Platts Asia SM outlook in Q2-Q3 2015 Will Bullish SM Market Continue (FINAL) - M Kim and Ng BY
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© 2014 Platts, McGraw Hill Financial. All rights reserved.
Asia SM outlook in Q2-Q3 2015: Will Bullish SM Market Continue?
Michelle Kim, Senior Editor, Platts Petrochemical Bao Ying Ng, Managing Editor, Platts Petrochemical May 8, 2015, Friday APIC conference, Seoul, Korea
1
© 2014 Platts, McGraw Hill Financial. All rights reserved.
Asia SM outlook in Q2-Q3 2015: Will Bullish SM Market Continue?
Michelle Kim, Senior Editor, Platts Petrochemical
May 8, 2015, Friday
APIC conference, Seoul, Korea
2
Asia SM Price Review
Supply Drivers
Feedstock Drivers
Demand Drivers
Macro-Economic Drivers
Conclusion: Q2-Q3 2015 Asian SM Outlook
3
Agenda 1
4
SM rallied the most in all aromatics
400
600
800
1000
1200
1400
1600
1/2/2015 2/2/2015 3/2/2015 4/2/2015
Styrene FOB Korea Marker
Benzene FOB Korea Marker
Ethylene CFR NE Asia
54%
43%
23%
As of Apr 30 2015
Source: Platts
5
Q1: SM bottoms out on Massive turnarounds, recovering crude
Quarter Q1
Situation Rising
Demand (Bull)
①EPS peak season in Spring ②Rising ABS OR ③Relatively low SM inventory in China ④Steady demand from ABS/HIPS
Supply (Bull)
①Massive TA in S. Korea ②Tight EU market(Asia->EU arb workable) ③Delays in new SM SU ④Credit concerns in China tightens USD SM offers
Feedstock (Bull)
①Steady & recovering BZ and C2
Demand (Bear)
①Inactive stockpiling during LNY
Supply (Bear)
①US-Asia arbitrage opens Jan-Feb short period ②Good EBSM margin generates more SM
700
900
1,100
1,300
1/2/2015 2/2/2015 3/2/2015
Styrene CFR China Marker
Styrene FOB Korea Marker
Linear (Styrene CFR China Marker)
$/MT SM Prices in Q1 2015
Flips to BW Feb 27
Massive TA in Mar-
May supported SM
Falls hit by weaker
crude again
Source: Platts
Hit 6-year low
6
Early Q2: SM firms up on Bullish China domestic SM on low inventory, Rising EPS OR amid Massive turnarounds, firm feedstock, tight US SM supply
Quarter Early Q2
Situation Sharply Rising
Demand (Bull)
①Improving EPS OR in peak spring season ②Worse than expected China GDP ③Low SM inventory in China ④Restocking demand in China
Supply (Bull)
①Massive TA in S. Korea ②Tight US SM supply on firm EU SM ③TA in Japan, permanent SD NO
Feedstock (Bull)
①BZ arbitrage open Asia-US ②Bullish ethylene
Demand (Bear)
①Weak demand from GPPS/HIPS/ABS
Supply (Bear)
①Good EBSM margin can generate more output 1,100
1,300
Styrene CFR China Marker
Styrene FOB Korea Marker
Linear (Styrene CFR China Marker)
$/MT SM Prices in Early Q2 2015
Bullish China domestic SM,
Rising EPS OR, Recovering
crude, and lack of US SM on
firm US SM market amid
massive TA season
supported SM
Source: Platts
7
Asia SM closely couples with crude market
500
700
900
1100
1300
1500
1700
1900
30
50
70
90
110
130
150
170
190
210
1/4/2014 2/4/2014 3/4/2014 4/4/2014 5/4/2014 6/4/2014 7/4/2014 8/4/2014 9/4/2014 10/4/2014 11/4/2014 12/4/2014 1/4/2015 2/4/2015 3/4/2015
Front month ICE Brent at Singapore
Styrene CFR China Marker
Linear (Styrene CFR China Marker)
$/MT
Decoupling on firm benzene, stockpiling ahead of new year
Decoupling on massive TA, relatively low inventory and recovering demand
Coefficient of Correlation: 0.86 Source: Platts
8
Relatively low SM inventory in China supported SM over Feb-Mar in 2015
Source: Platts
500
600
700
800
900
1000
1100
1200
1300
1400
0.00
50000.00
100000.00
150000.00
200000.00
250000.00
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
SM inventory in E. China 2011
2012
2013
2014
2015
5-Year Average
SM CFR China Monthly Average
9
Firm domestic SM market widens spread of RMB/USD SM prices
Source: Platts
700
800
900
1000
1100
1200
1300
1400
1500
1600
1/2/2015 2/2/2015 3/2/2015 4/2/2015
Styrene CFR China Marker
China Domestic ImportParity
Spread was $104.95/mt Jan 15 2015
10
Massive Turnarounds in Mar-May in S. Korea supported SM in Q1
Company Location Capacity (kt/year)
Timing Estimated Loss(kt)
Lotte Chemical Daesan 580 Mar 20, 3 weeks 36.24
LG Chem Yeosu 500 Apr, 1 month 41.66
LG Chem Daesan 180 Mar-Apr, 1 month 15
Samsung Total Daesan 650 Apr, 30-45 days 54.16~81.14
Samsung Total Daesan 280 Apr, 30-45 days 23.3~34.95
YNCC Yeosu 290 May, 1 month 24.1
SKGC Ulsan 420 No TA 0
SKGC Ulsan 350 Idled since 2014 29.16
Total Estimated Loss
Almost 76% of total annual capacity in S. Korea affected
223.62~262.25 kt
Source: Platts
11
Bullish Feedstock BZ/Ethylene Supports SM
400
600
800
1000
1200
1400
1600
1/2/2015 2/2/2015 3/2/2015 4/2/2015
Styrene FOB Korea Marker
Benzene FOB Korea Marker
Ethylene CFR NE Asia
54%
43%
23%
As of Apr 30 2015
Source: Platts
12
SM Price Drivers-EPS, GPPS, BZ, HIPS and TL affect the most
Source: Platts
EPS FR, 0.98 GPPS , 0.97
Benzene, 0.96
HIPS, 0.95
Toluene, 0.90
ICE Brent Future, 0.86
Naphtha CIF Japan, 0.85
Ethylene, 0.85
Paraxylene, 0.75
ABS, 0.71
0.50
0.60
0.70
0.80
0.90
1.00
1.10Coefficient of correlation
Asia SM Price Review
Supply Drivers
Feedstock Drivers
Demand Drivers
Macro-Economic Drivers
Conclusion: Q2-Q3 2015 Asian SM Outlook
13
Agenda 2
14
Lagging Styrene Global Capacity Expansion
Source: KPIA
0
5000
10000
15000
20000
25000
30000
35000
40000
2011 2012 2013 2014 2015 2016 2017
North America Middle East Europe Asia Total
Region North America Middle East Europe Asia Total
Average Growth Rate (Y-o-Y) (2011-2017)
0% 0% -1% 1.9% 1.1%
New SM startups ease supply tightness?
15
Country Company Location
SU 2015 2016 2017
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
China
Dongfang CNOOC-Shell
Hainan Q1-2 120
Shandong Yuhuang Shandong Q1-2 200
Sinopec Hainan Q1 160
Abel Taxing Jiangsu H2 500
Jinmen Hubei 2015 80
Ningbo Keyuan 2015 100
Ningbo Daxie Zhejiang 2016 280
Tianjing Chem Tianjin 2016 100
Ningbo Keyuan Zhejiang 2016 100
China Total 1160 480
Total 1160 480
Total SM start up in 2015: 1160 Kt
But, many plans delayed
Source: Platts
Lagging Downstream PS/ABS SU plan in 2015: 650 kt/year SM long
16
Country Company Location SU 2015 2016 2017
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
China
Jinchen Jiangsu 2015 80
Zhenjiang Chimei Jiangsu H1 150
Yashide Jiangsu Jun-Jul 60
Saibaolong Jiangsu 2015 100
LG Huizhou 2016 150
China Total 210 330
Total 210 330
Total PS start up in 2015: 210 Kt
Total SM start up in 2015: 1160 Kt
-Estimated SM requirement:210 kt
=950 kt long in SM
Source: Platts
ABS
PS
China imports S. Korea-origin SM the most in 2014
Source: China Customs, Korea Customs
Unit: mt
38% China’s SM Imports
S. Korea 1,415,022
Taiwan 468,557
Japan 465,913
Saudi Arabia 444,304
Iran 285,054
Kuwait 208,206
US 152,262
Total 3,676,954
25%
4%
S. Korea SM exports in 2014: 97% went to China
Source: China Customs, Korea Customs
Unit: mt
97%
S. Korea’s SM Exports
China 1,422,440
Hong Kong 25,880
Taiwan 24,932
Total 1,473,655
18%
S. Korea’s SM Imports
Japan 565,085
US 151,656
Saudi Arabia 72,092
Total 842,793
9%
67%
Tight US SM supply to Asia
Source: Platts
-300
-200
-100
0
100
200
300
400
500
600
0
200
400
600
800
1000
1200
1400
1600
1800
1/22/2009 1/22/2010 1/22/2011 1/22/2012 1/22/2013 1/22/2014 1/22/2015
Styrene FOB Korea Marker US-Asia SM arbitrage window
20
Firm Europe SM hampers US SM to come to Asia
-300
-200
-100
0
100
200
300
400
500
600
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1/2/2009 1/2/2010 1/2/2011 1/2/2012 1/2/2013 1/2/2014 1/2/2015
Styrene FOB ARA US-Europe SM arbitrage window
Source: Platts
Annual China SM Imports by Region
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
2010 2011 2012 2013 2014 2015
Korea
US
Saudi Arabia
Kuwait
Iran
Source: China Customs, Korea Customs
52.0 46.0 48.0 49.0 56.0 56.6
5.5 5.7 7.6 9.3
6.1 3.4
25.7 24.4
26.3 19.2 17.7 22.0
8.4 7.3
5.5 7.6 8.3 12.3 7.8
16.4 12.5 15.1 11.4 5.8
0%
20%
40%
60%
80%
100%
2010 2011 2012 2013 2014 2015
Korea
US
Saudi Arabia
Kuwait
Iran
US-origin decreasing, Korea Kuwait origin increasing
22
Will good EBSM margin add downward pressure?
Source: Platts
-300
-200
-100
0
100
200
300
400
500
600
700
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1/4/2010 1/4/2011 1/4/2012 1/4/2013 1/4/2014 1/4/2015
Styrene FOB Korea Marker EBSM margin
Asia SM Price Review
Supply Drivers
Feedstock Drivers
Demand Drivers
Macro-Economic Drivers
Conclusion: Q2-Q3 2015 Asian SM Outlook
23
Agenda 3
© 2014 Platts, McGraw Hill Financial. All rights reserved.
Feedstock drivers: Asian benzene market update
Ng Baoying, Managing Editor, Platts
May 8, 2015, Friday
APIC conference, Seoul, Korea
24
• Introduction to Platts
• Benzene, PX price volatility end-2014 to 2015
• Paraxylene fundamentals and outlook
• Benzene fundamentals and outlook
25
Agenda
26
Introducing Platts
Platts is a commodity information and data provider founded by Warren Platt over 100 years ago, and owned by McGraw Hill Financial, a leading provider of ratings, benchmarks and analytics.
Price Reporting Assessments
Market Reports Breaking News
$
!
• Platts is completely independent
• Our processes are open and transparent
27
What kind of companies subscribe to Platts?
A diverse range of companies
• Majors like BP, Shell, ExxonMobil and Chevron
• Oil trading houses like Glencore, Vitol, Cargill
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AUS
28 > 900 staff around the world
29
Platts Market On Close (MOC) is not an average
116
117
118
119
120
121
122
Market on close
assessment
Average
Time
30
How does Platts engage the market?
Phone calls IM: Yahoo/QQ
Electronic mails
HEARDS: PCA 005
Platts Market on Close Process
Market on Close assessment process
31
Part of the price discovery process at Platts is the Market on Close assessment process.
At 3:30-4:00 pm Singapore time daily, Platts invites firm bids and offers from approved market participants.
During 4:00-4:30 pm Singapore time, participants are allowed to increase or decrease their bids and offers.
These price movements are tested by the market as they are open bids and offers.
After 4:30 pm Singapore time, no new information will be accepted and the numbers on the MOC process will form an important basis for the final assessment of the day.
04/27/2015 PC0005 Heard 280: Benzene bid/offer summary ON CLOSE: No bids/No offers
04/27/2015 PC0005 Heard 276: Benzene [NON MOC]: June/July spread offer at minus $13/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 270: Benzene [NON MOC]: June/July spread bid at minus $17/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 269: Benzene [NON MOC]: H2 May/June spread bid at minus $23/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 268: Benzene [NON MOC]: July offer at $888/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 267: Benzene [NON MOC]: June offer at $875/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 266: Benzene [NON MOC]: H1 June offer at $873/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 234: Benzene bid/offer summary: No bids/No offers
04/27/2015 PC0005 Heard 218: Benzene: H1 Jun FOB SEA pegged at FOB Korea minus $11/mt
04/27/2015 PC0005 Heard 216: Benzene: H2 May FOB SEA pegged at FOB Korea minus $11/mt
04/27/2015 PC0005 Heard 214: Benzene: H1 May FOB SEA pegged at FOB Korea minus $11/mt
04/27/2015 PC0005 Heard 213: Benzene: H2 Jul pegged at $888/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 212: Benzene: H1 Jul pegged at $885/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 211: Benzene: H2 Jun pegged at $876/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 210: Benzene: H1 Jun pegged at $874/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 209: Benzene: H2 May pegged at $863/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 208: Benzene: H1 May pegged at $861/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 206: Benzene: June/July spread offer at minus $12/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 205: Benzene: June/July spread bid at minus $17/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 204: Benzene: H2 May/June spread bid at minus $23/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 203: Benzene: July offer at $895/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 202: Benzene: July bid at $880/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 201: Benzene: June offer at $883/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 200: Benzene: June bid at $865/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 199: Benzene: H1 June offer at $876/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 97: Benzene: H1 Jun FOB SEA pegged at FOB Korea minus $11/mt
04/27/2015 PC0005 Heard 96: Benzene: H2 May FOB SEA pegged at FOB Korea minus $11/mt
04/27/2015 PC0005 Heard 95: Benzene: H1 May FOB SEA pegged at FOB Korea minus $11/mt
04/27/2015 PC0005 Heard 94: Benzene: H2 Jul pegged at $888/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 93: Benzene: H1 Jul pegged at $885/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 92: Benzene: H2 Jun pegged at $876/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 91: Benzene: H1 Jun pegged at $874/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 90: Benzene: H2 May pegged at $863/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 89: Benzene: H1 May pegged at $861/mt FOB Korea 3kt
04/27/2015 PC0005 Heard 81: Benzene: June bid at $883/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 80: Benzene: June bid at $860/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 78: Benzene: June/July spread bid at minus $17/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 77: Benzene: H2 May/June spread bid at minus $25/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 76: Benzene: H1 June/July spread bid at minus $18/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 75: Benzene: H1 June/H2 June spread bid at minus $5/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 74: Benzene: July bid at $875/mt FOB Korea 3kt bb YOU
04/27/2015 PC0005 Heard 73: Benzene: June bid at $857/mt FOB Korea 3kt bb YOU
“Heards” propel market interface
PX: Bid July at $1,220/mt, CFR nb/tw/dl, Asia origin,
origin excluding all ME, India and China, T/T 30 days
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
PX:Jun/Jul bid heard at $13/mt CFR TND, Asia origin
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
PX: Offer Any July at $1,238/mt, CFR nb/tw/dl, Asia origin,
origin excluding all ME, India and China, L/C 30 days, valid for 5 min
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
---------after MOC peg
PX: Offer Any July at $1,240/mt, CFR nb/tw/dl, Asia origin,
origin excluding all ME, India and China, L/C 30 days, valid for 5 min
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
PX: Bid 1H July at $1,220/mt, CFR nb/tw/dl, Asia origin,
origin excluding all ME, India and China, L/C 30 days
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
---------after morning peg
PX: Jul bid heard at $1,215/mt CFR TND, Asia origin, T/T 30 days
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
PX: Bid 1H July at $1,210/mt, CFR nb/tw/dl, Asia origin,
origin excluding all ME, India and China, L/C 30 days
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
PX: H2 Jun bid heard at $1,225/mt CFR TND, Asia origin, 5kt
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
PX: H1 Jun offer heard at $1,238/mt CFR Ningbo, Asia origin, if form e, +1.75% return
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
PX: H1 Jul bid heard at $1,220/mt CFR Ningbo/Dalian/Jiangyin, Asia origin(exluding India/China/ME and Iran), L/C 30 days
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
PX: H2 Jun bid heard at $1,225/mt CFR TND, Asia origin, 5kt
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
PX : 1h June offer at 1236 cfr NB, asia, if form e, +1.75% return
(for details contact Michelle Kim at mihee.kim@platts.com or +65-6530-6425;
yahoo IM: platts_asia_px)
Platts benzene assessments
33
Daily: FOB Korea, FOB SEA
Weekly: CFR Taiwan
Prices based on latest information sourced from the market, up to the close of the assessment window at 4:30 pm Singapore time.
More information can be found on the Platts Petrochemicals Methodology Guide http://www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/asian-petrochemicals-methodology.pdf
Platts PX assessments
34
Daily: FOB Korea, CFR Taiwan/China
Weekly: CFR Southeast Asia
Prices based on latest information sourced from the market, up to the close of the assessment window at 4:30 pm Singapore time.
More information can be found on the Platts Petrochemicals Methodology Guide http://www.platts.com/IM.Platts.Content/MethodologyReferences/MethodologySpecs/asian-petrochemicals-methodology.pdf
© 2014 Platts, McGraw Hill Financial. All rights reserved.
Benzene, paraxylene price volatility
35
36
Crude prices sink in 2015
Front month ICE Brent crude futures relatively
stable in 2013
Brent tumbles in H2 2014
Brent begins recovery in
2015
$/b
0
20
40
60
80
100
120
140
ICE Brent Settlement Mo01
37
China’s annual GDP % growth seen slowing in the coming years
0
2
4
6
8
10
12
00-10 (a) 2011 2012 2013 2014e 2015f 2016f 2017f
GDP % growth, annual
Source: World Bank Notes: e-estimate, f-forecast
38
Asia benzene volatility returns
Asian benzene fluctuates within
$1,100-1,500/mt range in 2013
Range widens to $600-1,450/mt in
2014.
2015 benzene ranges from $500-870/mt
$/mt
13 Jan’15: $544/mt
0
200
400
600
800
1000
1200
1400
1600
Benzene FOB Korea marker
39
Asia PX rising from 6-year lows?
$/mt
600
800
1000
1200
1400
1600
1800
Paraxylene FOB Korea Marker
Asian Contract Price reached major settlement only two times in 2014: March and October • Major settlement also reached for February 2015 at $710/mt CFR Asia.
• Increased price/market volatility main reason for lack of settlements.
Term contract premiums flipped to discount for 2015 on increased supply/price fluctuations • Term discounts for PX Asian Contract Price participating buyers were set
at $4/mt on a CFR basis, while discounts for non-ACP buyers were agreed at $2/mt, CFR.
• In comparison, cash differentials for term year 2014 ranged from parity to a premium of $2/mt.
40
Volatile PX prices: ACP non-settlements and decreasing term contract premiums
© 2014 Platts, McGraw Hill Financial. All rights reserved.
Paraxylene: A rebound from six-year lows
41
42
PX-MX margins shrinking
Source: Platts data
0
200
400
600
800
1000
1200
1400
1600
1800
PX-MX spread
Paraxylene FOB Korea Marker
Isomer-MX FOB Korea Marker
0
200
400
600
800
1000
1200
1400
1600
1800
PX-naphtha spread
Paraxylene FOB Korea Marker
Naphtha C+F Japan Cargo
43
PX-naphtha spread rebounds
Source: Platts data
44
PX-toluene spread
Source: Platts data
0
200
400
600
800
1000
1200
1400
1600
1800
PX-toluene spread
Toluene FOB KoreaMarker
45
PX plant start-ups over 2014-2017
Country Company Location Quarter 2014 2015 2016 2017
BZ PX BZ PX BZ PX BZ PX
China Sinopec Hainan Q1 600
Ningbo Zhongjin Ningbo Q1 <200 1600
PetroChina Pengzhou H1 680
Sinopec Zhenhai - 1600
China Total 0 2880 200 1600 0 0 0 0
S.Korea SK Innovation (July) Incheon Q3 450 1300
SK Global Chemical/JX Nippon Oil (June)
Ulsan Q3 300 1000
Samsung Total (June) Daesan Q3 420 1000
GS Caltex/Taiyo Oil/Showa Shell
Yeosu - 400 1000
S. Korea Total 1170 3300 400 1000
India ONGC (Aug/Sep) Mangalore Q3 270 900
Reliance Dahej, Gujarat Q1 500 2200
Indian Oil Group Vadodara, Gujarat
Q1 400
India Total 270 900 500 2200
SEA Jurong Aromatics (Q3) Singapore Q2 400 800
PetroViet Vietnam Q2 240 700
PTT Global Chemicals Thailand
SEA Total 400 800 240 700
Total PX start up in 2015: 3.8 million mt
46
New PTA plant start ups Country Company Location 2013 2014 2015 2016
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
China Xianglu Zhangzhou. Gulei 3,000 1,500
Shenghong Jiangsu, Lianyungang
1,500
Yisheng No. 4 Ningbo, Zhejiang 2,200
BP No. 3 Zhuhai, Guangdong 1,250
Hengli No. 3 Dalian, Liaoning 2,200
Sanfangxiang No. 2 Jiangyin, Jiangsu 1,200
Chengda Chendu, Sichuan 1,200
Yisheng No. 2 Yangpu, Hainan 2,200
China Prosperity No. 2 Jiangyin, Jiangsu 2,200
Jiaxing Petrochemical No. 2
Jiaxing, Zhejiang 1,500?
Formosa No. 2 Ningbo, Zhejiang 1,500
Mitsubishi No. 2 Ningbo, Zhejiang 1,200
Sinopec Yizheng 2,000
Shaoxing Yuandong Shaoxing
China Total 10,600 5,650 8,400
India Reliance Dahej, Gujarat 1,200 1,200
JBF Mangalore 1,250
Indorama Ventures Tamil Nadu 1,000
Taiwan OPTC No. 3 Kuan Yin, Taoyuan 1,500
Total 10,600 10,800 9,400
Total PTA start up in 2015 10.8 mil mt
47
PTA prices fell steadily since 2011, only to rebound recently
Source: Platts data
400
500
600
700
800
900
1000
1100
1200
1300
PTA CFR China
48
China PX imports increasing
Source: Chinese Customs
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
China PX imports 2013-2014
49
US-to-China PX shipments
Source: Chinese Customs:
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Jan
-12
Feb
-12
Mar
-12
Ap
r-1
2
May
-12
Jun
-12
Jul-
12
Au
g-1
2
Sep
-12
Oct
-12
No
v-1
2
De
c-1
2
Jan
-13
Feb
-13
Mar
-13
Ap
r-1
3
May
-13
Jun
-13
Jul-
13
Au
g-1
3
Sep
-13
Oct
-13
No
v-1
3
De
c-1
3
Jan
-14
Feb
-14
Mar
-14
Ap
r-1
4
May
-14
Jun
-14
Jul-
14
Au
g-1
4
Sep
-14
Oct
-14
No
v-1
4
De
c-1
4
Jan
-15
Feb
-15
China imports of US origin PX (mt)
• New PTA capacity outstrips rise in PX
• Operating rates at existing and new downstream purified terephthalic acid plants sail up as one of key factors for paraxylene demand in Asia this year, given the addition of over 13 million mt/year of PTA capacity.
• New PTA capacity outstrips rise in PX capacity
• Heavy PX turnarounds to support Q2
• Slower Chinese economic growth lends uncertainties to PTA, PET runs
• New PTA capacity may not necessarily equate to a sharp overall increase in PX demand across Asia, as outlook for global demand and operating rates at downstream polyester and PET remains uncertain amid a slowdown in China's economic growth
50
PX market outlook
© 2014 Platts, McGraw Hill Financial. All rights reserved.
Benzene: Is the price rebound here to stay?
51
0
200
400
600
800
1000
1200
1400
1600
Benzene FOB Korea marker
52
Asia benzene volatility returns
Asian benzene fluctuates within
$1,100-1,500/mt range in 2013
Range widens to $600-1,450/mt in
2014.
2015 benzene ranges from $500-870/mt
$/mt
13 Jan’15: $544/mt
53
Benzene-SM spread falls from mid-2014 highs
$/mt
0
200
400
600
800
1000
1200
1400
1600
1800
2000
12/1/2008 12/1/2009 12/1/2010 12/1/2011 12/1/2012 12/1/2013 12/1/2014
Styrene-benzene spread
Benzene FOB Korea Marker
Styrene FOB Korea Marker
54
Downstream view: Benzene-phenol spread struggles to pull itself into breakeven territory
-200
300
800
1300
1800
2300
2800
3300
3800
-200
300
800
1300
1800
2300
1/3/2007 1/3/2008 1/3/2009 1/3/2010 1/3/2011 1/3/2012 1/3/2013 1/3/2014 1/3/2015
Benzene FOB Korea
Phenol CFR China weekly
Phenol-benzene spread
Breakeven
55
Downstream view: Benzene-caprolactam spread in the red
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
0
500
1000
1500
2000
2500
3000
3500
Benzene FOB Korea marker
Caprolactam CFR Far East Asia weekly
Caprolactam-benzene spread
56
Upstream view: Benzene-toluene spread narrows
-200
-100
0
100
200
300
400
500
600
700
0
200
400
600
800
1000
1200
1400
1600
Benzene-Toluene spread
Benzene FOB Korea Marker
Toluene FOB Korea Marker
-200
0
200
400
600
800
1000
1200
1400
1600
1/3/2007 1/3/2008 1/3/2009 1/3/2010 1/3/2011 1/3/2012 1/3/2013 1/3/2014 1/3/2015
Benzene-naphtha spread
Benzene FOB Korea Marker
Naphtha C+F Japan Cargo
57
Upstream view: Benzene-naphtha spread
58
US-Asia benzene spread narrows
-200
0
200
400
600
800
1000
1200
1400
1600
1800
1/2/2009 1/2/2010 1/2/2011 1/2/2012 1/2/2013 1/2/2014 1/2/2015
Benzene FOB Korea Marker $/mt
Benzene FOB USG Mo02 $/mt
US-Asia spread $/mt
Korea-USG 10 kt
59
US-Asia benzene margin falls below freight
-100
-50
0
50
100
150
200
250
300
350
400
1/2/2009 1/2/2010 1/2/2011 1/2/2012 1/2/2013 1/2/2014 1/2/2015
US-Asia spread $/mt
Korea-USG 10 kt
60
S. Korea exports to US steady S. Korea exports to China begin to rise
-350,000
-300,000
-250,000
-200,000
-150,000
-100,000
-50,000
0
50,000
100,000
150,000
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
Jan
-12
Feb
-12
Mar
-12
Ap
r-1
2
May
-12
Jun
-12
Jul-
12
Au
g-1
2
Sep
-12
Oct
-12
No
v-1
2
De
c-1
2
Jan
-13
Feb
-13
Mar
-13
Ap
r-1
3
May
-13
Jun
-13
Jul-
13
Au
g-1
3
Sep
-13
Oct
-13
No
v-1
3
De
c-1
3
Jan
-14
Feb
-14
Mar
-14
Ap
r-1
4
May
-14
Jun
-14
Jul-
14
Au
g-1
4
Sep
-14
Oct
-14
No
v-1
4
De
c-1
4
Jan
-15
South Korea exports to US
South Korea exports to China
South Korea exports to US
South Korea exports to China
61
Benzene plant start-ups over 2014-2017
Country Company Location Quarter 2014 2015 2016 2017
BZ PX BZ PX BZ PX BZ PX
China Sinopec Hainan Q1 600
Ningbo Zhongjin Ningbo Q1 <200 1600
PetroChina Pengzhou H1 680
Sinopec Zhenhai - 1600
China Total 0 2880 200 1600 0 0 0 0
S.Korea SK Innovation (July) Incheon Q3 450 1300
SK Global Chemical/JX Nippon Oil (June)
Ulsan Q3 300 1000
Samsung Total (June) Daesan Q3 420 1000
GS Caltex/Taiyo Oil/Showa Shell
Yeosu - 400 1000
S. Korea Total 1170 3300 400 1000
India ONGC (Aug/Sep) Mangalore Q3 270 900
Reliance Dahej, Gujarat Q1 500 2200
Indian Oil Group Vadodara, Gujarat
Q1 400
India Total 270 900 500 2200
SEA Jurong Aromatics (Q3) Singapore Q2 400 800
PetroViet Vietnam Q2 240 700
PTT Global Chemicals Thailand
SEA Total 400 800 240 700
Total BZ start up in 2015: 700,000 mt
US Shifts To Light Feeds
62
• Pygas to decrease 40%
• Crude C4 to decrease 20%
• Propylene to decrease 20%
• 69% growth in ethane based output
• 32% decrease in naphtha based
output
Source: Platts Petrochemical Analytics
Yields From Steam Crackers Vary With The Feedstock
63
US Benzene Production At Cracker
64
US Benzene Demand Will Outpace Supply, Increasing Volatility & Dependence On Imports
65 Source: Platts Petrochemical
• Benzene supply in Asia to lengthen as more new plants start up
• Asia to take up some of the demand with new downstream plants, like in phenol.
• US expected to buy Asian benzene to fulfill its needs in the long run
66
Benzene outlook
Asia SM Price Review
Supply Drivers
Feedstock Drivers
Demand Drivers
Macro-Economic Drivers
Conclusion: Q2-Q3 2015 Asian SM Outlook
67
Agenda 4
68
Northeast Asia EPS is a major epicenter of SM demand
53%
7%
11%
6%
2%
18%
3%
Global SM Demand by Region in 2015
NEA SEA NA SA
ME Europe Others
31%
25%
18%
8%
18%
Asia SM Demand by Derivatives
EPS ABS
GPPS/HIPS SBR
Others
Source: KPIA, Platts
69
Will China buy more SM in Q2-Q3 2015? -Monthly China imports, Korea exports to China: Stable
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
S. Korea Monthly SM Exports to China
2011
2012
2013
2014
2015
Average
Source: China Customs, Korea Customs
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
China Monthly SM Imports: Jan Mar above 5-year average
2011
2012
2013
2014
2015
Average
70
EPS: China Monthly OR and Exports -Stable to higher in Q1
0
10
20
30
40
50
60
70
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
China Monthly EPS OR
2013 2014 2015 3-Year AverageSource: Market
0
5000
10000
15000
20000
25000
30000
35000
40000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
China Monthly EPS Exports
2012
2013
2014
2015
3-year average
Source: China Customs, Korea Customs
Coefficient of Correlation:0.98
71
PS: Monthly China GPPS/HIPS Imports -GPPS: Weak but improving, HIPS: High
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
China Monthly HIPS Imports
2010
2011
2012
2013
2014
2015
5-year average
Coefficient of Correlation:0.95
Source: China Customs, Korea Customs
0
20,000
40,000
60,000
80,000
100,000
120,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
China Monthly GPPS Imports
2010
2011
2012
2013
2014
2015
5-year average
Coefficient of Correlation:0.97
72
ABS: Monthly China ABS Imports -Jan: Higher than 5-yr avg, Mar: Higher than 2014
0
50,000
100,000
150,000
200,000
250,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
China Monthly ABS Imports
2010
2011
2012
2013
2014
2015
5-year average
Source: China Customs, Korea Customs
73
EPS: Monthly China Real Estate Investment –Increasing but slowing down growth
Source: China National Bureau of Statistics
-5
0
5
10
15
20
25
30
0
2000
4000
6000
8000
10000
12000
Jan/Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 Real Estate Investment(100 mil Yuan) 2014 Real Estate Investment(100 mil Yuan)
2015 Real Estate Investment(100 mil Yuan) 2013 Growth Rate(Y-o-Y %)
2014 Growth Rate(Y-o-Y %) 2015 Growth Rate(Y-o-Y %)
+10% +6%
74
EPS: Sales of Cement sharply declined in Q4 2014
-3
-1
1
3
5
7
9
11
13
15
0
10000
20000
30000
40000
50000
60000
70000
80000
Q1 Q2 Q3 Q4
2012 Sales of Cement(10000 tons) 2013 Sales of Cement(10000 tons)
2014 Sales of Cement(10000 tons) 2012 Growth Rate(Y-o-Y %)
2013 Growth Rate(Y-o-Y %) 2014 Growth Rate(Y-o-Y %)
-2.3% Source: China National Bureau of Statistics
75
ABS/HIPS: China refrigerator output stable
-30
-10
10
30
50
70
90
110
130
150
0
200
400
600
800
1000
1200
1400
Jan/Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 Output of Home Refrigerators(10000 sets) 2014 Output of Home Refrigerators(10000 sets)
2015 Output of Home Refrigerators(10000 sets) 2013 Growth Rate(Y-o-Y %)
2014 Growth Rate(Y-o-Y %) 2015 Growth Rate(Y-o-Y %)
-0.008% Source: China National Bureau of Statistics
76
ABS/HIPS: China air-conditioner output declined, growth rates slowing down
-40
-20
0
20
40
60
80
100
120
0
500
1000
1500
2000
2500
Jan/Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2013 Output of Home Refrigerators(10000 sets) 2014 Output of Home Refrigerators(10000 sets)
2015 Output of Home Refrigerators(10000 sets) 2013 Growth Rate(Y-o-Y %)
2014 Growth Rate(Y-o-Y %) 2015 Growth Rate(Y-o-Y %)
Source: China National Bureau of Statistics -7%
Asia SM Price Review
Supply Drivers
Demand Drivers
Feedstock Drivers
Macro-Economic Drivers
Conclusion: Q2-Q3 2015 Asian SM Outlook
77
Agenda 5
China: Tight credit market will curb purchasing power in property market?
Source: China National Interbank Funding Center
4.6000
4.6500
4.7000
4.7500
4.8000
4.8500
4.9000
4.9500
5.0000
1/4/2015 1/11/2015 1/18/2015 1/25/2015 2/1/2015 2/8/2015 2/15/2015 2/22/2015 3/1/2015 3/8/2015 3/15/2015 3/22/2015 3/29/2015
Rising Shibor Rates in China
3M 6M 9M 1Y
79
China: Slowing China GDP growth rate & PMI limits SM demand
-1.00%
4.00%
9.00%
14.00%
19.00%
24.00%
0
2,000
4,000
6,000
8,000
10,000
kt
China SM Demand(kt)
China GDP Growth Rate(%)
China SM Demand Growth Rates(%)
Source: World Bank, HSBC, Markit, KPIA
41.0
43.0
45.0
47.0
49.0
51.0
53.0
55.0
57.0
Jan
09
Jun
09
No
v 0
9
Ap
r 1
0
Sep
10
Feb
11
Jul 1
1
Dec
11
May
12
Oct
12
Mar
13
Au
g 1
3
Jan
14
Jun
14
No
v 1
4
Ap
r 1
5
China Monthly PMI
PMI Index
Linear (PMIIndex)
80
Global: Strong USD on tapering QE in US weakens Global Commodities Market Prices(CRB)
Yuan/USD exchange rates in 2014 Commodity CRB Index in 2014
Source: Bloomberg
‘Super Dollar’ trend may continue throughout 2015
Strong USD may press down global commodity market
prices in 2015
81
Energy: US Shale Gas Boom Triggers Output Competition between US and ME which pulls down crude prices
2009 2010 2011 2020 2025 2030 2035 2040
Total World 72.9 74.9 75 82.7 85.5 89.9 94.3 99.1
ME(OECD) 20.8 21.7 23 23.8 25.2 28.4 31.5 34.5
US 5.5 5.6 5.8 9.8 9.3 8.6 8.2 7.8
North America(OECD) 10.8 11.2 11.5 16.8 17 17.1 17.2 17.2
0
5
10
15
20
25
30
35
40
0
20
40
60
80
100
120
Increasing Crude & Condensate Production on shale gas revolution
*Crude and lease condensate includes tight oil, shale oil, extra-heavy oil, field condensate etc.
Source: U.S. Energy Information Administration(EIA)
Unit: million
barrels/day
Asia SM Price Review
Supply Drivers
Demand Drivers
Feedstock Drivers
Macro-Economic Drivers
Conclusion: Q2-Q3 2015 Asian SM Outlook
82
Agenda 6
83
SM Outlook in Q2-Q3 2015: Will Bullish SM market continue?
Period Q2-Q3 2015
Outlook Q2: Steady to Weak Q3: Firm to Stable
Bullish Factors Supply • Tight US-Asia SM supply • Permanent SD of NOC • Japan SM TA in Q2 • Taiwan SM TA in Q3 • Tight credit in China
Demand • Low inventory in China, short-covering • Steady to firm ABS import from China • High ABS OR • Steady to firm HIPS import from China • Increase China EPS exports • Solid refrigerator manufacturing • Steady real estate investment • Seasonal demand from ABS/PS in Q3
Feedstock • Firm ethylene • Stable to firm BZ
Macro-economy • Rebounding crude oil
Bearish Factors Supply • S. Korea SM TA ends • US-Asia SM arbitrage reopens(Asia>EU SM) • Good EBSM margin • Long SM SU balance
Demand • Weak air-conditioner manufacturing • Lackluster GPPS demand • Declining sales of cement
Feedstock n/a
Macro-economy • Tight credit limits purchasing power • Strong Dollar • Lower PMI & GDP growth rate • Output competition between US&ME
But, SM market can be bearish, IF • SM makers
increase OR on better margin
• Crude & Naphtha prices fall sharply
• US SM supply increases
• Global macro-economy weakens
• China’s economy contracts
• Sluggish downstream demand worsen
© 2014 Platts, McGraw Hill Financial. All rights reserved.
Thank you very much! 감사합니다!
Michelle Kim
Senior Editor (SM, ABS, EPS, HIPS, GPPS)
Platts, McGraw-Hill Financial
12 Marina Boulevard 23rd Floor Marina Bay Financial Centre Tower 3 Singapore 018982
Tel: +65-6530 6425 Fax: +65-6532 2700 Yahoo ID: platts_asia_sm
Email: mihee.kim@platts.com website: www.platts.com
84
Ng Bao Ying
Managing Editor(BZ)
Platts, McGraw-Hill Financial
12 Marina Boulevard 23rd Floor Marina Bay Financial Centre Tower 3 Singapore 018982
Tel: +65-6530 6588 Fax: +65-6532 2700 Yahoo ID: benzene_platts
Email: bao.ying.ng@platts.com website: www.platts.com
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