Global Polyolefins Olefins Outlook '09

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  • PP exports from US in Jan-july only 2% down from 2008 PP global demand estimated to grow at 1% in 09, after 3-4% shrinkage in 08
  • Global Polyolefins Olefins Outlook '09

    1. 1. Chow Bee Lin, senior editor, manager, ICIS SCG Plastics Seminar, Dubai, UAE September 29, 2009 Global polyolefins & olefins overview Prema Viswanathan, deputy managing editor, ICIS www.icis.com
    2. 2. Agenda <ul><li>Global PE demand-supply </li></ul><ul><li>The feedstock challenge - ethylene </li></ul><ul><li>The feedstock challenge - propylene </li></ul><ul><li>Global PP demand-supply </li></ul>
    3. 3. PE 3.65m PE 1.55m PE 1.27m PE 750kt PE 1.035 PE 7.16m PE 1.91m PE 2.13m Global PE capacity - 73m tonnes Note: Japan’s, Taiwan’s & Singapore’s PE data includes EVA. PE 10.8m PE 3.9m
    4. 4. PE 1.95m PE 0.68m PE 0.5m PE 0.7m PE 11.59m Global PE demand – 67m tonnes (2008) PE 2.39m PE 1.08m PE 0.8m PE 1.3m PE 3.1m Note: Japan’s, Taiwan’s & Singapore’s PE data includes EVA. PE 3.4m
    5. 5. The threat of trade protectionism <ul><li>Chinese producers seek anti-dumping investigations on South Korean exports. </li></ul><ul><li>Australia extends validity of anti-dumping duties on HDPE exports from South Korea, Malaysia and Singapore. </li></ul><ul><li>Malaysia attempted to raise import duties on resin and plastic material. </li></ul><ul><li>Indonesia raised import duties on PE and PP supplied from non-ASEAN origins by 5 percentage point. </li></ul>Anti-dumping duty…anti-dumping duty…anti-dumping
    6. 6. Agenda <ul><li>Global PE demand-supply </li></ul><ul><li>The feedstock challenge - ethylene </li></ul><ul><li>The feedstock challenge - propylene </li></ul><ul><li>Global PP demand-supply </li></ul>
    7. 7. Who is most vulnerable? Asian Contract Pricing formulas offer Protection if hedged against naphtha Taiwan’s CP Eu + US + CFR Asia + FOB Korea Japanese crackers domestic sales 1.4-1.5N + alpha Korean exporter’s FOB price CFR NE Asia - alpha Indonesian contracts CFR SE Asia +/- alpha Most vulnerable will be non-integrated producers dependent Spot olefin pricing
    8. 8. Source: ICIS pricing Rising naphtha squeezes ethylene spot sales Healthy margins for cracker operators to sell Spot Naphtha uptrend squeezes cracker margins, no spot sales
    9. 9. Challenges for Asian cracker operators <ul><li>Asian crackers likely to run at reduced rates by end Q3 2009 </li></ul><ul><li>Challenge to maintain high op rate at 90-100% </li></ul><ul><li>Integrated crackers have lead over their peers </li></ul><ul><li>Could see phasing out of smaller, less economical crackers next year </li></ul><ul><li>Cost advantage for Mid-east suppliers but regional producers to remain price leaders </li></ul>
    10. 10. Agenda <ul><li>Global PE demand-supply </li></ul><ul><li>The feedstock challenge - ethylene </li></ul><ul><li>The feedstock challenge - propylene </li></ul><ul><li>Global PP demand-supply </li></ul>
    11. 11. PP 1.35m PP 0.51m PP 0.2m PP 0.8m PP 10.29m Global PP demand 45m t/y (2008) PP 1.8m PP 0.94m Note: Thailand’s and Singapore PE data includes EVA. *Industry estimated. PP 0.5m PP 1.8m PP 2.8m Sources: Industry, ICIS pricing
    12. 12. PP 3.7m PP 2.11m PP 0.37m PP 0.65m PP 0.49kt PP 7.54m PP 1.26m PP 2.03m Global PP capacity 48m t/y (2008) Note: Thailand’s and Singapore PE data includes EVA. PP 5.3m PP 3.1m Sources: Industry, ICIS pricing
    13. 13. Agenda <ul><li>Global PE demand-supply </li></ul><ul><li>The feedstock challenge - ethylene </li></ul><ul><li>The feedstock challenge - propylene </li></ul><ul><li>Global PP demand-supply </li></ul>
    14. 14. PP supply glut in US, tight in Europe <ul><li>Global PP demand estimated to grow at 1% </li></ul><ul><li>Poor economics shuts 500 kt US PP capacity </li></ul><ul><li>But US Jan-July PP exports close to 1m tonnes </li></ul><ul><li>Spike in US C3 costs ups PP prices </li></ul><ul><li>Cracker cutbacks in Europe up C3, PP prices </li></ul><ul><li>Europe-Asia PP arbitrage closes in August </li></ul><ul><li>Tight C3 supply in Europe reverses arbitrage </li></ul><ul><li>Asian C3 heads West on high Europe prices </li></ul>Source: ICIS news
    15. 15. Asia C3 surges on tight supply But outlook for suppliers less rosy in Q4 Source: ICIS pricing
    16. 16. Surplus supply to stem C3 rally <ul><li>Asian C3 supply relatively tight for most of 2009 on strong China demand </li></ul><ul><li>Asia C3 prices supported by high Chinese domestic C3/PP prices </li></ul><ul><li>Low FCC op rates in China, cut in export supplies from Japan, Korea in May-Aug </li></ul><ul><li>Outlook for spot supply less rosy for producers as surplus export propylene from Asia will hit market </li></ul><ul><li>New capacities - Shell, Secco (domestic), Idemitsu/Sumitomo, PetroVietnam, PTT, SCG </li></ul>
    17. 17. Thank you! Email: [email_address] [email_address]

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