Maria Tsay, Petrochemicals Editor at Platts recently presented this slide deck at the Platts VIanna Forum during the EPCA conference.

1. Bull Run Or Bear Pit:
Will Shale Gas Shorten The Global Aromatics Market?
Maria Tsay, Petrochemicals Editor
© 2014 Platts, McGraw Hill Financial. All rights reserved.

2. Europe In Its Global Context
US-Europe link
Shale Gas Impact: The US, Europe
Benzene Case-Study
East Of Suez
Q&A

3. Key Takeaways
• European aromatics are intrinsically linked to the US
aromatics markets
W. Europe
Balanced->Short
Benzene
Asia
Long->Longer
US
Short->Shorter
• Benzene Atlantic basin market set to tighten, but global
capacity is likely to be sufficient to cover the shortfall

4. EU Net Trade Of Aromatics
4
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
‐100,000
‐200,000
‐300,000
2010 2011
2012 2013
Toluene Benzene PX MX Isomers OX BTX
mt
Net imports
Net exports
Source: Eurostat

5. EU Benzene Trade Flows 2013
267kt
Source: Eurostat
Imports from
India 155,128
Israel 136,931
Turkey 129,717
US 83,777
Total 706,009
90%
Exports to
US 173,059
Total 193,336
12%

6. EU Toluene Trade Flows 2013
Source: Eurostat
55kt
36kt
Exports to
US 49,187
Turkey 45,709
Switzerland 31,630
South Africa 16,071
Total 225,671
Imports from
Israel 6,446
Serbia 1,749
Total 9,815
6kt
22%
Source: Eurostat

7. EU Xylenes Trade Flows 2013
Source: Eurostat
39+21kt
20+61kt
8kt
25%
9%
55%
PX Exports PX Imports
US 58,067 Israel 47,380
Pakistan 10,009 Russia 21,382
China 9,520 Turkey 13,197
Total 105,172 Total 91,968
MX Exports
US 27,904
South Africa 14,117
Total 113,761
OX Exports OX Imports
South Africa 11,853 Russia 38,513
Brazil 6,144 Israel 15,611
US 5,378 Turkey 4,190
Total 58,050 Total 58,408

8. Bln $ Mln mt
8
Profitability Of Benzene Production
7.40
7.20
7.00
6.80
6.60
6.40
6.20
6.00
5.80
5.60
5.40
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
‐
Revenue from benzene
Profit from benzene
Production
2009 2010 2011 2012 2013
Source: Eurostat, Platts

9. Shale Gas Impact: US

10. US Shifts To Light Feeds
10
100
90
80
70
60
50
40
30
20
10
0
Gasoil Full naphtha Natural gasoline Butane Propane Ethane
Source: Bentek, Platts Petrochemical Analytics
Other pygas
Mixed xylenes
Toluene
Benzene
Butylene
Butadiene
Propylene
Fuel gas
Ethylene
%

11. US Shifts To Light Feeds
• Pygas to decrease by 38%
Source: Bentek, Platts Petrochemical Analytics
8%
US Cracker Output Today
Ethylene
Propylene
Crude C4
Pygas
5%
US Cracker Output in 2023

12. US Benzene Dependence On Imports To Rise
000 mt US Benzene Supply/Demand Balance
9000
8000
7000
6000
5000
4000
3000
2000
1000
0
4400
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Benzene Production Benzene Demand
Source: Platts Petrochemical 12
Source: Platts Petrochemical Analytics
1500

13. Shale Gas Impact: Europe

14. European Crackers Are Less Competitive
Source: Platts

15. Crackers Maximize Use of LPG
Source: Platts
15
500
600
700
800
900
1000
1100
1200
1300
Jan‐2012
Feb‐2012
Mar‐2012
Apr‐2012
May‐2012
Jun‐2012
Jul‐2012
Aug‐2012
Sep‐2012
Oct‐2012
Nov‐2012
Dec‐2012
Jan‐2013
Feb‐2013
Mar‐2013
Apr‐2013
May‐2013
Jun‐2013
Jul‐2013
Aug‐2013
Sep‐2013
Oct‐2013
Nov‐2013
Dec‐2013
Jan‐2014
Feb‐2014
Mar‐2014
Apr‐2014
May‐2014
Jun‐2014
Jul‐2014
Aug‐2014
Sep‐2014
$/mt
ARA Naphtha and Propane Spot Prices 2012‐2014
Propane
Naphtha
Source: Platts
Average Max Min
2012 96.4% 114.8% 78.7%
2013 90.1% 108.0% 78.9%
2014 83.6% 97.2% 77.0%

16. Production Margins Soar
16
$/mt CIF ARA Benzene/Naphtha Spread 2012‐2014
1800
1600
1400
1200
1000
800
600
400
200
0
Source: Platts
Average Max Min
2012 355 632 94
2013 407 615 219
2014 483 637 344

17. Incremental Production Restarts
Source: Platts
17
900
1000
1100
1200
1300
1400
1500
1600
Jan‐2012
Feb‐2012
Mar‐2012
Apr‐2012
May‐2012
Jun‐2012
Jul‐2012
Aug‐2012
Sep‐2012
Oct‐2012
Nov‐2012
Dec‐2012
Jan‐2013
Feb‐2013
Mar‐2013
Apr‐2013
May‐2013
Jun‐2013
Jul‐2013
Aug‐2013
Sep‐2013
Oct‐2013
Nov‐2013
Dec‐2013
Jan‐2014
Feb‐2014
Mar‐2014
Apr‐2014
May‐2014
Jun‐2014
Jul‐2014
Aug‐2014
Sep‐2014
$/mt
ARA Benzene/TDI Grade Toluene Spread 2012‐2014
Source: Platts
Average Max Min
2012 54 263 ‐181
2013 163 282 8
2014 278 401 163

18. Europe Benzene Deficit To Rise
18
000 mt WE Benzene Supply/Demand Balance
8500
8000
7500
7000
6500
6000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Benzene Production Benzene Demand
1300
0
Source: Platts Petrochemical Analytics

19. Expansions East Of Suez

20. BZ/PX Expansions
Company Location Country BZ, kt PX, kt Start
SATORP Jubail Saudi Arabia 140 750 2013
Yasref Yanbu Saudi Arabia 140 700 Sep‐14
Sinopec Zhenhai China 1600 2014
ONGC Mangalore India 270 900 Aug‐14
SK Innovation Incheon South Korea 450 1300 Jul‐14
Samsung Total Daesan South Korea 420 1000 Jul‐14
Jurong Aromatics Singapore Singapore 400 800 Aug‐14
SK Energy/JX Nippon Oil Ulsan South Korea 300 1000 Jun‐14
Sinopec Hainan China 600 2013‐2014
PetroChina Yangzhou China 400 1000 2015
Saudi Aramco Ras Tanura Saudi Arabia 285 1200 2015
Petro Rabigh Rabigh Saudi Arabia 170 1350 2015
Reliance Dahej, Gujarat India 200 1500 2015
Indian Oil Group Vadodara, Gujarat India 370 2015
PetroViet Vietnam 240 700 2015
GS Caltex/Taiyo
Oil/Showa Shell Yeosu South Korea
20
Source: Platts
400 1000 2016
Chemaweyaat Ruwais UAE 860 1370 2017
Saudi Aramco Jazan Saudi Arabia 85 650 2017
Orpic Sohar Oman 46 2018
Source: Platts

21. Global Benzene Projections
2018 The US Europe Asia/ME
Source: Platts
The US W Europe Asia/ME
Accumulated
Global Net
2014 ‐283 ‐255 1,980 1,441
2015 ‐352 ‐97 1,295 2,287
2016 ‐367 ‐109 400 2,211
2017 ‐339 ‐115 945 2,703
2018 ‐278 ‐120 46 2,351
BZ: 2.1 mln mt
2017
2016
2015
2014
‐1000 ‐500 0 500 1000 1500 2000

22. Conclusions
• Shale gas use will tighten supply of aromatics, esp. of benzene, on
both sides of the Atlantic, BUT:
• Potential rationalization downstream and squeezed margins will cap
regional demand AND
• Capacity additions east of Suez will cover the shortfall, depending
on run rates
22
W. Europe
Balanced->Short
Benzene
Asia
Long->Longer
US
Short->Shorter
Benzene

23. © 2014 Platts, McGraw Hill Financial. All rights reserved.
Maria Tsay
Editor, Petrochemicals
Platts
+44 (0)20 7176 6763
maria.tsay@platts.com