WELCOME. Asian Aromatics Market Outlook Webinar. 01 August 2012 Hosted by ICIS

Transcription

1 WELCOME Asian Aromatics Market Outlook Webinar 01 August 2012 Hosted by ICIS

2 Corporate Structure

3 ICIS Global Presence

4 Mission Statement To enable our customers to make better informed trading decisions by delivering trusted pricing data, high value news and analytics; utilizing technology to shape services around their workflow and to give them competitive advantage

5 What information does ICIS produce? Chemicals Energy Fertilizers Trusted market intelligence for the global petrochemical, fertilizer and energy industries

6 Why do the world s top companies trust ICIS? A world leader in commodity market intelligence for over 25 years Independent market-trusted methodologies Comprehensive coverage of over 120 commodity markets Trusted assessments embedded into purchasing decisions Powerful data analytics and trends Experienced consulting team with supply and demand forecasting capabilities Global reach with local expertise We use ICIS news to be informed about the global market situation and ICIS pricing helps us with our forecasts. Mr Thomas Driesen, Commodity Manager, OXEA GmbH

7 Asia s aromatics: Trends and directions Mahua Chakravarty Senior Editor, ICIS Pricing 2012

8 Key recent trends for benzene and toluene

9 Volatility and macroeconomic slowdown: impact on benzene and toluene Upstream volatility and economic crisis caused slow demand from the downstream markets and liquidity drops High PX prices through 2011 resulted in high production of benzene and stronger demand for toluene Benzene influenced by supply glitches in Asia and uncertainty in US and EU markets China s downstream industries struggle with low credit liquidity and slower economy

10 BTX production high through 2011, but poor olefins affect crackers in Q BTX supply from crackers high in 2011, supported by positive margins, but supply tightened from Q High PX prices through 2011 supported reforming margins and operating rates, but PX softens in 2012 TDP margins thin due to narrow benzene/toluene spread, but gains support from firm MX Benzene production from HDA minimal due to negative margins, but impact on market limited

11 04/01/ /04/ /07/ /10/ /01/ /04/ /07/ /10/ /01/ /04/ /07/ /10/ /01/ /04/ /07/ /10/ /01/ /04/ /07/2012 USD/tonne BTX margins held up by strong MX-PX chain & steady toluene Naphtha to BTX spread to July 2012 BZ-Naphtha TOL-Naphtha MX-Naphtha Source: ICIS

12 BTX margins up from 2011 on strong MX-PX chain & steady toluene BTX Naphtha Spread 0 Source: ICIS

13 BENZENE

14 Arbitrage to remain key outlet for benzene in Asia Exports from Asia to the US rise in 2012 despite the slow economic climate in the US Coal benzene supply continues to increase in China, adding to the regional high balance But SM capacity growth slows to 3 new plants in 2012 Bulk of the growth in benzene demand in is expected to come from the phenol and caprolactam segments

15 China continues to lead Asia s capacity growth in 2012 Company Country/Location Benzene (kt/yr) Start-up Gaoqiao PC Shanghai, China 120 Jan 2012 Jiujiang PC Jiujiang, China 80 H Jilin PC Jilin, China 110 Q Daqing PC Daqing, China 120 Q Dragon Aromatics Zhangzhou, China 240 Early Q (Xiamen) Petrochina Sichuan Pengzhou, China 150 Late H PC Fushun PC Fushun, China 160 Q Huachen Energy Pinghu, China 30 Q Fujian R & P Fujian, China 40 Late ExxonMobil Singapore 340 H Source: ICIS & Chemease

16 China will continue to add capacity in 2013 Company Country/Location Benzene (kt/yr) Start-up Sinopec Quanzhou, China Sinopec Wuhan Wuhan, China Source: Chemease

17 China s coal benzene capacity additions in Company Benzene (kt/yr) Shandong Jinneng 100 Shandong Lumei 80 Jiangsu Meiya 80 Jiangsu Gelanchunpu 50 Jiangsu Dinghe 100 Jiangsu Shatong 100 Neimenggu Baotou 100 Hebei Dahua 50 Hebei Wangbaixing 100 Ningxia Baofeng 80 Henan Shouchuang 100 Henan Shoushan 50 Henan Jinma 100 Henan Zhongchuang 55 Total 1,145

18 Coal benzene being used for cyclohexanone and SM production Demand by downstream sectors Maleic Anhydride 12% Phenol 7% Others 4% Styrene 10% Aniline 21% Cyclohexanone 46% Styrene Cyclohexanone Aniline Phenol Maleic Anhydride Others Source: Chemease

19 Tonnes China is a balanced market now 600, , , x Jan-June 2012 Imports 248, , , , , ,096 Exports 56,129 69, , , ,349 19,180 Imports Exports 2 per. Mov. Avg. (Imports) Source: China Customs

20 Growth in new SM production slows down from 2012 Company Location Product Capacity (tonnes/yr) Start-up status Yanshan Beijing, China SM 270, Baling Hunan, China SM 120,000 Aug 2012 PetroChina Jilin Jilin, China SM 320,000 Oct 2012 SP Chemical Jiangsu, China SM 320,000 Delayed to late 2013 PetroChina Taizhou Zhejiang, China SM 600, Source: ICIS & Chemease

21 Rapid phenol expansions in maintain demand for benzene Company Location Product Capacity (tonnes/yr) Start-up status Kingboard Jiangsu, China Phenol 200, Sinopec Beijing, China Phenol 137, Yanshan Sinopec Mitsui Caojing, China Phenol 250, Shandong Shandong, Phenol 220, Lihuayi China LG Chem South Korea Phenol 300, FCFC Ningbo, China Phenol 300, Ineos Nanjing, China Phenol 400, Zhangjiagang Changchun Jiangsu, China Phenol 200, CEPSA Shanghai, China Phenol 250, Source: ICIS & Chemease

22 Exporting to US remains key for Asia % 1% 23% 2% 5% 25% 23% US Taiwan China Singapore Saudi Arabia Japan Netherland % 2% 3% 6% 5% 42% 30% Source: KITA US Taiwan China Singapore Saudi Arabia Japan Netherland

23 South Korean exports to US rise in % 7% 8% 3% 11% 47% 24% US Taiwan China Singapore Saudi Arabia Japan Netherland % 7% 6% 2% 43% 8% 25% Source: KITA US Taiwan China Singapore Saudi Arabia Japan Netherland

24 South Korean exports to US regular in , , , , , , , , , , , , , , , , , Jan-June 2012 Source: Korea International Trade Association (KITA)

25 TOLUENE

26 Asia desperately looks for outlets other than China Demand from China mired in uncertainty and depends on local production, demand, inventory level Gasoline blending is emerging as a key outlet within Asia, especially China, and is driven by economic growth Simultaneously, there is a race to export to southeast Asia, India and other regions Average monthly imports to China in 2011 was 50,000-60,000 tonnes, which dips in 2012

27 Tonnes Uncertainty in Chinese imports amid rapid capacity growth China's total imports 900, , , , , , , , , , , Jan-Nov 2011 Source: China Customs 2008-April Jan-April 2012 Imports down in 2011 & 2012 on economic slowdown and cash flow issues

28 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May imports fall although inventory dips Source: Chemease East China inventory at historical high in 2010

29 South Korea spreads its wings beyond China to southeast Asia and India 2011 Vietnam Indonesia 3% 3% US 10% Singapore 3% Australia 2% India 11% Japan 8% China 60% Source: KITA

30 India emerges as key export destination for South Korea, after China & Taiwan Jan-June % 5% 3% 4% 1% 1% 1% 42% 12% 21% China Taiwan India US Indonesia Vietnam Japan Malaysia Philippines Singapore Source: KITA

31 South Korean supply finds outlet in southeast Asia 50,000 40,000 30,000 20,000 10, Indonesia 6, , ,001 33,738 21,169 26,314 28,908 Vietnam 2,477 9,740 6,803 19,903 41,455 25,931 18,783 Indonesia Vietnam 2 per. Mov. Avg. (Vietnam) 2 per. Mov. Avg. (Indonesia) Source: KITA

32 South Korea & southeast Asia dominate exports to India 100,000 80,000 60,000 40,000 20, India 18,831 18,761 3,276 42,456 51,170 88,795 69,302 India 2 per. Mov. Avg. (India) Source: KITA

33 India emerges as key import market in Asia India has emerged as an important export destination in the past few years Expected growth at 6% and above in the next few years, driven by economic growth Net importer of toluene from southeast Asia, South Korea, the Philippines, Thailand and Iran Net annual deficit of more than 150,000 tonnes. Key producer is Reliance

34 OUTLOOK

35 Looking ahead benzene Benzene prices may fall sharply in second-half 2012 as the US and EU markets may correct Limited growth in downstream SM capacity, beyond China Demand from key downstream sectors like SM and phenol may remain weak on poor economic conditions Supply in southeast Asia may rise if Exxon starts production and when TPPI restart plant

36 Looking ahead toluene Toluene demand to remain key factor driving prices in Asia Demand from China to be affected by slow downstream solvents and blending markets Imports into India could be affected due to currency-related losses

37 Asia Styrene Monomer: Key Trends and Outlook Clive Ong Senior Editor, ICIS Pricing 2012

38 Asia SM in second half of 2012 Sentiment in Q3 turning bullish on expectations of stronger demand from China Traditional manufacturing for exports season Kicking off from low base in Q2 Weak global economic conditions resulting in continued stimulus by governments Overall demand to be slower than 2011?

39 SM spot prices in first half of 2012 Source: ICIS

40 SM inventories in east China , , , , , , , , Inventories Spot Price Source: ICIS

41 SM inventories in east China , , , , ,000 80,000 60,000 40, , Inventories Spot Price Source: ICIS

42 Tonnes SM inventories in east China 2011 vs , , , , ,000 80,000 60,000 40,000 20, Months Source: ICIS

43 SM prices in 2011 vs 2012 Jan-Jun Price 2012 Price Source: ICIS

44 SM prices in Spot Price Spot Price Source: ICIS

45 SM demand in 2011 vs Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Source: ICIS

46 Styrenic Resins Downstream demand mostly weak for first half of 2012 Key export destinations of Europe and the US facing weak economic conditions Slowing Chinese economic growth Elevated resins prices Low operating rates in China

47 China ABS demand in 2011 vs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: ICIS

48 China PS demand in 2011 vs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: ICIS

49 China EPS demand in 2011 vs Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: ICIS

50 Macro-events The 2008 mortgage & financial crisis Governments and central banks intervene in their economies Liquidity flood and asset prices 2011: End of Stimulus 2012: More Stimulus?

51 Crude futures from 2007 onwards QE1 QE QE Lite Japan Rate falls to 0.1% Fed Funds Rate falls to 0.25% UK Rate falls to 0.5% ECB Rate falls to 1% Japan Rate falls to 0% WTI Crude Source: ICIS

52 Government Intervention and Crude Oil End of QE2 Operation Twist 1 T ESFS Fed $500B swaps with ECB 6 central banks $swaps Operation Twist II Bank of Japan negative rates US keep low rates to 2014 UK raises QE to 325B Japan 1 T QE Fed/China supports EU bailout UK raises QE to 375B ECB cut rates to 0.75% Spanish bank bailout Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 WTI Crude Source: ICIS

53 Thank you us at