase of the domestic

production. The domestic demand was reduced to 3,528KT, an 11% decrease

compared to the previous year due to the reduction of PX demand following

the decrease of TPA operation rate. The export has made significant increase

to 3,972KT, an increase of 30% compared to the previous year with the

expansion of domestic supply and reduction of demand. Major exporting


- 25 -

country was China (export ratio of 91%), recording 3,630KT, an increase of

34% compared to the previous year, and Taiwan had 290KT, a decrease of

14% compared to the previous year.


In 2015, the domestic PX production is expected to expand 8,600KT, an

increase of 17% compared to the previous year thanks to the large-scale

capacity expansion in the previous year. Due to the production decrease

following the slow down in the TPA export, the PX domestic demand is　3,200KT, expecting to decrease for 9% compared to the previous year. The

export is expected to make a significant increase following the previous year

thanks to the export expansion to China due to the increase of export

capacity following the reduction of the domestic demand, increase of PX

import demand of PX following the increase of the chemical fiber production in

China, interference with the supply due to the fire in PX facility at Dragon

Aromatics of China in April. On the other hand, the import is expected to

decline following the previous year in accordance with the reduction of

domestic demand and securing domestic facility capacity.


- 26 -

ITEM: Raw Material (Naphtha)(Unit: 1,000MT)

2013 2014(E) 2015(P)　　 G.R 　 G.R

　 Supply 23,431 23,933 5.5% 25,321 5.8%Supply Import 23,210 23,935 3.5% 24,174 1.0%

　 Total 46,641 47,868 4.2% 49,495 3.4%　 Crackers 25,320 25,193 -0.5% 25,319 0.5%

Demand* Reformers 17,071 19,632 15.0% 21,398 9.0%　 Others 4,250 3,043 -13.9% 2,777 -8.7%

1) The 2014 Results

The demand for the domestic naphtha in 2014 is estimated to increase

for approximately 4% compared to the previous year. For each field, following

the reduction of the ethylene production and increase of the LPG cracking ratio, the

demand for NCC is estimated to have a slight reduction. On the other hand, due to

the increase of naphtha use following the new facility operation of PX, the demand for

reformer has increased a great deal compared to the previous year. The production is

analyzed to make a great increase of naphtha production in accordance with the

increased facility of condensate splitter.


The demand for domestic naphtha in 2015 is expected to continue the

demand growth around the reformer following the previous year. On the other

hand, notwithstanding the capacity expansion of 150KTA of ethylene for LG

Chemical in the 4Q in 2014, it is expected to make limited increase of 0.5%

for the increase rate of naphtha demand for NCC due to the decline of NCC

operation rate following the increase of T/A of NCC compared to the previous

year. Due to the prospect to increase the PX operation rate following the

great PX export, the naphtha production is expected to continue expanding

following the previous year with the expansion of the condensate

splitter-leading production.

- 27 -

2. Polyolefins Committee

Polyolefins Committee

- 28 -


ITEM : LDPE (including L-LDPE, EVA)(Unit : 1,000MT)

2013 20142015

(Prospect)

Supply

Production 2,292 2,465 2,665Import 110 114 138Total 2,402 2,579 2,803

Demand

Domestic 1,225 1,075 1,260Export 1,177 1,503 1,543Total 2,402 2,579 2,803

Year-end Capacity 400 2,368 2,608

1) The 2014 Results

In 2014, the total domestic LDPE production (including LLDPE/EVA) had

increased 8% (2,456KT) compared to that of in year 2013. Such an increase

was due to the expansion of business done by both LG Chemical and

Samsung Total. Samsung Total had built its additional EVA/LDPE plant in 2014,

having additional capacity of 240KT. LG Chemical also had increased its

additional capacity of 140KT by installing more EVA/LDPE plants in 2013. In

year 2014, the total amount of imported LDPE products was similar to that of

in year 2013.

Due to the economic recession in 2014 however, the demand of LLDPE

general purpose film in the domestic market had decreased. Most of leftover

inventories of LDPE during this time were exported to overseas.


- 29 -


The total production capacity of Korean producers in 2015 is expected to

be 2,655 KT which is 200KT more than that of in 2014. Samsung Total and

SK Global Chemical will be selling aggressively in 2015 with their increased

capacities. SK Global Chemical is planning to increase its capacity 230KT more

in 2015 by building new LLDPE plant.

The demand of domestic LDPE market would grow up to 1,260KT.

However, the exporting amount of LDPE would be similar to that of in

year 2014, which was 1,543KT. This is due to the adjusting and balancing the

demand for LDPE by big producers in domestic market.

The domestic demand is expected to grow to 1,260KT as 2013's

domestic demand. The Export quantity is similar to 2014's, 1,543KT due to the

balance of production domestic demand.

ITEM : HDPE(Unit : 1,000MT)

2013 20142015

(Prospect)

Supply

Production 2,236 2,094 2,087Import 38 46 48Total 2,274 2,140 2,135

Demand

Domestic 882 942 975Export 1,392 1,198 1,160Total 2,274 2,140 2,135


1) The 2014 Results

In 2014, Korea’s HDPE production was decreased by 6.4% at 2,094

thousand ton compared to 2013 according to market environments. Domestic

demand was increased by 6.8% on the back of slight recovery of domestic

economy


- 30 -


HDPE production is expected to be 2,087 thousand ton which is down by

0.3% compared to 2014. The reason is that more turn-around are scheduled.

(SamsungTotal, LG Chemical, YNCC, Lotte Chemical etc)

The domestic demand is expected to increase by 3.5% because of slightly

recovered domestic economy. The export volume will be slightly decreased due

to less production and more sales to domestic market.

ITEM : P P(Unit : 1,000MT)

2013 20142015

(Prospect)

Supply

Production 3,970 4,118 3,831 Import 36 37 30 Total 4,006 4,155 3,861

Demand

Domestic 1,555 1,599 1,641 Export 2,414 2,519 2,190 Total 3,969 4,118 3,831


1) The 2014 Results

In 2014, PP prices have mostly shown stable trend in line with crude oil

price and feedstock prices. However, not only crude oil but also naphtha and

following downstream feedstock price fell sharply at the end of 2014.

China imported 5.0 million ton of PP, up by 0.2% year on year. Chinese

PP self-sufficiency rate increased up to 74%(0.8%p↑ year on year). Due to

global depression, overall PP demand was not active enough not only China

but also domestic market in Korea.(China domestic demand in 2014 was 19.1

million ton, up by 7% year on year)


- 31 -


In 2015, Chinese GDP growth rate is expected to be 7.0% which is

0.5% lower than 2014. It is lowest level since 2004 in 11 years. Chinese PP

self-sufficiency will be raised by more than 5%, as new PP production capacity

comes online. New capacity expansion in China is expected over than 3.5

million ton of PP, including new method of production MTO/CTO, which is

around 2.0 million ton in 2015.

The world economy is expected to enter gradually in a recovery stage.

Accordingly, crude oil, naphtha as well as propylene price is expected to be on

upturn trend. Due to upcoming turnaround in Middle East and Asian crackers,

supply tightness could be occurred concerning market condition transiently.

- 32 -

3. Styrenics Committee


- 33 -

Styrenics Committee

ITEM : P S(Unit : 1,000 MT)

2012 20132014

(Prospect)

Supply Production 609 579 587 Import 22 26 28 Total 631 605 623

Demand Domestic

309

328

300

294

304

300 Export 637 594 604 Total 736 716 716

Year-end Capacity 808 808 808

* EPS excluded

1) The 2014 Results

The production was 579 thousand tons, 4.9% lower than that in 2013

due to sales decrease in domestic as well as export. The demand was 594

thousand tons, 6.7% lower than that in 2013 mainly came from 10.3% YoY

decrease in export.


The production will be 1.4% higher than that in 2014 with no more

capacity change. The demand will be 1.7% higher than that in 2014, but its

growth will be far behind in 2013.

Styrenics Committee

- 34 -

ITEM : A B S(Unit : 1,000 MT)

2013 20142015

(Prospect)


DemandDomestic 367 368 375Export 1,194 1,208 1,180Total 1,561 1,576 1,555


1) The 2014 Results

Compared to 2013, the stagnation of the export market by ABS maker’s

cost pressure and a weak Chinese market, the domestic market is stagnant

due to lack of demand in the front industry.


Significant growth will be difficult because of the recession increasing the

risk of the front industry, downward revision about economic growth rate, and

increase of China self-sufficiency.


- 35 -

ITEM : S M(Unit : 1,000 MT)

2013 20142015

(Prospect)

SupplyProduction 2,725 3,022 2,980 Import 948 845 750 Total 3,673 3,867 3,730

DemandDomestic 2,406 2,368 2,380 Export 1,266 1,474 1,350

Total 3,672 3,842 3,730 Year-end Capacity 2,870 2,870 3,220

1) The 2014 Results

There was a few operation trouble compared to last year(2013). Good

economics in the beginning of the year make high operation rate and SKGC in

Ulsan complex in Korea restart their EBSM plant from May(The plant was shut

down again on August due to poor economics.).


The Korea biggest SM producer, Samsung Total will increase their

capacity to 1,050KT/Y (from 930KT) during T/A season. Samsung Total has

two SM unit in DAESAN complex. This time they will increase No.1 plant

capacity by 120KT(280KT --> 400KT).

Production of SM in 2015 is expected to be 2,980 thousand tons due to

scheduled maintenance work. Total 7 units out of 8(exclude SKGC) in Korea

will have a turn around this year.

- 36 -

4. PVC Committee


- 37 -

PVC Committee

ITEM : P V C(Unit : 1,000MT)

2013 20142015

(Prospect)


DemandDomestic 796 894 897Export 660 583 590

Total 1,456 1,477 1,487Year-end Capacity 1,468 1,475 1,475

1) The 2014 Results

Due to high price of raw materials and slow growth of China, PVC

market was sluggish.


Since global economy will slightly improve in 2015, PVC market will

become better in near future.

PVC Committee

- 38 -

ITEM : V C M(Unit : 1,000MT)

2013 20142015

(Prospect)


DemandDomestic 1,370 1,388 1,412Export 100 125 135

Total 1,470 1,513 1,547Year-end Capacity 1,673 1,680 1,680

1) The 2014 Results

Due to high price of raw materials and slow growth of China, PVC market

was sluggish.


Although uncertainty of oil price still exists, the burden of VCM makers

will be slightly relieved from raw materials.

- 39 -

5. Synthetic Rubber Committee

Synthetic Rubber Committee

- 40 -

Synthetic Rubber Committee

(Unit : MT)　 2013 2014

2015(Prospect)

SBR

Capa. (Year-end) 746 746 746

SupplyProduction 591 561 568Import 67 63 61Total 658 624 629

DemandDomestic 274 278 287Export 384 346 343Total 658 624 629

BR

Capa. (Year-end) 516 516 516



* SBR(E-SBR+S-SBR) / BR (HBR + LBR)

1) The 2014 Results

The demand and supply of domestic synthetic rubber of 2014 has

production to record 1.01 million tons with the reduction of 2.7% compared to

the previous year and demand to record for 440,000 tons, an increase of

2.5% compared to the previous year.

In spite of the new facility increase (LG Chemical SSBR 60KT, November

2013) and increase of domestic demand of the synthetic rubber following the

production increase of domestic tire, production is decreased due to the

weakening of market status for exporting.

Export has recorded for reduction of a great range for △5.7% compared

to the previous year and it works as a main factor for slowing down of the

tire production of China, resulting in slowing down of demand for synthetic

rubber and progress of self supply to reduce the export to China. In addition,

the SBR export of ASEAN and so forth has the decrease of 15% compared to


- 41 -

the previous year with significant weakening of major export market

environment. For a reference, China's SBR and BR increase recorded high

decrease rate of △8.8% and △11.3% compared to the previous year

respectively.

Domestic demand was converted to the "+" growth in 2014 under the

"-" demand growth in 2013 in accordance with the domestic tire production

increase. According to the announcement of the Korea Tire Industry

Association, the domestic tire production increase rate in 2014 has increased

for 0.5%p compared to the previous year as 1.3% (99,714,000 units).


The demand and supply of the domestic synthetic rubber in 2015 has

production to increase 1.1% compared to the previous year for 1.02 million

tons and demand to increase 2.6% compared to the previous year for

450,000 tons.

Export is continued to have the import demand reduction of the major

export region, such as, China and others, to continue the lackadaisical export.

With the increase of domestic tire production with the demand increase

of OE (Original Equipment) tire following the release of number of new

domestic cars and tire of export to the US by Korea following the import

restrictions of the US on tires from China, the domestic demand of the

synthetic rubber is expected to increase for 2.6% compared to the previous

year.

- 42 -

6. Synthetic Fiber Raw Materials

Committee


- 43 -

Synthetic Fiber Raw Materials Committee

ITEM : A N(Unit : 1,000MT)

2013 20142015

(Prospect)




1) The 2014 Results

Comparing with 2013, domestic demand of AN in Korea was increased by

3.4% and reached to 514KT.

Production decreased 3.7% to 700KT due to weak export and unplanned

shutdown of Tongsuh No.4 plant.


Domestic demand of AN will be 2.7% lower than in 2014 because ABS,

AN production growth rate are expected to be little lower than in 2014 due to

weak export.

AN Production will decrease 2.9% to 680kt due to weak export and

decreasing production of it’s derivatives.


- 44 -

ITEM : Caprolactam(Unit : 1,000MT)

2013 20142015

(Prospect)


DemandDomestic 238 208 209Export 0 0 0

Total 238 208 209Year-end Capacity 270 270 270

1) The 2014 Results

Because of oversupply caused by large expansion of CPL and its

derivatives, and the economic slowdown in China, production in Korea was

decreased by –40%, which is 143KT. Meanwhile Korean import was increased

to 68KT, which is 130% increase in compared to the previous year.


Generally, the growth rate of supply and demand will continue to be

sluggish as they were in 2014, affected on continued expansion of China and

Korea economic slowdown.


- 45 -

ITEM : E G(Unit : 1,000MT)

2013 20142015

(Prospect)


DemandDomestic 1,202 1,165 1,168Export 468 545 555Total 1,670 1,710 1,723


1) The 2014 Results

Affected by 3.9% drop in the domestic polyester market in 2014, total

domestic demand for MEG fell by 3.1% year on year to 1.17 million tons.

Meanwhile, thanks to 4.3% growth in the Chinese polyester market in 2014,

China imported 8.45 million tons of MEG, due to which Korea’s export of MEG

rose by 16.5% compared to last year. As a result, total domestic output has

totaled 1.26 million tons, up by 5.1% year on year.


Growth in domestic demand for MEG will be limited in 2015 as domestic

chemical fiber firms’ total polyester output is expected to be just about 3.16

million tons, which is on a par with last year’s. Though Korea’s total MEG

capacity rises by 8.3% due to KPIC’s MEG expansion(150KT/year), PCI data

forecasts Korea will export merely 560KT of MEG in 2015, based on 86.6%

MEG operating rate. Considering usual operating rate in Korea, however, there

will be an additional 100KT MEG oversupply, which will be exported to China

where 4.9% growth in polyester output is predicted this year.


- 46 -

ITEM : T P A(Unit : 1,000MT)

2013 20142015

(Prospect)


Import 0 0 0Total 5,755 5,384 4,765

DemandDomestic 2,816 2,708 2,708Export 2,945 2,676 2,055Total 5,761 5,384 4,764


1) The 2014 Results

In 2014, we saw various company reshuffles in the PTA market due to

weakening economics. As a result, the annual PTA output was reduced by 371

kmt (6%) to 5,384 kmt. It is estimated that the reductions in capacity come

from stopped/scratched plants.

On the demand side, the increase of the Chinese Self-Sufficiency rate

combined with the levy of Anti-dumping duties for Indian material resulted in a

reduction of Asian demand for PTA and a rapid shift to exports to off-shore markets. It

is estimated that overall Demand dropped by 377 kmt (7%) to 5,384 kmt.


Market prospects are rather opaque for 2015 with low chances of

improvement in market economics.

Overall growth rate in PTA production has slowed down but new

capacities in China are expected to come in line adding pressure to the export

market. Prospects for 2015 remain unclear for currently shut facilities of

capacity of 500 kmt or less.

Overall annual production Capacity is expected to fall by 619 kmt (11%) to

4,765 kmt whilst Demand is expected to fall by 620 kmt (12%) to 4,764 kmt

- 47 -

7. Chemicals Committee

Chemicals Committee

- 48 -

Chemicals Committee

ITEM : 2-Ethyl Hexanol(Unit : 1,000MT)

2013 20142015

(Prospect)




※ Production is Shipment, Demand/Domestic is included self consumption

1) The 2014 Results

In the first half of 2014, 2EH profitability has drastically worsened due to

strong feedstock and weak demand in downstream. New start-up plants in

China(total production capacity 2,100KT/year) heavily boosted spot liquidity and

this lowered down 2EH price further.

In the second half, raw material C3 constantly plunged along with oil

price and took the floor to $684/MT at the end of 2014 since it reached

$1,413/MT on July. In the end of the year 2EH-C3 spread has temporally

widened to $493/MT but this was not cause by 2EH improvement but mainly

by oil price recession and expectations for new C3(PDH, MTO) facility in China

next year.


In the first half of 2015, Asian creaker’s turn around which concentrated

from Mar. to June will cause strong uptrend of C3 price. On the contrast, 2EH

chronic oversupply condition will go on. In the second half, we prospect

2EH-C3 spread can be somewhat improved. China’s new C3 plants(MTO, PDH)


- 49 -

are expected to come on stream at about 7million MT in this year and this is

more than doubled compared to last year’s new capacity.

In conclusion, even though weak demand in 2EH downstream will be the

same as last year, 2EH profitability can be improved by feedstock(C3) price

adjustment in the second half.

ITEM : Phthalic Anhydride(Unit : 1,000MT)

2013 20142015

(Prospect)




1) The 2014 Results

Domestic Market - Gradual Demand ruduction due to regulation of using

phthalic-based plasticizer and PA market downsizing(Paing, Alkyd Resin,

Pigment)

Weakness of Domestic Buyer’s importing PA due to heavy price

cometition among PA makers in PA domestic demand’s reduction

Export Market - Heavy price competition against India, China’s enlarged

PA capacity and European origin that have much competitiveness caused from

EURO currency like Russia, Italy.

Chemicals Committee

- 50 -


Domestic Market – Price competition among the makers would continue

because of stagnant PA domestic market without developing new PA　application

Export Market – Main trend would be affected by change main market

and producing country like India and China make according to economic

growth and operation ration.

ITEM : Acetic Acid(Unit : 1,000MT)

2013 20142015

(Prospect)




1) The 2014 Results

Effect from strong raw material (MeOH) Asian AA price began high, then

AA fell down dramatically with weaken MeOH price until March. AA price had

been turned to strong due to shortage of VAM stocks in Asia following VAM

plant scrap in EU and key producers’ F/M in US.

Moreover Chinese AA key producers were struggling with production

trouble at the same time. Strong AA trend lasted until end of Q3, but weak

MeOH and crude oil price help to keep AA producers proper margin.


- 51 -


Overall AA market will be expected to turn bullish from Q2, because of

shortage of AA stocks with several key producers’ TAR plan. Chinese PTA new

capacity and expansion will add shortage of AA stocks

After finishing TAR in Q2, AA price is expected to down again, and then

it will last end of year

ITEM : Phenol(Unit : 1,000MT)

2013 20142015

(Prospect)

SupplyProduction 868 980 980

Import 72 45 55Total 940 1,025 1,035

DemandDomestic 750 800 835Export 165 230 200Total 915 1,030 1,035


1) The 2014 Results

① Global trend

　 1Q 2Q 3Q 4Q

Outlook Negative Less negative Positive Very negative

Price(ICIS CMP Avg.) USD1,424/MT USD1,456/MT USD1,592/MT USD1,235/MT

② Analysis by each factors

- 1~2Q : Strong raw material price and the weak demand in downstream

pushed Phenol makers to be faced with worse profitability and to

reduce their operating ratio or to stop operating.

- 3Q : Due to the narrowed spread and worse profitability, the operation

of new Phenol plants in China has been delayed to 2015. Thanks to

Chemicals Committee

- 52 -

the delayed start-up and reduced operating ratio during 1~2Q, the

market price of Phenol went up to over $1,600/MT.

- 4Q : Along with the downturn of raw material Bz and C3, the price of

Phenol has sharply gone down which made the Bz-Phenol spread to

be narrowed.


① Global trend

1Q 2Q 3Q 4Q

Outlook Positive Less positive Negative Very Negative

② Forecast by each factors

- 1Q : The availability of Phenol has been tightened by the scheduled

plant maintenance and the curtailed plant operating rate. Phenol prices

were assessed as higher against a backdrop of firmer raw material

prices and limited cargo availability.

- 2Q : As new plants in China would be in a position to supply material,

the impact of the maintenance shutdowns in China is expected to

dissipate.

- 3~4Q : The operation of new Phenol Plants in Asia will turn the

market into chronic oversupply conditions and cut down the profit of

manufacturers.

< Phenol Production News >

　 Start-up S/D‘15.1Q SSMC 250KT Jan. KPB(380KT), LG Daesan(300KT)　‘15.2Q Cepsa 250KT Apr. SSMC(250KTA), Lihuayi(220KTA),

Sinopec SABIC(220KTA), Jilin(94KTA)　 FCFC 300KT　 Apr.

cpmai - chemicals petrochemicals manufacturer’s ......(1) synthetic resin [status of 2014] the...

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