global pet - amazon s3

1

Global PETwith a focus on North America

By James Ray, ICIS Consulting

September 1, 2015

ICIS & ICIS Consulting accepts no liability for commercial decisions made from this report.

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22

About ICIS

Over 9,200 price assessments in 1,200reports covering 180 commodities

More than 30 years of industry insight and data

Over 100,000 industry customers

Customers include virtually every major chemical company

Weekly contact with thousands of market participants

17,000+ annual news stories

800+ global employees

New York

WashingtonHouston

Bogota

London

Dusseldorf

Milan Tokyo

Mumbai

Beijing

Guangzhou

Singapore

Perth

Melbourne

Brisbane

Shanghai

2

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33

Agenda

• Global PET

• Supply & Demand

• Pricing

• North American PET

• Supply & Demand

• Pricing

• Asia PET

• Supply & Demand

• Pricing

3

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44

Agenda

• Global PET

• Supply & Demand

• Pricing


• Supply & Demand

• Pricing

• Asia PET

• Supply & Demand

• Pricing

4

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55

Xylene Chain

Source: ICIS Advanced Purchasing Course

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Xylene Chain

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Xylene Chain

2.62.42.22.01.81.61.41.21.0

2.8

2.6

2.4

2.2

2.0

1.8

1.6

1.4

1.2

1.0

Crude Midland WTI FIP Midland,

Na

ph

tha

Pa

raff

inic

DEL U

SG

Asse

S 0.153210

R-Sq 88.1%

R-Sq(adj) 87.6%

Fitted Line PlotNaphtha Paraffinic DEL USG Asse = 0.3014 + 0.9388 Crude Midland WTI FIP Midland,

Source: ICIS Consulting

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88

Xylene Chain

Source: ExxonMobil Chemical

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99

2.82.62.42.22.01.81.61.41.21.0

4.5

4.0

3.5

3.0

2.5

2.0

Naphtha Paraffinic DEL USG Asse

Xy

len

es F

OB

US

G A

sse

ssm

en

t B

arg

S 0.254499

R-Sq 87.3%

R-Sq(adj) 86.8%

Fitted Line PlotXylenes FOB USG Assessment Barg = 0.2174 + 1.501 Naphtha Paraffinic DEL USG Asse

Xylene Chain


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1010

4.54.03.53.02.52.0

6.5

6.0

5.5

5.0

4.5

4.0

3.5

3.0

Xylenes FOB USG Assessment Barg

Pa

raxy

len

e D

EL U

S C

on

tra

ct

Pri

c

S 0.160113

R-Sq 96.8%

R-Sq(adj) 96.7%

Fitted Line PlotParaxylene DEL US Contract Pric = 0.4685 + 1.233 Xylenes FOB USG Assessment Barg

Xylene Chain


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1111

6.56.05.55.04.54.03.53.0

6.0

5.5

5.0

4.5

4.0

3.5

Paraxylene DEL US Contract Pric

PTA

DEL U

S C

on

tra

ct

Pri

ce

Asse

s

S 0.0497889

R-Sq 99.5%

R-Sq(adj) 99.5%

Fitted Line PlotPTA DEL US Contract Price Asses = 1.250 + 0.7667 Paraxylene DEL US Contract Pric

Xylene Chain


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1212

Ethylene, C2=


Ethane C2

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1313

Product Cost Management: Polyester

Cost Breakdown

% Breakdown

* Purified Terephthalic Acid 86.0%

** Mono Ethylene Glycol 34.0%

Purified Isophthalic Acid 0.02%

DEG 0.02%

By Product Loss (water) -20.00%

Other Costs Materials 100.0%

Avg Annual Inflation

Raw Materials 42.94% 0.00%

Labor % of COGS 7.00% 0.00%

Over Head % 25.10% 0.00%

Margin 25.00% 0.00%

Total Cost % 100.0% Raw Material Represents 42.94% of Total Cost

Cost Adjustment Model

Chemical

Base Line

Price / lb

Current

Price / lb

Index

Change

Chemical

Breakdown

Formula Cost

Change

Raw Matl

Net Chg $

Other

Costs

Other % of

COGS

Other

Costs

Total

Change Annual Spend

7/1/14 4/1/15 per lb (Recipe) per lb - % Change Net Chg % % US $

* Purified Terephthalic Acid $0.600 $0.570 -$0.030 86.0%

** Mono Ethylene Glycol $0.680 $0.410 -$0.270 34.0% -17.8% (0.12)$ 0.00% 57.06% 0.00% -7.64% $1,000,000 -$76,435

Other $1.000 $1.000 $0.000 0.0%

Final Cost

Impact US$

* Purif ied Terephthalic Acid

61.41%

** Mono Ethylene Glycol 24.28%

Purif ied Isophthalic Acid 0.01%

DEG 0.01%

By Product Loss (w ater) -14.28%

Polyester Raw Material Break Down

Real World Example


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1414

Excess capacity is leading to low utilization

Source: ICIS Dash Board

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Largest growth in NE Asia

Source: ICIS Supply & Demand Database

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EG Trade Flow

This is where excess capacity is going


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PTA Trade Flow



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1818

PET Trade Flow



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1919

PET Trade Flow

This is where future capacity is going


www.icis.com

2020

PET Trade Flow


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2121

Agenda

• Global PET

• Supply & Demand

• Pricing


• Supply & Demand

• Pricing

• Asia PET

• Supply & Demand

21

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2222

Agenda

• Global PET

• Supply & Demand

• Pricing


• Supply & Demand

• Pricing

• Asia PET

• Supply & Demand

• Pricing

22

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2323Source: ICIS Dash Board

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2525Source: ICIS Supply & Demand Database

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Pricing – US PET vs Recycled PET

Recycled PET price advantage declines with low oil prices

Source: ICIS Pricing

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2727

Agenda

• Global PET

• Supply & Demand

• Pricing


• Supply & Demand

• Pricing

• Asia PET

• Supply & Demand

• Pricing

27

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2828

Agenda

• Global PET

• Supply & Demand

• Pricing


• Supply & Demand

• Pricing

• Asia PET

• Supply & Demand

• Pricing

28

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Pricing – Asia PET vs US PET

Asia maintains a PET price advantage

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3232

Understanding market time lags(Leading indicators)

Cause & Effect lines may not fit well

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

P 1 P 2 P 3 P 4 P 5 P 6 P 7 P 8 P 9 P10 P11 P12

Market Cause & Effect Time Lag

Cause

Effect Offset 2P

But watch the dotted line shift

32Source: ICIS Advanced Purchasing Course

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3333


Cause & Effect lines fit well when adjusted for time lag

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

P 1 P 2 P 3 P 4 P 5 P 6 P 7 P 8 P 9 P10 P11 P12


Cause

Effect Offset 2P

But watch the dotted line shift


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3434


Cause & Effect lines fit well when adjusted for time lag

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

P 1 P 2 P 3 P 4 P 5 P 6 P 7 P 8 P 9 P10 P11 P12


Cause

Effect Offset 2P

See the shifted dotted line shift now


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3535

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

P 1 P 2 P 3 P 4 P 5 P 6 P 7 P 8 P 9 P10 P11 P12

After

Understanding market time lags(Leading Indicators)

Real World Example:When one product goes up 10 cents in China,It goes up 6 cents in the US, 6 weeks laterand 4 cents in EU 2 weeks later

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

P 1 P 2 P 3 P 4 P 5 P 6 P 7 P 8 P 9 P10 P11 P12

Before

Cause

Effect

Source: ICIS Consulting © 2013


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3636

US PET Follows Asia price by 1 month

151050-5-10-15

1.0

0.8

0.6

0.4

0.2

0.0

-0.2

-0.4

-0.6

-0.8

-1.0

Lag

Cro

ss C

orr

ela

tio

nAsia PET vs US PET Price


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3737

Agenda

• Global PET

• Supply & Demand

• Pricing


• Supply & Demand

• Pricing

• Asia PET

• Supply & Demand

• Pricing

37

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3838

Agenda

• Global PET

• Supply & Demand

• Pricing


• Supply & Demand

• Pricing

• Asia PET

• Supply & Demand

• Pricing

38

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3939

Summary

• PET is over capacity globally resulting in low utilization

and lower prices

• PET Prices are lower due to low utilization

• PET Prices are fairly predictable if you understand the

value chain

• They are predictable because many contract prices are

managed with a formula


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4040

THANK YOUContact ICIS Consulting today for a confidential discussion about how we can help to address your business challenges and support your decision-making.

James RaySenior Consultant - Americas

+1 903 245 [email protected]

http://www.linkedin.com/pub/james-ray/5/356/20b

http://www.linkedin.com/pub/james-ray/5/356/20b

41

Appendix

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4242

Corporate Structure

Chemicals Energy Fertilizers

42

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4343

ICIS Mission Statement

“Our aim is to give companies a

competitive advantage. We deliver

trusted pricing data, high-value

news, analysis and independent

consulting, enabling our customers

to make better-informed trading

and planning decisions.”

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4444

Global Presence, Local Insight

Over 9,200 price assessments in 1,200reports covering 180 commodities

More than 30 years of industry insight and data

Over 100,000 industry customers

Customers include virtually every major chemical company

Weekly contact with thousands of market participants

17,000+ annual news stories

~800 global employees

New York

WashingtonHouston

Bogota

London

Dusseldorf

Milan Tokyo

Mumbai

Beijing

Guangzhou

Singapore

Perth

Melbourne

Brisbane

Shanghai

44

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4545

Support for Immediate Through Long-Term Decisions

Price Assessments

Market News

Data Analysis and Short-Term Supply &

Demand

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Price indices

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Plant capacities, outputs & shutdowns

Market insight & analysis

Historical supply & demand database

Forecast supply & demand database

Available on Dashboard

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4646

Critical information as it’s needed

Pricing intelligence:

• Chemical price reports

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• Fertilizer price reports

• Chemical price alerts

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Transactional Short-term planning Long-term planning

News:

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magazine

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database

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4747

ICIS Consulting

Price History

Market / Industry

Knowledge

Supply & Demand

Data

Consulting

Tool BoxTest

1. ICIS is the world's largest

petrochemical market information

provider and has fast growing

energy and fertilizer divisions.

2. ICIS is established and has the

tools and resources to do the job.

3. ICIS offers global coverage with a

focus on Asia, China, Europe,

Middle East, Africa and the

Americas.

4. Heritage Parpinelli TECNON and

CBI China

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4848

Coverage along the entire value chain

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Forecast supply & demand database

24 hour real-time news

Market insight & analysis

Training & conferences

Global consultancyPrice reports

Bringing industry insight and data since 1958

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Short-Term Supply & Demand

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Supply & Demand

Cost Modeling

48

Price forecast

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petrochemicals, fertilizers, specialty polymers and fine chemicals

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ferrous metals and paper and pulp markets

• Analysis of current and future market prices, margins and supply

and demand trends that could affect your business

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5050

Recent Global Consulting Assignments

• Global petrochemical competitive analysis

• Ethylene cracker feedstock evaluation

• Loss evaluation

• Refinery feasibility

• C4’s market analysis

• Global oil & refining review

• Oil & gas master plan for national energy company

• Facility valuation

• Commercial advisory on contracts, markets & strategy

5050

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5151

Your partner for consulting and analysis, providing an alternative

view of the global chemical and energy markets

Clients considering multi-

million dollar co-located

investment

An ICIS market study revealed

previously unseen issues for

both buyers & sellers and

offered client alternatives for

saving over $50,000,000

Will the site and

proposed formula

pricing be competitive

for 20 - 30 years?

51

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5252

Clients planning a new chemical

plant need take-off agreements

Prior to public announcement,

clients need product sales outlets to

arrange financing for new operations



Through our vast network of contacts, ICIS was able to arrange

introductions to high level contacts within interested companies

resulting in several sales outlets for the client

52

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5353



Growing converter clients

purchasing $500,000,000 of raw

material in a tight market

struggled with price and supply

issues

Through weekly consultations, ICIS guided client through regional

short term raw material contract negotiations, Cost Reduction Team

activities, and presented long term take-off opportunities.

Developing a global strategy along with working smarter, client was

able to reduce commodity raw material costs by approximately 2%

in a tight market

How do we insure a reliable

supply with out over paying?

53

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Multi-national clients seeking JV for a

multi-billion dollar investment

How sustainable is the shale

advantage?



Several feasibility studies were conducted by ICIS Consulting for

olefins/derivatives and refinery feedstock complexes with the

outcome pending

54

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5555



How should we manage the business to

exploit increasingly global Markets?

Calling on our wealth of global market and

industry information and combining that with

an insight of your business, we can identify

and outline opportunities and scenarios.

ICIS Consulting recently carried out a

review of the Asian propylene,

paraxylene and benzene markets for

an Indian petrochemical producer

who was keen to understand

opportunities ahead of its plant start

up.

How could we grow our business

through organic growth and

acquisitions?

We can provide merger and acquisitions,

diversification and restructuring support to

help you make decisions about acquisition

investments and which organic developments

would deliver the greatest opportunities. ICIS

can carry out all the required research, from

initial screenings through to due diligence or

launch, including a full service capability for

the Chinese market.

55

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Using our price and margin models, as well as

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A market review and commercial due

diligence were performed for a PTA

producer ahead of their annual PX

term purchase negotiations.

How should we manage future risks

to our business?

Future price and supply and demand

scenarios enable you to carry out market

and product developments analysis to better

understand where you are heading in your

markets.

56

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5757

How can we be more competitive?

Our comprehensive company structure and

ownership information supports customized

competitive analysis work allowing you to

benchmark your business and discover

opportunities for competitive advantage..

A feasibility study was conducted by

ICIS Consulting for a new market

entrant to explore product options for

an olefins/derivatives and refinery

feedstock complex.

Could we diversify to take

advantage of projected margins?

Market entry studies and feasibility analysis

projects can support your assessment of

how attractive other markets would be and

drive your development strategies. We also

conduct technology assessments, helping

you to focus and select the right features for

business success.



57

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How will projected supply and

demand trends affect my business?

Up to 50 years of historical information and

insight and al comprehensive view on the

short and long term supply and demand

landscape provide you with an outlook for your

products and markets.

ICIS recently provided an

expert opinion case review to

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against an alleged

contamination claim.

What independent information and

expertise can I call on to help me

resolve disputes?

We can provide independent, expert

services for disputes and arbitration to

support the resolution of difficult

commercial issues when they occur.

58

59

Appendix A

Lead Consulting Staff & Capabilities

59

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6060

other

ICIS Consulting Services

-M&

A / R

ationaliz

ation

-Bench M

ark

ing

-Capital and R

esourc

e P

lannin

g

-Chin

a M

ark

et

Penetr

ation S

tudy

-Contr

act

Consultin

g

-Feedsto

ck a

nd p

roduct valu

ation

-Fore

casting

-Industr

y E

xperience (

hands o

n)

-Investm

ent A

naly

sis

-Litig

ation S

upport

-Opera

tions C

ost

Modelin

g

-Pla

nnin

g /

Pro

ject M

anagem

ent

-Port

folio

Optim

ization

-Pro

ject

feasib

ility

-Refinin

g-p

etr

ochem

ical

inte

gra

tion

-Str

ate

gic

Revie

w

-Technolo

gy A

ssessm

ent

Paul Ray - Global X X X X X X X X X X X X X X X X

Mike Perkins - EMEA X X X X X X X X X X X X X X X

Kieran Cosgrove - EMEA X X X X X X X X X X X X X

Stefano Zehnder - EMEA X X X X X X X X X X X X X

Regan Hartnell - EMEA X X X X X X X X X X

Karl Bartholomew - Americas X X X X X X X X X X X X X X

James Ray - Americas X X X X X X X X X X X X X

Ed Sporcic - Americas X X X X X X X X X

60

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6161

ICIS Consulting Markets

-Aro

matics

-Convert

ers

/ P

rocessors

-Cru

de

-Gas P

rocessin

g

-LN

G

-NG

Ls

-Ole

fins

-Petr

ole

um

coke

-Petr

ochem

icals

-Poly

mers

-Refinin

g

Paul Ray – Global X X X X X X X X

Mike Perkins - EMEA X X X X X

Kieran Cosgrove - EMEA X X X X

Stefano Zehnder - EMEA X X X X X X X X

Regan Hartnell - EMEA X X X X

Karl Bartholomew - Americas X X X X X X X X

James Ray - Americas X X X X

Ed Sporcic - Americas X X X X X

61

62

Appendix B – ICIS Services

62

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63

The ICIS Supply and Demand DatabaseOur fully integrated/ reconciled database is comprised of 4 interconnected information engines centralized through one easy

to use interface-offering the most current and consistently accurate information on a myriad of topics including

Supply & Demand

Full lifecycle product availability/consumption data including:

• Energy & Refining

• Feedstocks

• Petrochemicals

• Olefins/olefin derivatives

• Aromatics/aromatic derivatives

• Polymers

Trade

Comprised of data on 160+ industry related commodities. It offers a balanced view of

global trade flows to aid strategic modeling/planning

Capacities

Manufacturing plants production capacity levels including projections that span from

1978 to 2030

Company Ownership

Data on current and previous company structures and ownership

Including joint partnerships and licensors

We empower our clients with an invaluable tool to aid in their decision making processes63

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6464

ICIS offers in-depth analysis of the chemical, energy and fertilizer markets through our market reports, chemical magazine, annual reports and supply and demand database

Chemical Analysis

• Annual studies, data analytics and margin analysis offer in-depth analysis

to reveal the strategic implications of market data and information

Energy Analysis

• Insight reports and annual studies offering detailed information on

demand, trade, supply and forecast trends

Fertilizer Analysis

• Our fertilizers reports and analysts offer in-depth analysis, trade flow

mapping, price forecast and bespoke presentations for the fertilizer

markets

In-Depth Analysis

64

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65

ICIS Annual Studies

Combining a thorough review of data available in our Supply and Demand Database with expert commentary for our industry

analysts, the Annual Studies serves to merge information with intelligence to provide you the insight needed to make the

right decisions for your business

Annual Global Studies Produced:

World Petrochemical Industry (Olefins)

World Petrochemical Industry (Aromatics)

World Petrochemicals Feedstocks (Olefins)

World Petrochemicals Feedstocks (Aromatics)

World Energy & Refining

World Plastics

World Elastomers

Quarter Market Monitors updates in PDF format

Data is built up and elaborated from a bottom up approach

Q&A access to our expert consultants and analysts

Reconciled

and verified

views

65

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6666

Magazines, Press & Publications

(third party)

Country, Ministries,

Associations & Institutions

Interviews & Internal Data/Research

IEA / DOE / & many other Sources

(third party)

Trade Data

Macro Economic Data

(OEC, IMF, WB)

Web

Annual Reports

Refining Operation Model

Specialized Model(Road Fuels, GTLs/CTLs, LNG)

Macro Economics Model(GDP, Population)

Aggregated Offline Database

(By Country)

Breakdown(By element)

• Energy demand

• Oil demand

• Refining operations

• Naphtha balances

• Olefins feedstocks

• Aromatics feedstocks

• Base Petrochemicals

• Derivatives / Polymers

ICIS

supply and demand

database

Methodology

Conferences & Trade Events

Petrochemical Production and Capacity Input

Data Sources Offline Models and Spreadsheets Online Database

66

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67

Product Demand forecast

Trade Flow analysis

Production calculated

Petrochemical

Feedstock Demand

calculated

Capacity Utilization / Operating Rates constraint

Scheduled maintenance

Plant shutdowns

New start ups

Crude Oil Demand calculated

Gasoline Demand &

Composition calculated

Consumer Price Index (CPI)

Gross domestic Product (GDP)

Exchange Rate

Population Growth

Energy Demand

calculatedUpstream

Oil & Gasoline

Forecasts are demand driven

Downstream

Petrochemicals

67

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68

Data Integration Example – Refinery / Cracker

Oil

Pygas

RefineryGasoline

Data

Reconciliation

1⁰ Derivatives

2⁰ Derivatives

3⁰ Derivatives

Para-Xylene PET

Aromatics

extraction

B T X

C4’s Propylene Ethylene

Top Down

Bottom Up

Catalytic

Reformer

Naphtha

Chemical (steam)

cracker

1⁰

2⁰

3⁰

68

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Price Assessments

Chemical Prices

• Market reports, dashboard, price alerts, historical pricing data, China prices

Energy Prices

• Price assessments, in-depth analysis on price drivers, historical pricing, daily

production information and China insight for key energy markets energy markets

Fertilizer Prices

• Key price assessments, analysis, short term trends, forecasts and supply and

demand outlook for fertilizer products

Buyers, sellers and analysts trust our pricing information to help them

• Understand price drivers

• Negotiate using independent price assessments

• Build price formulas and models

ICIS provides independent and reliable pricing and market

intelligence for the global chemical, energy and fertilizer markets

69

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7070

24 Hour Breaking News

Chemical News

• Customize the news you receive to suit your needs

• Search quickly and accurately to find content relevant for you

• Access expert commentary and analysis on important stories

• Stay ahead of plant and productions news and updates on capacity,

outputs and shutdowns

• Analysis of the industry’s important issues in our weekly magazine, ICIS

Chemical Business

Energy and Fertilizer News

• Energy and fertilizer news is covered in our market reports and is part of

the ICIS news service

ICIS news brings you 24 hour global news keeping you informed of key events

that are likely to affect price, supply or demand of products or raw materials

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