steve global olefin september 2014

8/18/2019 Steve Global Olefin September 2014

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Information | Analytics | Expertise

© 2014 IHS / ALL RIGHTS RESERVED

GLOBAL OLEFINSCost, Demand, Price and Trade

SEPTEMBER 2014

Steve Lewandowski, Global Business Lead [email protected]

mailto:[email protected]:[email protected]


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© 2014 IHS

Ethylene and Propylene

Where arethey comingfrom?

Whereare they

going?

AGENDA

Energy Outlook

Ethylene View

Propylene View


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Base Energy

3

LYB/ JUNE 2014


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© 2014 IHS

Energy: Global Crude / North American NG

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1012

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18

20

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WTI Crude Brent Crude Henry Hub Gas

Constant 2012 Dollars Per MMBtu


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Energy: North America Natural Gas Liquid’s Mont Belvieu NGLs Price Playing Field – Global Redesign

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WTI Crude Henry Hub Gas Ethane Propane Butane USGC Light Naphtha

`$/MMBTU


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ETHYLENE

Technology

Cost and MarginsSupply:

Regional

Feed typeTrade

6

LYB/ JUNE 2014


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Primary Ethylene Production Routes

Natural Gas

Syn Gas

CoalMTO/MTP Ethylene

Propylene

MTO

CTO

NaturalGasoline

PropaneButanes

NaphthaGas Oil Propylene

PygasBenzeneToluene/XyleneHeavy Aromatics

C5/C6 Non Aromatics

Crude C4ButadieneMixed Butylenes

Fuel Oil

Ethane

CrudeOil

Refinery

Gas ExtractionplantNGL

Fractionator

Ethylene

Methane/Hydrogen

Ethylene

Unit


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0.0

2.5

5.0

Ethane Propane Light Naphtha Gas OilEthylene PropyleneCrude C4 Pygas (BTX & Heavy Aromatics)Hydrogen Methane FuelFuel Oil

Ton/Tons of Ethylene

Cracker: Co-Product Yields and Feed Rate


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Process Flow: Coal and Natural Gas to Olefins

9

Coal

Gasification

Syngas

Methanol

DME

MTO Reactor

Ethylene Natural Gasoline

Fuel Gas

Crude C4’s

PG Propylene

PG Propylene

LPGs Natural Gasoline

Fuel Gas

Natural gas

Reformer

MTP Reactor

Acetyl Ethanol

Oxylate EsterMEG


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© 2014 IHS

Ethylene Cash Cost SnapshotDifferent Technolog ies around the world

(Cash cost = Feed +VC + FC – co-product)

0

225

450

675

900

1125

1350

1575

WesternCanada

U.S. Ethane U.S.Weighted Average

US GTO China CTO West EuropeNaphtha

Northeast Asia Naphtha

Southeast Asia Naphtha

China MTO US MTO

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

Ethylene Cash Costs FromEthane in Saudi Arabia

2013 2023


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© 2014 IHS

Regional Ethylene Cash Costs

0

200

400

600

800

1,000

1,200

1,400

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

NAM Ethane WEP Naphtha SEA Naphtha

Cents Per Pound


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© 2014 IHS

Ethylene Demand

N.America34,125

S. America,5,599

W.Europe,23,726

C. Europe,2,324

CIS &Baltics,4,017

Africa,1,850

MiddleEast,

29,363

Indian

Subcontinent, 4,080

NEAsia,

37,921

SE Asia,10,725

2013 2023

N.America,

44,843

S. America,7,738

W.Europe,17,914

C. Europe,1,814

CIS &Baltics,8,287

Africa, 1,643

MiddleEast,

39,134

IndianSubc., 8,038

NEAsia,

50,964

SE Asia,13,944

133 Million Metric Tons 194 Million Metric Tons


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© 2014 IHS

Ethylene Capacity AdditionsCapaci ty addi t ions in s ync wi th demand g rowth forecast

-10.0

-5.0

0.0

5.0

10.0

15.0

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

Million Metric

Tons

Total Asia OthersMiddle East West EuropeNorth America Annual Demand Increase


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© 2014 IHS

0%

2%

4%

6%

0.0

50.0

100.0

150.0

200.0

250.0

08 09 10 11 12 13 14 15 16 17 18

Ethane (7.6/4.9) Propane (7.2/2.6)Butane (3.1/4.7) Naphtha (1.5/2.2)Gas Oil (-5.9/3.7) Methanol to Olefins (0.0/24.2)Coal to Olefins (0.0/38.5) Others (4.8/9.8)Total Capacity (3.4/3.7) Percent from non steam cracker

Million Metric Tons Percent non cracker

Global Ethylene SupplyCapacity, Feed Stock, and Percent Production from non-Traditional Sources

Ethane and Naph tha

St il l the work horses


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© 2014 IHS

Low Cost Regions Will Push Excess Supply To OtherRegions

-40

-30

-20

-10

0

10

20

30

40

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

North America South America West Europe Middle EastIndian Sub. Northeast Asia Southeast Asia Others

Net Expo rts

Net Imp orts

Million Metric Tons


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Deep Dive into North America

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LYB/ JUNE 2014


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© 2014 IHS

Unprecedented capacity additions in North America due toample ethane supply

Ethylene Capacity Additions

2014 2015 2016 2017 2018 2019 2020

Total Additions

Projected North American Ethylene (2014 - 2020) (ThousandMetric Tons per Year)

through 2020

Company Location

BASF/Total Port Arthur. TX 170 170

ChevronPhillips Cedar Bayou, TX 150 1350 1500

Dow Freeport, andPlaquemine 220 600 900 1720

Eastman Longview, TX 17 17

Equistar All Locations 385 114 363 862

ExxonMobil Baytown, TX 750 750 1500

FHR PT Arthur 100 100

Formosa Point Comfort, TX 1150 1150

Oxy/Mexichem Ingleside, TX 137 413 550

Sasol Lake Charles, LA 387 1163 1550

Westlake All Locations 94 122 216

Williams Geismar, LA 258 258

Braskem Idesa Mexico 1000 1000

Nova Sarnia 168 168

Firm: 666 814 1363 918 4674 2326 0 10761


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© 2014 IHS

Capacity addition announcement continue

Ethylene Capacity Additions

2016 2017 2018 2019 2020 2021 2022 2023 2024+

Total Additions

Projected North American Ethylene (2014 - 2020) (Thousand MetricTons per Year)

Company Location

Aither Chemicals WV. 200 200

Appalachian Resins Salem Township, OH 275 275

Ascent WV. 1000 1000

Axiall/Lotte Lake Charles, LA 500 500 1000

Formosa Louisiana 0 0

Hanwha TBA 1000 1000

PTTCG TBA 1000 1000

ShinTech Louisiana 500 500

Shell Monaca, PA 1500 1500

Total TBA 1000 1000 Williams Geismar, LA 750 750 1500

Other 2 0

Announced: 0 0 0 1775 3450 1750 2000 0 0 8975


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© 2014 IHS

(4,000)

(2,000)

----

2,000

4,000

6,000

8,000

10,000

12,000

2012 2013 2014 2015 2016 2017 2018 2019 2020

Net Feeds New Ethylene Capacity New Ethylene Consuming Capacity

US – Capacity Integration


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© 2014 IHS

Global Ethylene Prices

20

0200

400

600

800

1,0001,200

1,400

1,600

1,800

2,000

12 M M J S N 13 M M J S N 14 M M J S N 15 M M J S N

$US Per Metric

Ton

NAM Ethylene Avg. Acq WEP Ethylene Contract Pipeline

SEA Spot CFR SE Asia


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PROPYLENE

Technology

Cost and MarginsSupply:

Regional

Feed typeTrade

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LYB/ JUNE 2014


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© 2014 IHS

Direct Refinery Grade chemical consumption

Alkylation

Unit

High Octane Motor

Gasoline

Other Fuel Uses

MotorGasoline

PurificationSplitter Unit

Propylene toconsumers

CrudeOil

Steam Cracker(Olefins Plant)NGL*

Naphtha

Ethylene& Olefins

Refining Industry

CrudeUnit

MotorGasoline

Chemical Industry

On-Purpose

FCC /CokerUnits

Key Routes to Produce Propylene

Nat.Gas

* Ethane, Propane, Butane, Lt Nap.


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© 2014 IHS

On-Purpose Propylene Production

PDH block flow Metathesis dimerization block flow

23

Propane

PDH Unit

Polymer GradePropylene

Fuel Gas

Hydrogen

Ethylene

Dimer Unit

Butene-2

OCU

Polymer GradePropylene

C4 Raffinate

Natural Gasoline

Raffinate


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© 2014 IHS

On-Purpose: Coal and Natural Gas to Olefins

24

Coal

Gasification

Syngas

Methanol

DME

MTO Reactor

Ethylene Natural Gasoline

Fuel Gas

Crude C4’s

PG Propylene

PG Propylene

LPGs Natural Gasoline

Fuel Gas

Natural gas

Reformer

MTP Reactor

Acetyl Ethanol

Oxylate EsterMEG


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© 2014 IHS

Propylene Market ViewUS PDH Margins Attracting New Investment –2013 cash costs

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

NAM GTP NAM GTO ChinaCTO

NAM PDH ChinaMTO

NAM MTONAM MTP

$US Per MetricTon

2013 2023Source: IHS © 2014 IHS


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© 2014 IHS

Propylene Cash Costs

0.00

200.00

400.00

600.00

800.00

1000.00

1200.00

1400.00

1600.00

1800.00

NAM PDH NAM Splitter NAM Metathesis

WEP PDH NEA PDH China CTO


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© 2014 IHS

Propylene Demand

2013 2023

N.America17,863

S. America,4,062

W.Europe,13,263

C. Europe,1,571

CIS &Baltics,4,800

Africa, 1,294

Middle

East,13,507

IndianSubc., 6,510

NEAsia,

53,679SE

Asia,9,618N.Americ

a,13,524

S. America,

2,996

W.Europe,13,569C. Europe,

1,501

CIS &Baltics,1,915

Africa, 1,067

MiddleEast,7,287

Indian Subc.,3,748

NEAsia,

31,949SE

Asia,6,231

83 Million Metric Tons 126 Million Metric Tons


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© 2014 IHS

-8.0

-4.0

0.0

4.0

8.0

12.0

90 92 94 96 98 00 02 04 06 08 10 12 14 16 18

Million Metric Tons

North America Middle East

China West Europe

Others Other Asia

Capacity Overwhelms

Anticipated Demand Growth

Global Propylene Capacity Additions


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© 2014 IHS

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0%

5%

10%

15%

20%

25%

30%

0.0

50.0

100.0

150.0

200.0

08 09 10 11 12 13 14 15 16 17 18

Stm. Crackers (1.8/2.4) FCC Splitters (4.7/1.7) Dehydro (17.5/15.7)

Metathesis (17.9/2.2) Olefin Cracking (4.6/-0.3) Methanol to Olefins (0.0/24.3)

Coal to Olefins (0.0/39.9) Coal to Propylene (0.0/6.6) HS FCC (31.6/8.5)

Others On-Purpose (4.5/-0.2) Total Capacity (4.2/4.0) Total On-Purpose

Thousand Metric Tons Percent On-Purpose

Global Propylene SupplyCapacity, Source, and Percent Production from non-Traditional Sources

On Purpose supp ly

Becomes cr i t ical to balance


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© 2014 IHS

Global Propylene Net Equivalent Trade

-15.0

-12.0

-9.0

-6.0

-3.00.0

3.0

6.0

9.0

12.015.0

08 09 10 11 12 13 14 15 16 17 18 23

North America West Europe Middle East Asia (Ex China) China Others

Net Imports

Net Exports

Million Metric Tons


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© 2014 IHS

Polypropylene: Americas Trade Balance

-1.2

-0.9

-0.6

-0.3

0.0

0.3

0.6

0.9

1.21.5

2008 2010 2012 2014 2016 2018

South America Net Trade North America Net Trade NAM Exports - SAM Imports

Net Trade, Million Metric Tons

Propylene Market View


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© 2014 IHS

0

200

400

600

8001,000

1,200

1,400

1,600

1,800

12 A J O 13 A J O 14 A J O 15 A J O

NAM Net Trans. Contract Price WEP Disc. Contract PriceSEA CFR Spot Price

Dollars Per Metric Ton

Propylene Market ViewLong Term Propylene Price Forecast


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Key Take-Away: cost, demand, trade

• Regional investments

are driven by: advantaged feedstock

cos t ($) or,

strong demand growth($).

• Ethylene andderivatives t radef lows will grow andwill flow fromadvantaged regions tothe rest of the world.

• Propylene andderivatives’ t rade

f lows will be flat ascapacity additions anddemand growth match.

North AmericaChina

Middle East

steve global olefin september 2014

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