the changing c4 feedstock slate and the shifts in trade ...€¦ · se asia naphtha ne asia naphtha...
TRANSCRIPT
The changing C4 feedstock slate and the shifts in trade dynamics
Serena SengManaging EditorS&P Global PlattsAPIC 2018
Agenda
❖ Light feedstocks and the impact on butadiene supply
❖ China’s olefins expansion and changes to the butadiene landscape
❖ Downstream synthetic rubber markets – end of the good times?
Light feedstocks and the impact on butadiene supply – The Global feedstock landscape
US Oil and Shale• Increase supply
reduce energy prices
• Increase production of ethane and NGLs Middle East Oil and Gas
• Ethane and other NGLs
• Current competitive prices but prices may rise in future
• New plant startups focus on integration
China Coal and Methanol • Coal to chemicals
production on the rise
• New refineries are integrated
• Multiple feedstock options
Source: S&P Global Platts Analytics, Platts
Light feedstocks and the impact on butadiene supply – Price comparisons of Global feedstocks
0
200
400
600
800
1000
1200
1400
1600
1800
Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17 Oct-17 Mar-18
$/mt
Asian Ethylene
MTO
NE Asia
Naphtha
CTO
US
Ethane
ME Ethane
Crude~$100/b
Crude~$50/b
Crude
~$43/b
Crude~$55/b
Crude hovers
above $70/b
Source: S&P Global Platts Analytics
Light feedstocks and the impact on butadiene supply – Asian cracker feedstock patterns change, but naphtha still dominant
74%
3%
5%
2% 5%
8%
2%
Asian Ethylene Feedstock Slate - 2017
Naphtha
Ethane
Propane
Butane
Gas Oil
Coal
Methanol
69%5%
6%
3% 4%
12%
2%
Asian Ethylene Feedstock Slate -2028
Source: S&P Global Platts Analytics
0
50
100
150
200
250
Hydrogen andmethane
Ethylene Propylene Butadiene Mixed butenes C5+ Benzene Toluene Fuel Oil
Butane
Propane
Ethane
Gasoil
Naphtha
Light feedstocks and the impact on butadiene supply – Cracker product yield from different types of feedstocks
Source: S&P Global Platts, Industry sources
Light feedstocks and the impact on butadiene supply – a closer look at heavy feedstock vs light feedstock yields
26%
30%13%
5%
8%
8%
5%4%
2%
Naphtha
Hydrogen andmethaneEthylene
Propylene
Butadiene
Mixed butenes
C5+
Benzene
VS
24%
37%
18%
2%6%
13%
Butane
Hydrogen andmethane
Ethylene
Propylene
Butadiene
Mixedbutenes
Light feedstocks and the impact on butadiene supply – Asian crackers are mostly integrated with BDE/BTX units
0
100
200
300
400
500
600
700
800
0
500
1000
1500
2000
2500
3000
3500
Naphtha C+F Japan Cargo $/MT (RHS) Butadiene FOB Korea Weekly Mavg $/MT
Butadiene CFR Taiwan Mavg $/MT Butadiene CFR China Mavg $/MT
61%21%
18%
Butadiene extractionunit PLUS Aromaticsextraction unit
Butadiene extractionunit OR Aromaticsextraction unit
None
Asian cracker types
Production costs by Asian cracker types
$0
$100
$200
$300
$400
$500
$600
BDE/BTXNaphtha cracker
Non-IntegratedNaphtha Cracker
2017
2018
Source: S&P Global Platts, Industry sources
China’s olefins expansion and changes to the butadiene landscape – the need to secure ethylene
$300
$800
$1,300
$1,800
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
Global Ethylene Price Forecasts ($/mt)
US Asia Europe
Source: S&P Global Platts Analytics, PIRA, Industry sources
China’s olefins expansion and changes to the butadiene landscape – ethylene via CTO
Company Location ProcessCapacity
KT/YearStartup
China Coal Mengda Inner Mongolia CTO 226 2016
Shenhua Group Xinjiang CTO 68 2016
SINOPEC Zhong Tian He
Chuang EnergyInner Mongolia CTO 371 2016
Qinghai Salt Lake Qinghai CTO 121 2017
SINOPEC Zhong Tian He
Chuang EnergyInner Mongolia CTO 217 2017
Jiutai Energy Inner Mongolia CTO 300 2018
Shenhua Group Ningxia CTO 377 2018
Connell Chemical Jilin CTO 120 2018
SXYCPC Yanan E&C Shaanxi CTO 450 2018
China Coal Yulin Shaanxi CTO 302 2019
SINOPEC-Wanbei Coal-
Electricity GroupAnhui CTO 350 2019
Shenhua Group Shaanxi CTO 280 2020
Yili Meidianhua Xinjiang CTO 301 2020
Lower Chinese coal prices make an attractive option for CTO
0
20
40
60
80
100
120
140
160
180
200
0
200
400
600
800
1000
1200
25/7/2015 25/7/2016 25/7/2017 25/7/2018
PCC Met Shandong Semi Soft Free-on-Rail Yuan/MT (LHS)
*PCC Met Shandong Semi Soft Free-on-Rail USD parity $/MT (RHS)
*PCC Met Shandong Semi soft Free-on-Rail USD parity calculated by applying an implied exchange rate of 1USD=6.5 Yuan
• China adds 13 new CTO plants over 2017-2020• Most located in Inner Mongolia and Shaanxi where
coal reserves lie• Chinese coal prices highest in 3 years yet still
cheaper than naphtha feedstock or methanol feedstock
0
1000
2000
3000
4000
5000
6000
2016 2017 2018 2019 2020 2021 2022
New ethylene capacities from CTO/MTO in KT/Year
Source: S&P Global Platts Analytics, Platts, Industry sources
China’s olefins expansion and changes to the butadiene landscape – ethylene via MTO
Source: S&P Global Platts Analytics, Platts, Industry sources
0
500
1000
1500
2000
2500
3000
2016 2017 2018 2019 2020 2021 2022
New Ethylene Capacities from MTO in KT/Year
Company Location Process
Ethylene
Capacity
KT/Year
Startup
Fund Energy Jiangsu MTO 97 2016
Sailboat Petrochemical Jiangsu MTO 366 2017
Shandong Lianhong MTO
ExpansionShandong MTO 50 2017
Jiutai Energy Inner Mongolia MTO 250 2018
Nanjing Chengzhi Yongqing Jiangsu MTO 300 2019
0
100
200
300
400
500
600
0
500
1000
1500
2000
2500
3000
3500
4000
25/7/2015 25/7/2016 25/7/2017 25/7/2018
Methanol Domestic China (Ex-Tank) Yuan/mt (LHS)
*Methanol Domestic China (Ex-Tank)USD parity $/MT (RHS)
Firm Methanol prices unattractive to be used as C2 feedstock in MTO
*Methanol domestic China (Ex-Tank ) USD parity calculated by applying an implied exchange rate of 1USD=6.5 Yuan
• China adds 5 MTO plants over 2017-2019 • Most located in Jiangsu region, easy
access to coastal region and imported methanol
• Domestic Methanol prices remain firm from end 2016 and at least $150-200/mthigher than coal prices
China’s olefins expansion and changes to the butadiene landscape – what happens to MEOH imports if MTO margins dive?
400
380
Source: S&P Global Platts, Industry sources, China customs
-150.00
-100.00
-50.00
0.00
50.00
100.00
150.00
200.00
1/6
/20
17
1/7
/20
17
1/8
/20
17
1/9
/20
17
1/1
0/2
017
1/1
1/2
017
1/1
2/2
017
1/1
/20
18
1/2
/20
18
1/3
/20
18
1/4
/20
18
1/5
/20
18
1/6
/20
18
1/7
/20
18
MT
O m
arg
in (
$/m
t)
Average MTO margins plunged May
(assume PP/MEG downstream)
We’re here!
Answer: MTOs shut, imports fall. H1 methanol imports down ~5-11% YOY
China’s olefins expansion and changes to the butadiene landscape –ethylene right at the top of cost curve
-
200
400
600
800
1,000
1,200
- 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000
$/mt
Cumulative Capacity ('000 mt)Saudi Ethane
US Ethane
WE Naphtha
SE Asia Naphtha
NE Asia Naphtha
Russia average
Global Ethylene Demand: 151 million mt/year
Chinese MTOs
CTOs
-
200
400
600
800
1,000
1,200
1,400
1,600
Middle EastEthane
Saudi Ethane Iran Ethane US Ethane WE Naphtha SE AsiaNaphtha
NE AsiaNaphtha
NE Asia GasOil
CTO MTO
$/mt Ethylene production costs
Jun-14 Jan-18
Source: S&P Global Platts Analytics
China’s olefins expansion and changes to the butadiene landscape – Propylene via CTO/MTO
Company Location ProcessPropylene Capacity
KT/YearStartup
China Coal Mengda Inner Mongolia CTO 226 2016
Shenhua Group Xinjiang CTO 113 2016
Qinghai Salt Lake Qinghai CTO 121 2017
SINOPEC Zhong Tian He Chuang
EnergyInner Mongolia CTO 206 2017
Huating Zhongxu Coal Chemical
CorpGansu CTO 200 2018
Jiutai Energy Inner Mongolia CTO 300 2018
Shenhua Group Ningxia CTO 550 2018
China Coal Yulin Shaanxi CTO 302 2019
SINOPEC-Wanbei Coal-Electricity
GroupAnhui CTO 300 2019
Shenhua Group Shaanxi CTO 300 2020
Yili Meidianhua Xinjiang CTO 301 2020
Company Location Process
Propylene
Capacity
KT/Year
Startup
Fund Energy Jiangsu MTO 97 2016
Nanjing
Chengzhi
Yongqing
Jiangsu MTO 300 2019
Sailboat
PetrochemicalsJiangsu MTO 275 2017
Shenhua GroupInner
MongoliaMTO 360 2019
SINOPEC Zhijin,
ZhijinGuizhoy MTO 300 2021
Source: S&P Global Platts Analytics, Industry sources
1944
2677
3911
48135424
5411
New Propylene capacities from CTO KT/Year
2016
2017
2018
2019
2020
2021
2884
3219
32443904
3915
4202
New Propylene capacities from MTO KT/Year
2016
2017
2018
2019
2020
2021
China’s olefins expansion and changes to the butadiene landscape – Propylene via PDH
-200
0
200
400
600
800
1000
1200
1400
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
Jan
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
Oct
No
v
De
c
Jan
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
Oct
No
v
De
c
Jan
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
Oct
No
v
De
c
Jan
Feb
Mar
Ap
r
May Jun
Jul
Au
g
Sep
Oct
No
v
De
c
Jan
Feb
2014 2015 2016 2017 2018
Japan Propane Imports thousands/bbl (LHS) China Propane Imports thousand/bbl (LHS)
South Korea Propane Imports thousands/bbl (LHS) US Propane Cracker Margin $/mt (RHS)
Company Location ProcessPropylene Capacity
KT/YearStart up Status
Tianjin Bohai Chemical Tianjin PDH 600 2013 Running
Haiwei Group Hebei (Hengshui) PDH 500 2016 Running
Hebei (Huanghua) PDH 500 Planned Planned
Ningbo Haiyue New Material Co Ningbo PDH 600 2014 Running
Shaoxing Sanyuan Zhejiang PDH 450 2014 Running
Zhejiang Satellite Energy Co Zhejiang (Pinghu) PDH 450 2014 Running
Zhejiang (Pinghu) PDH 450 2019Under
construction
Oriental Energy Zhejiang (Ningbo) PDH 660 2016 Running
Zhejiang (Ningbo) PDH 660 planned planned
Caofeidian PDH 660 planned planned
Hebei (Tangshan) PDH 660 planned planned
Yantai Wanhua Shandong PDH 750 2015 Running
Zhangjiagang Yangtze River
Petrochemical Co
Jiangsu
(Zhangjiagang)PDH 600 2015 Running
Jiangsu
(Zhangjiagang)PDH 600 Planned Planned
Fujian Meide Petrochemical Fujian (Fuqing) PDH 660 2019Under
construction
Fujian (Fuqing) PDH 660 Planned Planned
Shenzhen Juzhengyuan Dongguan (Humen) PDH 900 2019-2020Under
construction
Source: S&P Global Platts, EIA, Industry sources
China’s olefins expansion and changes to the butadiene landscape – CTO vs Naphtha production costs of olefins
Source: S&P Global Platts, EIA, Industry sources
China’s olefins expansion and changes to the butadiene landscape – rise in BD imports over the past 10 years
*2018 data is up to March, S&P Global Platts CFR China price history starting from 2013
Source: S&P Global Platts, China Customs
0
200
400
600
800
1000
1200
1400
1600
1800
0
50000
100000
150000
200000
250000
300000
350000
400000
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *2018
Imports (LHS) Price CFR China $/MT(RHS)
New Butadiene capacities start up resulting in less import demand
Tight supply drives up import demand
China automobile production growth surged 48% in 2009, fueling a surge in BD imports World financial
crisis lowered demand for automobiles and BD imports
China’s olefins expansion and changes to the butadiene landscape - 2014-2018 imports breakdown by countries
0
500000
1000000
1500000
2000000
2500000
*2018 2017 2016 2015 2014
China’s olefins expansion and changes to the butadiene landscape – overview of Chinese butadiene demand
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Butadiene Demand in NE Asia KT/YearCAGR 3.42%
Butadiene downstream demand 2010-2020
2010 Demand in
KT/Year
2015 Demand
in KT/Year
2020 Demand in
KT/Year
SBR 1600 2800 4300
PBR 690 1910 1960
• NE Asia butadiene demand expected to rise from 10 million in 2010 to 14 million tonnes by 2020
• SBR demand expected to see bigger growth than PBR at 4.3 million tonnes by 2020
• Rise in China car sales and production to fuel butadiene demand in 2020
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0
5000000
10000000
15000000
20000000
25000000
30000000
35000000
2013 2014 2015 2016 2017
No of Cars ProducedNo of Cars Sold*Sales in RMB (Billion) (RHS)
China Car Production and Sales Figures from 2013-2017
Source: S&P Global Platts, China Association of Automobile Manufacturers, Industry sources
2.5 mnt
*Sales figures are estimates
China’s olefins expansion and changes to the butadiene landscape – On purpose butadiene production the solution to Chinese BD supply woes?
20
Zibo Qixiang Tengda Chemical, ODH, 150 KT/year 2013
Transfar Kaiyue, ODH, 50KT/Year 2013
Yuhuang Chemical Co, ODH , 180KT/Year, 2013
Wanda Group, ODH, 150KT/Year, 2013
Sinopec Wuhan, BDX, 120KT/Year, 2013Petrochina
Sichuan, BDX, 150KT/Year, 2013 Shanghai SECCO
Petrochemical BDX, 90KT/Year, 2013
Fujian Refining & Petrochemical, BDX, 150KT/Year, 2013
Zhuhai Zhongguan petrochemical, ODH, 70KT/Year, 2014
Sinopec Baling, ODH, 100KT/Year, 2015
Sinopec Shanghai, BDX, 220KT/Year, 2015
Sinopec Yangzi, BDX, 340KT/Year, 2015
China’s BD capacities 2013-2015
Source: S&P Global Platts, Industry sources
2013 2014 2015
Imports KT/Year 370 203 278
*Production KT/Year 1040 1041 1770
**Demand KT/Year 3441 4030 4618
Surplus/Deficit
KT/Year-2031 -2786 -2570
China’s olefins expansion and changes to the butadiene landscape - new butadiene capacities 2017-2022
Company Name ProcessCapacity
KT/Year
Completion
Date
Shandong Kenli ODH 100 2017
Jiangsu Sailboat MTO/ODH 100 2017
Bluestar Puyang BDX 30 2017
Shenhua
NingmeiCTO 65 2017
CNOOC / Shell NCC/BDX 160 2018
Zhejiang PC
(Rongsheng)NCC/BDX 200 2019
Nanjing
ChengzhiMTO/ODH 100 2019
Sinopec Fujian
Gu LeiNCC 110 2019
Jiutai Energy ODH 60 2019
Liaoning Bora NCC/BDX 130 2019
Sinochem
QuanzhouNCC/BDX 120 2020
Sinopec Haijian NCC 160 2020
Hengli
PetrochemicalNCC/BDX 150 2020
Wanda Group NCC/BDX 168 2020
Sinopec / KPC NCC/BDX 130 2020
Wanhua NCC 100 2020
Zhejiang PC
(Rongsheng)NCC/BDX 200 2022
Sinopec Fujian
Gu LeiNCC/BDX 90 2022
Total 2,173
Number of Butadiene Plants added 2017-2022
4
1
5
6
2
2017
2018
2019
2020
2022
Source: S&P Global Platts, Industry sources
Downstream synthetic rubber markets – the end of the good times? Where is the demand coming from?
*NE Asia butadiene demand 2020
29%
29%6%
3%
14%
10%
9% Polybutadiene (PBR)
Styrene Butadiene Rubber(SBR)
Nitrile Butadiene Rubber(NBR)
Polychloroprene (PCR)
Acrylonitrile ButadieneStyrene (ABS)
Styrene Butadiene Latexes
Others
Typical Car tyre raw material composition
37%
15%
32%
16%
NaturalRubber
SyntheticRubber
Fillers(Carbonblack, silicaetc)Others
*Industry estimates based on 14 million metric tonnes of expected demand
Source: S&P Global Platts, Industry sources
Downstream synthetic rubber markets – the end of the good times? Synthetic Rubber Market 2015-2017
0
2000
4000
6000
8000
10000
12000
14000
16000
2015 2016 2017
Americas
Europe
Asia-Pacific
-1000
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2015 2016 2017
Synthetic Rubber Production (KT/Year) Synthetic Rubber Consumption (KT/Year)
Supply/Demand surplus or deficit (KT/Year)
• Asia is worlds largest producer of synthetic rubber at 52%, followed by Europe at 27% and Americas at 21%
• Asia synthetic rubber supply/demand at deficit year on year from 2015-2017
• In spite of rising synthetic rubber prices, global shortage of 137,000 mt in 2017
Source: Rubber Statistical Bulletin
World Synthetic Rubber Production in KT/Year Asia-Pacific Synthetic Rubber Supply/Demand 2015-2017
Downstream synthetic rubber markets – the end of the good times? Natural Rubber Market 2015-2017
0
2000
4000
6000
8000
10000
12000
14000
2015 2016 2017
Americas
Europe
Asia-Pacific
World Natural Rubber Production in KT/Year Asia-Pacific Natural Rubber Supply/Demand 2015-2017
0
2000
4000
6000
8000
10000
12000
14000
2015 2016 2017
Natural Rubber Production(KT/Year)Natural Rubber Consumption (KT/Year)Supply/Demand surplus or deficit (KT/Year)
• Natural rubber production continues to exceed demand over the last 3 year period resulting in surplus supply and lower prices as compared to the synthetic rubber market
0
500
1000
1500
2000
2500
2015 2016 2017 *Q1 2018
Butadiene CFR SE Asia $/MT (LHS)
ESBR 1502 CFR SE Asia $/MT (LHS)
Natural Rubber SGX TSR 20
BD/SBR and Natural Rubber prices trend 2015-Q1 2018
Source: Rubber Statistical Bulletin, S&P Global Platts
Summary
❖ The shift to lighter feeds is inevitable amid cheaper raw material costs
❖ China’s drive for self-sufficiency in olefins production sees new investments in CTOs and PDHs and on-purpose Butadiene production beyond 2020
❖ Growing Chinese consumer affluence will continue to drive automobile demand and in turn demand for tyres and tyre raw materials through 2020
❖ Regional short term butadiene supply shortages stemming from maintenance T/As and Japanese cracker issues will support firmer Butadiene prices
❖ Synthetic rubber consumption to outpace production leading to supply deficits till 2020
❖ Natural rubber prices in Asia expected to remain low amid supply glut
Thank You!
Editor’s contacts
Managing Editor: Serena Seng, [email protected]
Ethylene &derivatives: Fumiko Dobashi, [email protected]
Propylene & derivatives: Melvin Yeo, [email protected]
Butadiene& derivatives: Elizabeth Low, [email protected]