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© 2013 Platts, McGraw Hill Financial. All rights reserved. Emerging trends in Asian polymer markets Prema Viswanathan, Associate Editorial Director-Petrochemicals, Olefins Asia 2014, Shanghai, 06-07 March, 2014

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© 2013 Platts, McGraw Hill Financial. All rights reserved.

Emerging trends in Asian polymer markets

Prema Viswanathan, Associate Editorial Director-Petrochemicals,

Olefins Asia 2014, Shanghai, 06-07 March, 2014

2

Agenda

• China polymer imports – 2012-2013

• Polyolefins demand, supply, import trends

• Olefins imports to China

• Polyolefins margins

• The Middle East factor

• The Shale Gas factor

• Price trends and margins for polyolefins

3

China polymer imports

3

0

2000000

4000000

6000000

8000000

10000000

12000000

14000000

16000000

18000000

LDPE LLDPE HDPE PP Homo PP Copol GPPS HIPS ABS PVC PET Total

2012 2013MT/year

Source: China Customs

4

China’s PE/PP balance

0

5

10

15

20

25

2013 2014 2015 2016 2017

Capacity

Demand

0

5

10

15

20

25

2013 2014 2015 2016 2017

Capacity

Demand

Figures in million mt/year

PE PP

Source:Platts

5

China PE, PP imports

5

0

1000000

2000000

3000000

4000000

5000000

6000000

7000000

8000000

9000000

2012 2013

PE PP

Source: China Customs

6

China olefins imports

6

0

500000

1000000

1500000

2000000

2500000

3000000

1 2 3 4 5 6 7 8 9

YEAR Ethyelene Propylene

MT/year (2005-2013)

Source: China Customs

7

Middle East PE capacity-demand chart

0

5

10

15

20

25

30

35

2013 2014 2015 2016 2017 2018

Capacity

Output

Demand

Source: Platts

Note: Figures in million mt/year

8

Shale Gas: A Global Phenomenon

8

9

Ethylene: Producers are “all-in”

9

Source: Company announcements, Platts

IF built, proposed greenfield projects in the US could add as much as 8.55-9.15 million mt/yr of ethylene capacity by 2017

Company Location ,000 mt/yr ETA

ExxonMobil Chemical Texas 1,500 2016

Formosa Plastics CUSA Texas 800 2016

Chevron Phillips Chemical Texas 1,500 2017

Dow Chemical Texas 1,500 2017

Sasol Louisiana 1,500 2017

Occidental/Mexichem Texas 550 2017

Shell Chemical Pennsylvania 1,000-1,500 2017

Aither Chemical/RMG W. Virginia 200-300 2017

Appalachian Resins W. Virginia 250 2017

10

Brownfield projects: The Ones to Watch

10

Source: Company announcements, Platts

Company Location +,000 mt/yr ETA

BASF-Total Texas 60 2012

Dow Chemical (restart) Louisiana 400 2012

Westlake Chemical Louisiana 110 2013

Williams Louisiana 230 2013

Ineos Texas 120 2013

Westlake Chemical Kentucky 80 2014

BASF-Total Texas 100 2014

Westlake Chemical Louisiana 110 2015

LyondellBasell Texas (3) 830 2014-16

Dow Chemical TX/LA (2) 400 2014-16

11

Ethylene nearing 6 year high (CFR China)

11

$1,695/mt

$385/mt

$1,345/mt

$850/mt

$1,392/mt

$1,005/mt

$1,403/mt

$885/mt

$1,162/mt

$1,510/mt

Nearing 6

year high

12 Source: Platts

Margins: HDPE

13

Propylene Prices 2010-2013 (CFR China)

13

14 Source: Platts

Margins: PP

15 15

• PE expected to rebound in March as

Chinese producers cut rates

• Chinese producers had 1.1m-1.2m mt of

PE and PP after Lunar New year holidays,

compared with 0.8m mt around this time

last year

• End users and distributors have very low

inventory and will have to restock very

soon

Outlook: PE

16 16

• Regional turnarounds in Q2 to tighten

supply

• Weak demand as margins mostly negative

because of weak SM and MEG demand

and high inventory

• Slight weakening of C2 expected but will

be capped by tight supply

• High Asian prices causing cargoes to

move from Europe to Asia – 18-19kt fixed

for Q1

Outlook: Ethylene

17 17

• Market direction in Asia bearish

• Chinese buyers showing little buying interest

• Inventory stockpile among producers

• Slow buying after Lunar New Year

• Domestic China prices weakening and this has squeezed

import prices

• Weak economic outlook for China

• Tightening credit also slowing buying activity

Outlook: PP

18 18

Outlook: PP Outlook: PP

Outlook: Propylene

• Weakening demand for PP affecting

propylene

• Price resistance due to falling PP prices

• Severe winter in China affecting propylene

trades

• Turnarounds at propylene plants in Japan to

tighten supply

19 19

Asia Editors:

WenYin Wong: Ethylene, PE, MEG

[email protected]

Marcus Pang: Propylene, PP

[email protected]

Thank you!