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070814 asiachemconf vfinal (twitter)

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  • 1. News Release News Media Contact: Melissa Manning Danny Cheung Press Team IHS Inc. IHS Inc. IHS Inc. +1 832 458 3840 +65 6439 6192 +1 303 305 8021 melissa.manning@ihs.com danny.cheung@ihs.com press@ihs.com Asian Urbanization Fueling Demand for Chemicals and Polymers but Growth Unequal; China Expanding Production While Others Face Reduction, IHS Says  Asia will add more olefins capacity than North America and Mideast combined by 2020;  Regional disparities will also drive discussions at IHS Asia Chemical Conference, Sept. 3-4, in Singapore SINGAPORE (July 17, 2014) – Asia’s growing middle class and increasing urbanization have buoyed the region’s chemical demand, particularly for olefins, according to analysis from IHS (NYSE: IHS), the leading global source of critical information and insight, but not all countries are equal in their demand growth. According to IHS, the rise in disposable income for Asia’s middle and upper classes is increasing consumption of durable and nondurable goods made from chemicals and polymers. The growth of households with income greater than $5,000—a threshold considered middle class in the region and often associated with urbanization—is greater than the general population growth and fastest in countries such as China, Indonesia, and Thailand. “Across this income threshold is the time when people buy their first refrigerators, televisions, and other appliances,” said Tony Potter, vice president of Asia Pacific for IHS Chemical. “Ultimately, they buy their first car. In doing so, they essentially become new customers of the petrochemical industry. In China, an estimated 28 million people have been crossing this threshold each year, with a further 23
  • 2. million in India. Throughout the whole of Asia, there are approximately 70 million new chemical industry customers added each year.” The phenomenal Asian growth in both economic and industrial power will be key drivers of the discussions at the IHS Chemical Conference, 3-4 Sept., at the Pan Pacific Hotel, 7 Raffles Boulevard, Marina Square, Singapore. The full agenda for the conference, as well as registration details, can be found at http://www.ihs.com/events/ihs/asia-chemical-sep-2014.aspx New crackers based on shale-related ethane in North America or low-cost feedstocks in the Middle East grab headlines, Potter said, but Asia is set to add more olefins capacity by 2020 than these two regions combined. “Asia is the engine of global demand for olefins. At IHS Chemical, we forecast global incremental demand growth for ethylene and propylene combined will exceed 10 million metric tons (MMT) per annum during the next five years, with Asia accounting for 60 percent of demand growth.” However, not all Asian countries are experiencing equal growth in chemical production. China will be responsible for much of the investment. Potter said that IHS Chemical expects 53 olefin projects to start up in China by the end of 2018. Many are coal-to-olefins (CTO) or methanol-to-olefins (MTO) projects, but there are also a substantial number of on-purpose propylene projects. The coal-based units are based both inland, where coal is available at lower mine-mouth prices, and in coastal provinces, where coal prices are higher because of transportation costs and exposure to the international coal market. Several CTO/MTO plants are already operating, but IHS says the CTO/MTO rush will be concentrated in 2015 to 2017 and tail off thereafter. IHS believes the coal- based builds, likely constrained by water availability and environmental concerns are finite. Said Potter, “Capital costs are substantial, but once the units are built, operating costs will be sufficiently low to position these Chinese units in the lower-cost half of the global supply curve.” The situation varies elsewhere in Asia. India has much potential for growth, but olefin investments have not kept up with demand and derivative imports have been growing. Elsewhere in Asia, cracker investments are difficult to justify in the absence of advantaged feedstocks. Malaysia, Indonesia, and Vietnam, driven by growing domestic deficits of base chemicals and polymers, are all studying projects for start-up during 2018 to 2022. According to Potter, the story is different farther north—in Japan and Taiwan, where the olefins industry is consolidating and reductions in capacity are expected.
  • 3. Propylene capacity addition in Asia during 2013 to 2018 will amount to 23 MMT, 85 percent of which will be in China. Said Potter, “Due to this dominance in new capacity occurring in China, it might be tempting to conclude that the rest of the world does not need to invest in new propylene units, but that would be misguided. In reality, it is more likely that much of the Asian new-build capacity will run intermittently or at low operating rates. Much of the coal and all the naphtha-based propylene is tied to ethylene production, with relatively limited control over the ethylene-propylene production ratio.” Discretionary propylene production, he said, is from coal-to-propylene/methanol- to-propylene, propane dehydrogenation (PDH), and metathesis units. “The dependence on imported propane in a region that historically has had the highest propane prices in the world,” said Potter, “results in less-than-compelling economics, suggesting that the new PDH units will act as swing capacity.” The IHS Asia Chemical Conference is the only conference in Asia with in-depth analysis and overviews of the economy, energy and feedstocks, and chemicals spanning base chemicals and polymers to specialties and end-uses. Members of the press can register for a complimentary pass to the Asia Petrochemical Conference in Singapore, but must register in advance by sending an e-mail with media credentials to danny.cheung@ihs.com or press@ihs.com. To speak with Tony Potter, please contact melissa.manning@ihs.com, or press@ihs.com. ### About IHS (www.ihs.com) IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs more than 8,000 people in 31 countries around the world. IHS is a registered trademark of IHS Inc. All other company and product names may be trademarks of their respective owners. © 2014 IHS Inc. All rights reserved. “If you prefer not to receive email messages from IHS, please email (melissa.manning@ihs.com). To read our privacy policy, click here.”

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