global cracker additions impact of new capacities and changing … · 2019-11-15 · market...

London

Houston

Moscow

Singapore

Dubai

New York

Beijing

Kiev

Tokyo

Astana

Shanghai

Rio de Janeiro

Washington DC

Riga

Calgary

Cape Town

Mexico City

San Francisco

Sydney

Sao Paolo

Berlin

Brussels

Market Reporting

Consulting

Events

Global Cracker Additions – Impact of new capacities and changing feedstocks

Indian Petrochem, Mumbai

Andy Nicholson 14 November 2019

Copyright © 2019 Argus Media group. All rights reserved.

• The Argus Media group (referred to herein as “Argus”) makes no representations or warranties or other assurance, express or implied, about the accuracy or suitability of any information in this presentation and related materials (such as handouts, other presentation documents and recordings and any other materials or information distributed at or in connection with this presentation).

• The information or opinions contained in this presentation are provided on an “as is” basis without any warranty, condition or other representation as to its accuracy, completeness, or suitability for any particular purpose and shall not confer rights or remedies upon the recipients of this presentation or any other person. Data and information contained in the presentation come from a variety of sources, some of which are third parties outside Argus’ control and some of which may not have been verified.

• All analysis and opinions, data, projections and forecasts provided may be based on assumptions that are not correct or which change, being dependent upon fundamentals and other factors and events subject to change and uncertainty; future results or values could be materially different from any forecast or estimates described in the presentation.

• To the maximum extent permitted by law, Argus expressly disclaims any and all liability for any direct, indirect or consequential loss or damage, claims, costs and expenses, whether arising in negligence or otherwise, in connection with access to, use or application of these materials or suffered by any person as a result of relying on any information included in, or omission from, this presentation and related materials or otherwise in connection therewith.

• The information contained in this presentation and related materials is provided for general information purposes only and should not be construed as legal, tax, accounting or investment advice or the rendering of legal, consulting, or other professional services of any kind. Users of these materials should not in any manner rely upon or construe the information or resource materials in these materials as legal, or other professional advice and should not act or fail to act based upon the information in these materials.

Argus Media group notices

• One of the world’s leading PRAs, Argus is a team of nearly 1,000 staff members in 22 global offices

• Publishing more than 21,000 daily spot and forward price assessments, plus market intelligence for world commodities markets

• Coverage includes: ◦ Energy

◦ Fertilizers

◦ Petrochemicals

◦ Metals

• Services ◦ Price reporting and indexation

◦ Consulting

◦ Conferences

• Indexation examples ◦ US crude oil

◦ European gasoline

◦ Asia-Pacific LPG

◦ Coal

◦ US and European environmental markets

The Argus view



• US shale and NGLs update.

• US ethylene and polyethylene balances

• Global ethylene and polyethylene balances

• Cost competitiveness

• China ethylene & derivative balances

• Propylene Balances

• The benzene effect

Agenda

illuminating the markets Copyright © 2019 Argus Media group. All rights reserved.

consulting

services

5

US major shale plays

Liquid Shale

Gas Shale

Other Shale

Basin

Haynesville

-Bossier

Bakken

Niobrara

PRB

Tight Oil

Permian

Delaware

Eagle Ford

SCOOP-

STACK

Permian

Midland

Three

Forks

Barnett

New

Albany

Antrim

Fayetteville

Tuscaloosa

Williston

Basin

Powder River

Basin

Montana

Thrust

Belt

DJ

Basin

Big Horn

Basin

Greater

Green River

Basin

Uinia

BasinPiceance

Basin

Paradox

Basin

San Juan

Basin

Raton

Basin

Park

Basin

Permian

Basin

Palo Duro

Basin

Anadarko

Basin

Forest City

Basin

Cherokee

Platform

Arkoma

BasinArdmore

Basin

Western

Gulf

TX-LA-MS

Salt Basin

Black Warrior

Basin

Valley & Ridge

Basin

Illinois

Basin

Appalachian

Basin

Michigan

Basin

Santa Maria-

Ventura-

Los Angeles

Basin

San Joaquin

Basin

Marcellus

Utica

Where the action

is now

The next

wave?

– Argus Consulting Services


consulting

services

6

Production from US oil

fields peaks at 14.5mn b/d

in 2030.

Permian is the primary

growth source, reaching

5.6mn b/d in 2030

(compared to production

of 3.4mn b/d in 2018).

US crude production forecast

– Argus Consulting Services, EIA, Rystad


consulting

services

7

US NGLs production – Historical and outlook

– Argus Consulting Services, EIA


consulting

services

8

US NGLs Production Forecast

0

500

1,000

1,500

2,000

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

‘000 b

/d

Permian NGLs production outlook

0

500

1,000

1,500

2,000

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

‘000 b

/d

Marcellus NGLs production outlook

0

400

800

1,200

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

‘000 b

/d

Bakken NGLs production outlook

0

400

800

1,200

2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

‘000 b

/d

Eagle Ford NGLs production outlook

New US Ethylene capacity


Company Site Capacity ’000t Ethane consumption

'000 Bpd Timing Status

Oxy-Mexichem Ingleside, TX 550 33 Q1 2017 Operating

Dow Freeport, TX 1500 90 Q3 2017 Operating

CP Chem Cedar Bayou, TX 1500 90 Q1 2018 Operating

ExxonMobil Baytown, TX 1500 90 Q3 2018 Operating

Indorama Lake Charles, LA 440 25 Q2 2019 Operating

Westlake/Lotte JV Lake Charles, LA 1000 60 Q2 2019 Operating

Shintech Plaquemine, LA 500 30 Q3 2019 Operating

Sasol Lake Charles, LA 1500 90 Q4 2019 Operating

Dow Freeport, TX 500 30 Q1 2020 Under const.

Formosa Plastics Point Comfort, TX 1200 72 1st H 2020 Under const.

Bayport Polymers Port Arthur, TX 1000 60 Q1 2021 Under const.

Shell Chemical Monaca, PA 1600 96 Q3 2021 Under const.

ExxonMobil/Sabic Corpus, Christi 1800 108 2023 Under const.

Total supply additions 14,590 874 2017-2023

Company Location Capacity '000 t Grade Start-up Current Status

Dow Chemical Freeport, TX 400 LLDPE 17-Sep Operational

Chevron Phillips Old Ocean, TX 1000 HDPE/LLDPE 17-Sep Operational

Ineos/Sasol La Porte, TX 470 HDPE 4Q 2017 Operational

ExxonMobil Mont Belvieu, TX 1300 HDPE/LLDPE 4Q 2017 Operational

Dow Chemical Plaquemine, LA 400 LDPE 1Q 2018 Operational

Dow Chemical Taft, LA 125 HDPE 4Q 2018 Operational

Dow Chemical Freeport, TX 320 Elastomers 4Q 2018 Operational

Sasol Lake Charles, LA 450 LLDPE 1Q 2019 Operational

ExxonMobil Beaumont, TX 650 LLDPE 3Q 2019 Operational

Formosa Plastics Point Comfort, TX 400 HDPE/LLDPE 3Q 2019 Operational

LyondellBasell La Porte, TX 500 HDPE 4Q 2019 Construction

Sasol Lake Charles, LA 420 LDPE 4Q 2019 Construction

Formosa Plastics Point Comfort, TX 400 LDPE 4Q 2019 Construction

Shell Chemical Monaca, PA 1100 HDPE 2021 Construction

Shell Chemical Monaca, PA 500 LLDPE 2021 Construction

Dow Chemical Freeport, TX 600 LLDPE 2022 Announced

Bayport Poly Bayport, TX 650 HDPE 2022 Construction

ExxonMobil/Sabic Corpus Christi, TX 600 HDPE/LLDPE 2022/2023 Construction

ExxonMobil/Sabic Corpus Christi, TX 650 HDPE 2022/2023 Construction

Total supply additions 10,935 All 2017-2023

New US Polyethylene capacity



consulting

services

11

Overcapacity will accelerate in Ethylene/PE

2020 China capacity additions

– High impact

Malaysia, Russia, Oman, and

others also impact 2020



Ethylene/Polyethylene Global Operating rates

• Operating rates will go significantly lower going forward

• No major demand slowdown or recession factored in

• Expect extended trough

• Recovery starts mid-decade


Cost Competitiveness

• US costs in last 6 months might be indicative of the next few years <$400/t

• US needs ~$150/t advantage to ship PE into Asia excluding tariffs


Cash cost vs spot price

• Asia Ethylene price will continue to fall

• Asia Pacific naphtha margins expected go negative within 2 years

• US ethylene price will come back down


China Ethylene Supply-Demand

• Structural shortage remains, but slightly reduced

• Non integrated derivatives will be under pressure


China cracker projects

• China is likely to add totaling 18mn t/yr cracker capacity during 2019-23

Company Company nature Country SubdivisionLocation Source 2019 2020 2021 2022 2023 2023 onwards

SP Chemicals International 100% Jiangsu Taixing propane, ethane 650

Zhejiang Petrochemical No 1 Private 91%, overseas 9% Zhejiang Zhoushan mostly naphtha 1,400

Jiangsu Hengli Petrochemical Private 100% Liaoning Dalian mostly naphtha 1,500

Liaoning Bora Petrochemical Private 50%, overseas 50% Liaoning Panjin mostly naphtha 1,000

Ningbo Huatai Shengfu Private 100% Zhejiang Daxie refinery offgas 600

Sinopec-KPC State-owned 50%, overseas 50% Guangdong Zhanjiang mostly naphtha 800

Wanhua Chemical Private 100% Shandong Yantai mostly LPG 1,000

Sinopec/SK Wuhan PetrochemicalState-owned 65%, overseas 35% Hubei Wuhan mostly naphtha 300

Sinopec SABIC Tianjin State-owned 50%, overseas 50% Tianjin Tianjin mostly naphtha 300

Zhejiang Satellite Private 100% Jiangsu Lianyungang only ethane 1,250

Sinochem Quanzhou PetrochemicalState-owned 100% Fujian Quanzhou mostly naphtha 1,000

Luqing Petrochemical Private 100% Shandong Shouguang heavy residual 750

PetroChina Changqing State-owned 100% Shaanxi Yulin domestic ethane 800

Gulei Refinery State-owned 50%, overseas 50% Fujian Gulei mostly naphtha 800

Zhejiang Petrochemical No 2 Private 91%, overseas 9% Zhejiang Zhoushan mostly naphtha 1,400

PetroChina Jieyang State-owned 60%, overseas 40% Guangdong Jieyang mostly naphtha 1,200

Jiangsu Shenghong PetrochemicalPrivate 100% Jiangsu Lianyungang mostly naphtha 1,100

Sinopec Hainan State-owned 100% Hainan Hainan naphtha, LPG 1,000

Sinopec Zhenhai PetrochemicalState-owned 100% Zhejiang Ningbo mostly naphtha 1,200

ExxonMobil Exxon 100% Guangdong Huizhou mixed gas 1,200

Huajin Aramco Petrochemical State-owned 65%, overseas 35% Liaoning Panjin mostly naphtha 1,500

Hebei Xuyang Petrochemical Private 100% Hebei Caofeidian naphtha, LPG 1,500

PetroChina Tarim Oilfield State-owned 100% Xinjiang Korla ethane from "Tarim light-ends recovery project" 600

SABIC Zhangzhou Gulei State-owned 50%, overseas 50% Fujian Gulei mostly naphtha 1,500

Subtotals 3,550 4,000 3,800 4,500 2,200 6,300


China’s on-purpose olefin projects: CTO and PDH Company Location Region Olefin Capa Ethylene Propylene Derivatives Start-up

Shandong Luxi Chemical Liaocheng, ShandongE China 300 120 180 -- 4Q 19

Shenhua Baotou, expansion Baotou, Inner MongoliaNW China 680 300 400 300PE, 400PP 1H 20

Yanchang & China Coal Yulin No 2Yulin, Shaanxi NW China 600 300 300 300PE, 300PP mid-20

Shenhua Shaanxi, 1st phase Yulin, Shaanxi NW China 680 300 380 300PE, 380PP mid-20

Huating Coal Pingliang, Gansu NW China 200 30 160 160PP 2H 20

China Coal Yulin Energy No 2 Yulin, Shaanxi NW China 600 300 300 300PE, 300PP mid-21

Qinghai Mining Golmud, Qinghai NW China 680 260 420 260PE, 420PP 2H 21

Shanxi Coking Corporation Hongdong, Shanxi N China 600 300 300 300PE, 100OCU, 400PP 2H 21

Sinopec Zhijin Zhijin, Guizhou SW China 600 300 300 300PE, 300PP 2H 22

Shenhua Ningxia-SABIC Ningdong, Ningxia NW China 700 300 400 345PE, 423PP 2022 onwards

5,640 2,510 3,140Sub-total capacities

Company Location Plant Process Capacity, kta LPG demand, kta Start-up

Juzhengyuan No 1 Dongguan, Guangdong PDH Lummus 600 720 4Q 19

Zhejiang Petrochemical No 1 Zhoushan, Zhejiang PDH UOP 600 720 1Q 20

Fujian Meide Fuqing, Fujian PDH UOP 660 792 2Q 20

Oriental Energy Fuji No 2 Ningbo PDH UOP 660 792 2Q 20

Huahong Petrochemical Jiaxing, Zhejiang PDH UOP 450 540 2H 20

Jinneng Technology Qingdao, Shandong PDH Lummus 900 1080 1H 21

Formosa Ningbo Ningbo, Zhejiang PDH TBC 650 780 2H 21

Zhejiang Petrochemical No 2 Zhoushan, Zhejiang PDH UOP 600 720 2022

Shanghai Secco Caojing, Shanghai PDH TBC 600 720 2022

Oriental Energy Lianyungang PDH UOP 600 720 2022

Guangxi Huayi New Materials Qinzhou, Guangxi PDH UOP 750 900 2022

New capacities 7,070 8,484

Dalian Changxing Island Hengli Petrochemical

Hebei Caofeidian, Hebei Xuyang Petrochemical

Jiangsu Lianyungang Shenghong, Satellite

Shanghai Caojing

Zhejiang Ningbo Zhejiang Petrochemical Sinopec Zhenhai

Fujian Zhangzhou Gulei Petrochemical

Guangdong Huizhou CNOOC Shell, Exxon Huizhou


Policy driven: China to build seven major industrial bases

• China says in "Petrochemical Industry Planning and Distribution Plan" that it will promote the development of industrial agglomeration, including

o The construction of seven major petrochemical industrial bases;

o The construction of integrated refinery/petrochemicals, ethane and aromatics projects;

o The construction of industrial parks, upgrading the efficiency of energy consumption, feedstock supply, logistic and storage.


Market domination: Sinopec and PetroChina

2018 = 20.6mn 2023 = 38.2mn

• Sinopec and PetroChina are the leading cracker operators in China, housing respective 9mn and 6mn cracker capacities.

Company Location Project Start-up

PetroChina Changqing

Shaanxi 800 2021

PetroChina Jieyang

Guangdong 1200 2022

Sinopec Hainan Hainan 1000 2023

Sinopec Zhenhai Petchem

Zhejiang 1200 2023

Sinopec-KPC, jv Guangdong 800 2020

Sinopec SK Wuhan Petchem, jv

Hubei 300 2020

Sinopec SABIC Tianjin, jv

Tianjin 300 2020

Gulei Refinery, jv Fujian 800 2022

Unit: in ethylene capacity mt/yr

• China is embracing for a rapid petrochemical expansion period in 2019-23 . . .

to boost self sufficiency,

to meet growing demand,

to upgrade industry technology

• Petrochemical investments have strong support from all aspects. . .

Policy, market dominance, energy security/utilization

Profit, organic growth of companies, market shares

• Massive capacity growth will bring changes to petrochemical market balance. . .

Import reliance to decline for ethylene, propylene, PX

Operating rate to fall for ethylene, PE, propylene

Propylene-PP balance is healthier than ethylene-PE

China Summary


Propylene capacity will increase over the next 5 years from 136mnt to 168mnt by 2023

• Most significant growth from PDH and steam cracking

• Coal / Metathesis / Methanol remain small compared to other routes but with substantial growth

• Some growth for refinery sources but also challenges from economics and IMO


000t

New capacity is needed to address supply contraction as well as demand growth


• Propylene has been “lost” to steam cracker & refinery rationalisation

• … and to increased investments in “light” feedstocks

• Availability from refineries is also under threat from further rationalisation (particularly in Europe) & IMO changes

Leading to global investment located close to demand


Benzene from pygas - US


Benzene by cracker feedstock Total benzene from pygas and heartcut

• Benzene from pygas is projected to fall by 5.6% in 2019

• Higher benzene from ethane cracking will be offset by reductions in imports of pygas/heartcut and reduced naphtha cracking


• Changes in cracker feedstocks affect availability of Ethylene & Derivative prices will continue trending lower over the next 2 years

• Trough is expected by 2021 • Ultimately cancelation of projects will bring a recovery, but

strong project momentum exists currently • Continuation of a trade war into 2020 will start to cause

significantly more disruption • Risks are to the downside in demand in the Argus current

Supply-Demand forecasts • Greater use of NGLs affects product balances throughout the

petrochemical complex – propylene is one example, benzene another.

Concluding thoughts

Stay Connected

@ArgusMedia Argus-media

+Argusmediaplus argusmediavideo

Copyright notice Copyright © 2019 Argus Media group. All rights reserved. All intellectual property rights in this presentation and the information herein are the exclusive property of Argus and and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus. Trademark notice ARGUS, the ARGUS logo, Argus publication titles, and Argus index names are trademarks of Argus Media Limited. For additional information, including details of our other trademarks, visit argusmedia.com/trademarks.

Andy Nicholson

V-P Market Development Petrochemicals

[email protected]

Tel +33 1 3466 5591

Mob +33 6 8995 8767

www.argusmedia.com

global cracker additions impact of new capacities and changing … · 2019-11-15 · market...

Documents