pemex_6-2012 global chlor-alkali review

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© 2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent.

Chlor-Alkali: Co-Products, not Co-Demand

Water

Salt

Electricity

Health Care

Water Treatment

Pharmaceuticals

Electronics

Plastics (PVC)

Metals: Aluminum, TiO2

Food Production

Processing & Packaging

Home/Gov’t Construction

Pulp and Paper Production

Auto & Truck Production

Flame Retardant Materials

Cell

Chlorine

Hydrogen

CausticSoda

1.0 ton

1.

1 ton

The combined output of

1.0 Ton o f Chlor ine and 1.1 Ton of Caustic = ECU ( Electro -Chemical Unit )

Caust ic Supply is Set by Chlor ine Produc t ion

21



© 2012, IHS Inc. No portion of this presentation may be reproduced, reused, or otherwise distributed in any form without prior written consent. 22

2011 Latin America Caustic End Uses

Pulp & Paper 20%

Alumina31%

Organics11%

Soaps/Detergents/

Textiles12%

Inorganics5%

Water Treatment

4%

Others

20%

2011 Domestic Demand = 3.9 Mil l ion Dry Metr ic Ton s




Demand Growth Close Up

-4.0

-2.0

0.0

2.0

4.0

6.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

N. America S. America Europe Africa/Middle East/Indian Subcontinent Asia

Caustic Soda Demand Year-on-Year, Million Metric Tons




2011 Latin America Caustic SodaSupply Demand Future

0.0

1.0

2.0

3.0

4.0

5.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Production (0.1/2.5) Domestic Demand (3.4/3.8)

Total Capacity (1.4/1.6)

Million Dry Metric Tons

(% AAGR = 06-11/11-16)




Mexico Caustic Net Trade

-14

-12

-10

-8

-6

-4

-2

0

2

46

09 A J O 10 A J O 11 A J O 12

Exports Imports Net Trade

Thousand Dr Metric Tons




• South America’s

demand will likelygrow by almost

700,000 metric tonsfrom 2011 to 2016

Latin America’s Growing Demand

Alpart (2013)

Alumina do Para (2014)

Suzano (2013, 2014)

Veracel (2013)

Fibria (2014, 2015)Eldorado (2012)

Klabin Kimberly

(2015)CMPC (2015)

Montes del Plata (2013)

New Pulp Mill Capacity

New Alumina Refinery Capacity

LEGEND

26




Electricity$152

Salt $32

Variable $14

Fixed $114

27

U.S. ECU Cash Costs: Throw Me a Lifebuoy

2000 TotalECU CashCost = $312

All costs in 2012 constant dollars.




U.S. ECU Cash Costs: Throw Me a Lifebuoy

Electricity$85

Salt $27Variable$8

Fixed $95

2000 = $3122012 = $215

31% Cash

Cost Decl ine

All costs in 2012 constant dollars.

2012 TotalECU CashCost = $215




ECU Cash Costs: Shale Gas Improves U.S.

100

150

200

250

300

350

400

450

500

550600

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

USGC ECU Cash Costs WEP ECU Cash Costs

NEA ECU Cash Costs CHI ECU Cash Costs

Cash Costs, Dollars Per Metric Ton

Middle East

2011 Electricity Costs(Cents/kWh)

North America = 3.0Europe = 8.4Brazil = 7.3




-1.00

-0.75

-0.50

-0.25

0.00

0.25

0.50

0.75

1.00

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

17.0

Change in Capacity Year over Year North America Caustic Capacity

Capacity, Million Dry Metric Tons Change in Capacity, Million Dry Metric Tons

U.S. Chlor-Alkali Industry Responds toShale Gas Advantage

30

North America Caustic Capacity




U.S. Producers- Net Exports Rising

0%

2%

4%

6%

8%

10%

12%

14%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Imports Exports Net Exports as % of Total Demand

Million Dry Metric Tons Percentage




Global Outlook for Caustic Soda Flows

2011

2006

2016

Net Trade Flows

United States

7 7 3

1 3 2 0

2 5 1 3

South America

1 3 2 1

1 9 1 5

2 4 5 7

Europe

5 1 1

5 2 5

4 1 6

Global Caustic Net Trade, Thousand Dry Metric Tons

Northeast Asia

2 5 0 9

3 3 6 6

3 9 8 6

Southeast Asia

2 2 0 3

2 6 4 1

3 2 3 3

Middle East

6 5 1

5 7 0

7 1 0




Arbitrage Determines a ‘Global Price’

CFR Aus tral ia

$430 FOBMiddle East

$450 FOB

Northeast Asia

$410 FOB

USGC

$94

February 2012 Spot Caustic Prices




Price: The Battle Zone

0

100

200

300

400

500

600

700

800

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

U.S. AAP Caustic USGC

West Europe Contract (Delivered)

NEA Contract* (Delivered Taiwan)

Dollars Per Dry Metric Ton

* Excludes China




Beneath the Waves: Price Support

60

70

80

90

100

110

120

130

0

100

200

300

400

500

600

Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12

FOB NEA Spot CFR SEA Spot Dubai Crude Oil

Caustic, U.S. Dollars per DMT Crude, U.S. Dollars per Barrel

2010 Avg = $78 per Barrel

2011 Av g = $106 per B arrel

Japan Tsunam i

Tosoh Explos ion

pemex_6-2012 global chlor-alkali review

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