Professional Documents
Culture Documents
Tony.Potter@ihsmarkit.com
8
10
Percent change
Percent change
6
5
4
2 0
0
-5
-2
-4 -10
2000 2005 2010 2015 2020 2000 2005 2010 2015 2020
125
Dollars/barrel
100
75
50
25
0
2000 2005 2010 2015 2020 2025
Source: IHS Markit Current US dollars © 2017 IHS Markit
4
Confidential. © 2017 IHS MarkitTM. All Rights Reserved.
Agenda
20
15
Dollars Per MMBtu
10
0
00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Brent Crude Henry Hub Gas USGC Ethane
Source: IHS Markit USGC Propane China Coal NEA Naphtha © 2017 IHS Markit
6
Confidential. © 2017 IHS MarkitTM. All Rights Reserved.
Non-conventional Technology Providing Options For Future
Investments In Olefins Production
Conventional Light Olefins Cash Cost Non-Conventional Light Olefins Cash Cost
US$ / Metric Ton
1400
2011 2013 2015
1200
1000
800
600
400
200
0
US US PDH NEA PDH NEA WEP US GTP US GTO NEA CTO NEA MTO
Ethane Naphtha Naphtha
Source: IHS Markit © 2017 IHS Markit
PDH = Propane Dehydro; GTP = Gas to Propylene; GTO = Gas to Olefins; CTO = Coal to Olefins; MTO = Methanol to Olefins
Confidential. © 2017 IHS MarkitTM. All Rights Reserved.
North America ethylene capacity growth*
Rest of Asia
China
MDE/Afr
Europe
Americas
0 2 4 6 8 10 12
Million Metric Tons
Naphtha & Heavier LPG Ethane Coal/ Methanol Others
Source: IHS Markit © 2017 IHS Markit
9
Confidential. © 2017 IHS MarkitTM. All Rights Reserved.
Unconventional Feedstocks for China Crackers?
Coal-to-Liquids-Cracker
X Huge capital cost. Over 60 Billion RMB for 4 Million CTL and 600 KTA
cracker.
X Environmental challenges—water consumption and carbon tax.
X Low crude oil price impact.
National energy security strategy support. Consumption tax (30%-50%)
could be exempted.
Ethane/Propane Cracker
X Highly rely on imported feedstocks from NAM. Ethane/Propane prices
will rise with demand increase and crude oil price rise.
X E/P supply is fine in the US. But infrastructure and logistics are key
restrictions.
Lower capital cost per ton and highly environmentally friendly.
Highest C2 yields meet C2 and C3 fundamental difference.
S. Korea
KPIC Expansion +330KTA (2017)
Lotte Chem Expansion +200KTA (2018/2019)
LG Chem Expansion +230KTA (2019)
Thailand
PTTGC 500KTA (2021)
Philippines
JG Summit Expansion +160KTA (2021)
Vietnam
Long Son 1000KTA (2022+)
India
Reliance 1,500KTA (2017)
Indonesia
At least one potential cracker Malaysia
1,000KTA(2023+ ?) LC Titan Expansion +92KTA (2017/2018)
Petronas 1,200KTA (2020)
-1
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
North America West Europe Middle East
Asia Others Annual Demand Increase
Source: World Analysis - Ethylene
Source: IHS Markit © 2017 IHS Markit
160 90%
80 86%
40 84%
0 82%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Global Demand Op. Rate Op. Rate US delay Op. Rate ex US & Iran
Source: IHS Markit © 2017 IHS Markit
1,500
1,000
500
0
11 12 13 14 15 16 17 18 19 20 21
-500
Integration Analysis
1,000 500
800 400
600 300
400 200
200 100
0 0
Jan 15 Jul 15 Jan 16 Jul 16 Jan 17 Jul 17
BDE Component BTX Component Non-integrated Margins Integrated Margins
Source: IHS Markit © 2017 IHS Markit
50 60
Percent
40 50
30 40
20 30
10 20
0 10
11 12 13 14 15 16 17 18 19 20 21
Domestic Production Net Equivalent Import Self-sufficiency
Source: IHS Markit © 2017 IHS Markit
17
Confidential. © 2017 IHS MarkitTM. All Rights Reserved.
Asian equivalent ethylene shortfall continues to grow despite substantial
China investments
West Europe Northeast Asia
13,281 307
Southeast Asia
Middle East -412 -953
-1,931
South America
Others*
2011
-2,858 -2,583 -3,803
2016
-7,382
-10,455 2021
-11,446
© 2017 IHS Markit *Others: Africa, Indian Sub., CIS & Baltic, Central Europe
Agenda
120 0.3
80 0.2
40 0.1
0 0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Ethylene Propylene Production PE ratio
Source: IHS Markit © 2017 IHS Markit
100
Million Metric Tons
75
50
25
0
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
Rest of Asia
China
MDE/Afr
Europe
Americas
0 2 4 6 8 10 12 14 16
Million Metric Tons
Steam Cracker Refineries PDH Coal/ Methanol Others
Source: IHS Markit © 2017 IHS Markit
12% 4%
5% PDH
16%
2016 (inner)
41% Metathesis Capacity = 27.9 MM MT/y
40%
11% MTO/MTP 23% of global capacity
18%
9% CTO/CTP 2021 (outer)
19%
HS FCC Capacity = 45.1 MM MT/y
31% of global capacity
Other
10%
15%
Source:World
Source: WorldAnalysis
Analysis- Propylene
- Propylene
Source: IHS Markit © 2017 IHS Markit
5,168 KT 1,400 KT
1,480 KT 11 Producers 3 Producers
4 Producers (S. Korea)
4,280 KT
7 Producers
600 KT
410 KT 1 Producer
Operating 2 Producers (Vietnam)
(Thailand)
Under Constructing
380 KT
Planning 2 Producers
(Malaysia)
Confidential. © 2017 IHS MarkitTM. All Rights Reserved.
PDH-A Seasonal Player and Struggling Technical Glitch
300 100%
LPG prices.
200 80% • Operating rates remain
100 60%
relatively low as producers
experience numerous
0 40%
unplanned outages
-100 20%
-200 0%
11 CTO/ 1 CTP 7
6 3 MTO
3,378KT/3,597KT
5 770KT/920KT
4
3
CTO/CTP operating
2
CTO/CTP under constructing
CTO/CTP planning 1
MTO/MTP operating 0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
MTO/MTP under constructing
MTO/MTP planning Source: IHS Markit
MTO MTP CTO CTP
Overbuild
6
-2
06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21
North America Middle East China Other Asia West Europe Others Annual Demand
Source: World Analysis- Propylene
Source: IHS Markit © 2017 IHS Markit
5
Million Metric Tons
4
1 MMT short
3
2
1
0
-1
-2
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cumulative Demand Growth less Cumulative Capacity (Nameplate) Growth
Cumulative Demand Growth less Cumulative Effective Capacity Growth
Source: IHS Markit Assumed 85% operating rates on-purpose units. © 2017 IHS Markit
1,000
500
0
11 12 13 14 15 16 17 18 19 20 21
Integrated Naphtha Cracker* PDH MTO* (Basis: Shanghai, E China) CTO* (Basis: Inner Mongolia, NW China)
Source: IHS Markit Notes: *Per Metric Ton Light
Olefins
© 2017 IHS Markit
29
Confidential. © 2017 IHS MarkitTM. All Rights Reserved.
China’s Move Towards Self-Sufficiency in Propylene
Million Metric
China’s TonsSelf-Sufficiency
Propylene Percent, %
60 120
Million Metric Tons
50 100
Percent
40 80
30 60
20 40
10 20
0 0
11 12 13 14 15 16 17 18 19 20 21
Domestic Derivative Equivalent Demand Net Equivalent Import Self-sufficiency
Source: IHS Markit © 2017 IHS Markit
30
Confidential. © 2017 IHS MarkitTM. All Rights Reserved.
Propylene net equivalent imports shift away from Asia to India, Africa, W.
Europe
307
Northeast Asia
158
1,726 -384
1,308
694
West Europe
-1,305 3,546 3,839
-1,828
2,311
North America -3,023
Southeast Asia
• China demand growth will slow but remain substantial driven by the growth of the
middle classes
• Consolidate and rationalize. Centralizing production bases into chemical industry parks
• Financing is becoming more transparent
• Environmental legislation is becoming more stringent. Introduction of carbon tax dents
competitive position of coal
• China is approaching self-sufficiency for some products forcing exporters to find new
markets. In other value chains, import dependency is growing
• SOEs vs private companies. Private companies now allowed to import crude.
Mega-aromatics complexes back integrating into refining and planning to add olefins
capacity
-1.0 -0.5
-2.0 -1.0
-3.0 -1.5
-4.0 -2.0
-5.0 -2.5
-6.0 -3.0
-7.0 -3.5
11 12 13 14 15 16 17 18 19 20 21 11 12 13 14 15 16 17 18 19 20 21
Ethylene Vinyls Styrenics Propylene Acrylonitrile Polypropylene
Polyethylene Glycol Others
Net Trade Others Net Trade
Source: IHS Markit © 2017 IHS Markit Source: IHS Markit © 2017 IHS Markit
-400 slow
-600 • Transportation fuel deficits driving refinery
-800 investments
-1000
-1200 • Logistics: some parts of eg Indonesia are easier
-1400 to supply from other SE Asia countries
-1600
-1800
-2000
Indonesia Vietnam Philippines
Ethylene Equiv Propylene Equiv
Source: IHS Markit © 2017 IHS Markit