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Paul Blanchard

Director, Engineering Plastics

IHS Chemical

Motor Vehicle Metals & Resins Conference

May 23, 2013

Polypropylene & Nylon

Market Overview

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Polypropylene

Market Overview

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Propylene Market View2012 Global PG/CG Propylene Market

Acrylic Acid4%

Acrylonitrile7%

Cumene4% Oxo Alc.

8%

Polypropylene68%

Propylene Oxide7%

Others2%

Produ ct ion = 80.2 Mil l ion

Metr ic Tons

Domest ic Demand = 80.4 Mil l ion

Metr ic Tons

Stm.Crackers

54.6%

FCCSplitters

31.6%

Dehydro4.8%

Metathesis

4.1%

OlefinCracking

0.3%

Gas-to-Olefins

1.2%

HS FCC2.7%

Others On-Purpose

0.7%

DemandSupply

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Propylene Market ViewU.S. PDH Margins Attract ing New Investment 2012 cash cos ts

0

9

18

27

36

45

54

63

73

82

0

200

400

600

800

1000

1200

1400

1600

U.S. PDH MDE PDH China CTO West EuropeNaphtha

U.S. Splitter Northeast AsiaNaphtha

Northeast AsiaPDH

U.S.Metathesis

U.S. Dollars Per Metric Ton U.S. Cents Per Pound

U.S. RG Price

U.S. PG Price

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Demand

Global demand exceeds GDP driven by Asia and growth

economies in Latin America, Indian Subcontinent and Middle East

Developed economies continue to lag GDP

Capacity

Significant increases before, during and after global recession have

created global oversupply condition focused in Northeast Asia.

Costs and Margins Non-integrated producers challenged especially as PDH and Coal

capacity grows.

PP to remain at premium to PE but cost advantaged to PS, PET

Polypropylene : Global Overview

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North America

20%South America

6%

Europe20%

Northeast Asia31%

Southeast Asia8%

Africa/MiddleEast10%

IndianSubcontinent

5%

2012-2022 AAGRWest Europe = 1.3%

North America = 2.0%

South America = 4.5%

Northeast Asia = 4.9%

2012 Total Global

Demand = 53.9 Million Metric Tons

Polypropylene Demand

Global AAGR

12-17 = 4.9%

12-22 = 4.3%

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-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.06.0

2007 2009 2011 2013 2015 2017 2019 2021 2018 2020 2022North America South America Europe

Africa/Middle East Indian Sub. Northeast Asia

Southeast Asia Global Demand Growth

Million Metric Tons

Growth in Middle East and China

Leads to Polyp ropy lene Over-Capacity

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Coal-To-Propyleneto Polypropylene

PP Projects, Million Metric Tons

0

5

10

15

20

25

30

0.0

1.0

2.0

3.0

4.0

5.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

CTP/CTO Based PDH BasedCrude Based On Purpose PP as a % of Capacity

% of Capacity

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As Supply Pressure Builds,

Where will Middle East PP Go?

22

61

550

30

408

376

1057

1213

* 2012 Exports in -000- Metric Tons

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Lower DomesticDemand

Increasing Imports

Declining Exports

Share of Global Production

Declines

Rationalization of 4-5 %Expected

Multiple Challenges for Western Europe

70

75

80

85

90

95

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

2007 2009 2011 2013 2015 2017 2019 2021Domestic Demand Imports

Exports Nameplate Capacity

Op Rate

Million Metric Tons Operating Rate, %

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Significant Shift for Global Trade

2012 Net Trade

2017 Net Trade

(Thousand Metric Tons)

289

-240

373

3116

-567

195

-2075

-331

-370

-1177

490

-743

2946

-732

-754

-248

18

201

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-9.0

0.0

9.0

2007 2009 2011 2013 2015 2017 2019 2021

North America South America EuropeMiddle East Africa Indian SubcontinentNortheast Asia Southeast Asia

Polypropylene Net Trade, Million Metric Tons

Global Net Trade

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Regional Prices Reflect Global Demand

Slowdown & Overcapacity

661

1,323

1,984

2,646

30

60

90

120

Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14

North America Discounted West Europe DiscountedNorth America Spot Export CFR China

Price, Dollars Per Metric TonPrice, Cents Per Pound

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-25

-15

-5

5

15

25

20

40

60

80

100

120

Jan-09 Sep-09 May-10 Jan-11 Sep-11 May-12 Jan-13 Sep-13 May-14

Surcharge/Discount, Imported Resins NAM Discounted Price, IHS Estimate

Imported Resin Price Estimate*

North American Price, Cents Per Pound Surcharge/Discount, Cents per Pound

Surcharge

Discount

Arbitrage Windows Will Open and Close

* China PP Spot CFR + freight + tariff + transfer to bulk + domestic transportation

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661

1102

1543

1984

30

50

70

90

2007 2009 2011 2013 2015 2017 2019 2021NAM Discounted Contract NAM Spot Export

WEP Discounted Contract NEA Spot CFR China

Price, Cents Per Pound Price, Dollars Per Metric Ton

Regional Prices Trend to Alignment

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Cost position to dampen domestic demand short term

Ratio of PP/HDPE cost and volatility restricting growth

Excess propane from shale will drive new investments in on-

purpose propylene capacity

A portion of that new propylene capacity will need to be monetized in the

form of polypropylene which will need to depend on export demand

outside the Americas region

Prior to new on-purpose propylene capacity additions, volatility

to continue

Propylene supply not expected to improve until 2017

Loss in PP capacity over the past few years combined with decreaseddomestic and export demand and increased propylene inventory positions

has helped rebalance the propylene market.

Still, supply demand remains tight and any unplanned outages have

immediate affects

North America Polypropylene Outlook

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Polypropylene Conclusions

Short Term High Cost, Regional Demand Shifts,

Overcapacity

Major Trade Shifts, Regional Price Differentials

Challenges for Western Europe New Capacity for North America

Longer Term

Over-Capacity Persists

New Trade Shifts to Consider

Regional Prices Trend to Alignment

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Major events that could derail

the baseline forecast

Government intervention

concerning hydraulic fracking

A compression of the global crude

oil/natural gas spread.

An extended global economicslowdown

Rapid development of shale plays

in other regions which provide

advantaged feedstocks

Development of economical

alternate routes to ethylene

production

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Nylon 6 & 6,6

Market Overview

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Demand Overview

Feedstock impact

Structural changes insupply / demand

Outlook for prices

Overview : Nylon 6 & Nylon 6,6

Chrysler oil pan in BASF Ultramid by Mahle

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2012 Global Nylon Resin Demand

Demand = 6.1 Mil l ion Metric Tons

Nylon 6 Fiber46%

Nylon 6 ETP24%

Nylon 6,6 ETP18%

Nylon 6,6Fiber12%

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2012 Global Nylon ETP Demand

2012 Global Demand 2.6 Mil l ion Metr ic Tons

Automotive &Truck35%

Electrical &Electronic

12%

Appliances

8%

Film & Coating15%

Wire & Cable1%

Consumer10%

Industrial/

Machinery13%

Others6%

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2012 Global Nylon ETP Demand

0 100 200 300 400 500 600

Others

Industrial

Consumer

Wire/CableFilm/Coating

Appliance

E/E

Automotive

Nylon 6 Nylon 6,6

Thousand Tons

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HoneywellDSM - Europe

BASF, DSM,UBE, Univex,

Baling PC,

Mitsubishi

Benzene Cyclohexane Caprolactam Nylon 6

Nylon 6 Producers:

Benzene

Cumene PhenolCyclo-

hexanone

Propylene

Nylon 6 Chain Overview

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Global Capacity = 6.2 Mil l ion Metr ic Tons

Nylon 6 Capacity

North

America12% South

America1%

Europe17%

CIS & BalticStates

6%

Middle East0.26%Indian

Subcontinent2%

NortheastAsia

58%

Southeast

Asia4%

Capacity by Region

BASF SE8%

Li Peng6%

DSM5%

FormosaGroup

4%

Zig Sheng4%

SINOPEC3%

UbeIndustries

3%

Others67%

Top Produc ers

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Global Demand for Nylon 6 Resin

20%

30%

40%

50%

60%

70%

80%

90%100%

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.08.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Engineering Plastic Demand Fiber Demand Total Capacity Forecast

Million Metric Tons Operating Rate

Nylon Resin Capacity Changes

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Nylon Resin Capacity Changes

Nylon 6

-100

0

100

200

300

400

500

600

2012 2013 2014 2015 2016 2017

West Europe CIS & Baltic States China Rest of Asia

Thousand Metric Tons

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0

200

400

600

800

1,000

1,200

1,400

2012 2013 2014 2015 2016 2017

Europe CIS & Baltic States China Rest of Asia

Thousand Metric Tons

Caprolactam Capacity Changes

North America Nylon 6 Resins Cash Cost

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North America Nylon 6 Resins Cash Cost

and ETP Market Price

-20

0

20

40

60

80

100

120

140

160

180

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Nylon 6 Cash Cost Nylon 6 Pre-tax Margin N6 Market Price

Cents Per Pound

~

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Nylon 6 growth in Asia tightened caprolactamsupply in 2011, pressuring polymer prices upwardglobally. This has changed

North American suppliers have relied on exports

of caprolactam and nylon 6 Asia demand slump limits export opportunity

Buyers market on base resin emerging

New capacity announced in China is built ahead of

demand

Nylon 6 Summary

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Ascend

Asahi

Invista, DuPont

Rhodia, Shenma

Benzene Cyclohexane Adipic Acid

Adipo-

nitrile

HMDA

Nylon 6,6

Crude C4 Butadiene

Nylon 6,6 Producers:

Propylene

Ammonia

Acrylonitrile

Nylon 6,6 Chain Overview

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Nylon 6,6 Capacity

Ascend21%

Invista16%

DuPont14%

Solvay/Rhodia

12%

ShenmaIndustrial

8%

BASF SE5%

RadiciChim SpA

4%

Others20%

Top Producers

Global Capacity = 2.4 Mil l ion Metr ic Tons

N. America41%

S. America5%

Europe25%

CIS & Baltics1%

Africa/Middle East

3%

NE Asia23%

SE Asia2%

Capacity by Region

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Global Adiponitrile Capacity

Ascend

20%

Invista60%

Solvay/Rhodia15%

Asahi Kasei5%

ADN Capacity = 1.7 Mil l ion Metr ic Ton s

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Nylon 6,6 Global Capacity Additions

0

20

40

60

80

100

120

2012 2013 2014 2015 2016 2017

West Europe Middle East Northeast Asia

Thousand Metric Tons

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Global Nylon 6,6 Demand

40%

50%

60%

70%

80%

90%

100%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Fiber Demand Engineering Plastic Demand Total Capacity Forecast

Million Metric Tons Operating Rate

Butadiene Price Forecast

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Butadiene Price ForecastS. Korea, West Europe, and the United States

0

25

50

75

100

125

150

175

200

0

551

1102

1653

2205

2756

3307

3858

4409

09 AprJulOct 10 AprJulOct 11 AprJulOct 12 AprJulOct 13 AprJulOct

Spot Korea, FOB Contract WEP, CIF Contract USA, FOB

Dollars Per Metric Ton Cents Per Pound

North America Nylon 6 6 Resin Cash Cost

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North America Nylon 6,6 Resin Cash Cost

And Market Price

0

20

40

60

80

100

120

140

160

180

200

Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13

Nylon 6,6 Cash Cost Nylon 6,6 Pre-tax Margin Nylon 6,6 Market Price

Cents Per Pound

~

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Supply of nylon 6,6 intermediate adiponitrile isstabilizing factor that supports the market

Suppliers have capacity to grow

Competitive intensity has increased

Invistas Shanghai investment in nylon 6,6

intermediates and polymer is progressing

toward 2015-2016 startup

Nylon 6,6 Summary

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Thank You