2008 APIC – CMAI Seminar 2008 APIC – CMAI Seminar Singapore Singapore Shanghai Shanghai Houston Houston New York New York London London Düsseldorf Düsseldorf Dubai Dubai Singapore Singapore Shanghai Shanghai Houston Houston New York New York London London Düsseldorf Düsseldorf Dubai Dubai The Keys to Understanding the Global Aromatics Markets: Shifting Trade Patterns for BTX, Rapid Demand Growth for Polyester, Consolidation in the Styrenics Industry The Keys to Understanding the Global Aromatics Markets: The Keys to Understanding the Global Aromatics Markets: Shifting Trade Patterns for BTX, Shifting Trade Patterns for BTX, Rapid Demand Growth for Polyester, Rapid Demand Growth for Polyester, Consolidation in the Consolidation in the Styrenics Styrenics Industry Industry Mark Fisler Mark Fisler Executive Vice President Executive Vice President Aromatics, Fibers & Methanol Studies Aromatics, Fibers & Methanol Studies [email protected][email protected]APIC Marketing Seminar by CMAI APIC Marketing Seminar by CMAI Singapore, May 27, 2008 Singapore, May 27, 2008 There are myriad influences on the global aromatics markets ranging, for example, from gasoline related legislation in the United States to refining capacity expansions, rapid polyester demand growth, Asian derivative demand development, through to forecast imbalances in the pace of supply growth between ethylene and propylene. This presentation will focus on the three major pillars of the world aromatics markets, benzene, styrene and paraxylene. Their common theme is weakening supply/demand balances and depressed margins, though each is at a different stage of the process. The rate of benzene capacity addition based on known plans is already well above realistic forecast demand growth, but there is potential for huge additional benzene capacity growth after 2011 that would be very detrimental to operating rates and industry fortunes. The road ahead looks increasingly challenging and complex. Benzene’s biggest derivative, styrene, is going through a transitional phase. Dogged by subdued demand growth in recent years, the styrene industry has reached a degree of maturity and structural overcapacity that has already forced painful consolidation. It has been in a prolonged down cycle while most other petrochemicals have been enjoying top-of-the- cycle earnings, despite record energy costs. Further reconstructive surgery is likely to be required in “traditional” industries as new highly competitive capacity is still being added in the Middle East and Asia. Different parts of the polyester chain are at different stages of their cycle. PX is on the brink of a capacity expansion explosion that will pressure margins, while the worst may already be over for polyester fiber and PTA. However, high crude oil prices have squeezed almost all the margin from the polyester chain, and will cap how much polyester fiber margins can improve. PTA is right at the bottom of the trough. Fewer planned expansions due to miserable margins will help PTA move toward recovery.
40
Embed
Mark Fisler - APIC - Singapore/CMAI/MarkFislerAPIC2008the keys to...America West Europe Central Europe & CIS Middle East & Africa Indian Subcontinent Northeast Asia Southeast Asia
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
2008 APIC – CMAI Seminar2008 APIC – CMAI SeminarSingaporeSingapore ShanghaiShanghai HoustonHouston New YorkNew York LondonLondon DüsseldorfDüsseldorf DubaiDubaiSingaporeSingapore ShanghaiShanghai HoustonHouston New YorkNew York LondonLondon DüsseldorfDüsseldorf DubaiDubai
The Keys to Understanding the Global Aromatics Markets:Shifting Trade Patterns for BTX,
Rapid Demand Growth for Polyester, Consolidation in the Styrenics Industry
The Keys to Understanding the Global Aromatics Markets:The Keys to Understanding the Global Aromatics Markets:Shifting Trade Patterns for BTX, Shifting Trade Patterns for BTX,
Rapid Demand Growth for Polyester, Rapid Demand Growth for Polyester, Consolidation in the Consolidation in the StyrenicsStyrenics IndustryIndustry
Mark FislerMark FislerExecutive Vice PresidentExecutive Vice President
APIC Marketing Seminar by CMAIAPIC Marketing Seminar by CMAISingapore, May 27, 2008Singapore, May 27, 2008
There are myriad influences on the global aromatics markets ranging, for example, from gasoline related legislation in the United States to refining capacity expansions, rapid polyester demand growth, Asian derivative demand development, through to forecast imbalances in the pace of supply growth between ethylene and propylene. This presentation will focus on the three major pillars of the world aromatics markets, benzene, styrene and paraxylene. Their common theme is weakening supply/demand balances and depressed margins, though each is at a different stage of the process. The rate of benzene capacity addition based on known plans is already well above realistic forecast demand growth, but there is potential for huge additional benzene capacity growth after 2011 that would be very detrimental to operating rates and industry fortunes. The road ahead looks increasingly challenging and complex.Benzene’s biggest derivative, styrene, is going through a transitional phase. Dogged by subdued demand growth in recent years, the styrene industry has reached a degree of maturity and structural overcapacity that has already forced painful consolidation. It has been in a prolonged down cycle while most other petrochemicals have been enjoying top-of-the-cycle earnings, despite record energy costs. Further reconstructive surgery is likely to be required in “traditional” industries as new highly competitive capacity is still being added in the Middle East and Asia. Different parts of the polyester chain are at different stages of their cycle. PX is on the brink of a capacity expansion explosion that will pressure margins, while the worst may already be over for polyester fiber and PTA. However, high crude oil prices have squeezed almost all the margin from the polyester chain, and will cap how much polyester fiber margins can improve. PTA is right at the bottom of the trough. Fewer planned expansions due to miserable margins will help PTA move toward recovery.
•• ParaxyleneParaxylene/PTA/PTA–– Capacity Capacity vsvs DemandDemand–– Trade ChangesTrade Changes–– What will Happen to Margins? What will Happen to Margins?
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
2007 World Benzene Demand2007 World Benzene Demand2007 World Benzene Demand
Nitrobenzene Global Average Benzene Global Average Benzene Demand Growth = 3.1%Demand Growth = 3.1%
Percent Increase, Demand Growth 2007-2012
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
World New Benzene CapacityWorld New Benzene CapacityWorld New Benzene Capacity
AmericaAmerica West EuropeWest Europe Central Europe & CISCentral Europe & CISMiddle East & AfricaMiddle East & Africa Indian SubcontinentIndian Subcontinent Northeast AsiaNortheast AsiaSoutheast AsiaSoutheast Asia Incremental DemandIncremental Demand
The Supply StormsThe Supply StormsThe Supply Storms
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
United States Legislation ReviewUnited States Legislation ReviewUnited States Legislation Review• February 2007 MSAT
– Impact – Evolutionary– Reduces benzene across entire pool to 0.62 volume
percent in 2011– Expected to increase benzene supply
• December 2007 EISA– Impact – Transformational– Dramatically elevates biofuels – ethanol from all sources– Expected gasoline surplus, octane value reduced– RFS for 2008 increased from 5.4 billion to 9.0 billion!
•• February 2007 MSATFebruary 2007 MSAT–– Impact Impact –– EvolutionaryEvolutionary–– Reduces benzene across entire pool to 0.62 volume Reduces benzene across entire pool to 0.62 volume
percent in 2011percent in 2011–– Expected to increase benzene supplyExpected to increase benzene supply
•• December 2007 EISADecember 2007 EISA–– Impact Impact –– TransformationalTransformational–– Dramatically elevates Dramatically elevates biofuelsbiofuels –– ethanol from all sourcesethanol from all sources–– Expected gasoline surplus, octane value reducedExpected gasoline surplus, octane value reduced–– RFS for 2008 increased from 5.4 billion to 9.0 billion!RFS for 2008 increased from 5.4 billion to 9.0 billion!
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Energy Independence & Security Act 2007 Incremental Octane Index
Energy Independence & Security Act 2007 Incremental Octane Index
The Middle East: A More Liquid The Middle East: A More Liquid Evolution?Evolution?
• 20 million tons of new ethylene capacity by 2012
• Ethylene goes long, global propylene balances remain snug
• Over half of new Saudi capacity is now capable of cracking propane, butane or light naphtha
• Greater use of liquids will create more available benzene extraction feed
•• 20 million tons of new ethylene 20 million tons of new ethylene capacity by 2012capacity by 2012
•• Ethylene goes long, global propylene Ethylene goes long, global propylene balances remain snugbalances remain snug
•• Over half of new Saudi capacity is Over half of new Saudi capacity is now capable of cracking propane, now capable of cracking propane, butane or light naphthabutane or light naphtha
•• Greater use of liquids will create Greater use of liquids will create more available benzene extraction more available benzene extraction feedfeed
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
The Middle East: A Liquid EvolutionThe Middle East: A Liquid EvolutionThe Middle East: A Liquid Evolution
Saudi Aramco/Dow, 2012Saudi Aramco/Dow, 2012Ras Tanura,, Saudi ArabiaRas Tanura,, Saudi Arabia
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
China: Is This The Real Storm? China: Is This The Real Storm? China: Is This The Real Storm?
• China adds 6 million tons in 6 years
• Most new capacity driven by backward integration from polyester
• Produces a more balanced trade position
• The current rate of capacity expansion slows after 2012, but will it really?
•• China adds 6 million tons in China adds 6 million tons in 6 years6 years
•• Most new capacity driven Most new capacity driven by backward integration by backward integration from polyesterfrom polyester
•• Produces a more balanced Produces a more balanced trade positiontrade position
•• The current rate of capacity The current rate of capacity expansion slows after expansion slows after 2012, but will it really?2012, but will it really?
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
The Great Wave Of ChinaThe Great Wave Of ChinaThe Great Wave Of ChinaChina Benzene Production CapacityChina Benzene Production Capacity
•• ParaxyleneParaxylene/PTA/PTA–– Capacity Capacity vsvs DemandDemand–– Trade ChangesTrade Changes–– What will Happen to Margins? What will Happen to Margins?
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Styrene Process FlowStyrene Process FlowStyrene Process Flow
Million Metric TonsMillion Metric Tons PercentPercent
New Operating RateNew Operating Rate
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Styrene ConclusionsStyrene ConclusionsStyrene Conclusions• Styrene is in the midst of a
transition, more capacity surgery is expected
• Demand has slowed, but styrene supply continues to come online
• The Middle East will continue to competitively place styrene in major markets
• Existing producers will have to choose – more surgery is necessary
•• Styrene is in the midst of a Styrene is in the midst of a transition, more capacity transition, more capacity surgery is expectedsurgery is expected
•• Demand has slowed, but Demand has slowed, but styrene supply continues to styrene supply continues to come onlinecome online
•• The Middle East will continue to The Middle East will continue to competitively place styrene in competitively place styrene in major marketsmajor markets
•• Existing producers will have to Existing producers will have to choose choose –– more surgery is more surgery is necessarynecessary
•• ParaxyleneParaxylene/PTA/PTA–– Capacity Capacity vsvs DemandDemand–– Trade ChangesTrade Changes–– What will Happen to Margins? What will Happen to Margins?
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
The Paraxylene Unit Is Integrated Into The Refinery
The Paraxylene Unit Is Integrated Into The Refinery
Naphtha ReformerBTX
ExtractionParaxylene
Unit PX to PTA
TDP
Hydrogen
Benzene
MixedXylenes
MixedXylenesToluene
BenzeneLight and Heavy
Aromaticsto the Gasoline pool
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Paraxylene Capacity Grows Faster Than Demand
ParaxyleneParaxylene Capacity Grows Capacity Grows Faster Than Demand Faster Than Demand
Asia Produces Most ParaxyleneAsia Produces Most Asia Produces Most ParaxyleneParaxylene
00
1010
2020
3030
4040
0202 0707 1212
Million Metric TonsMillion Metric Tons
AmericasAmericas EuropeEuropeMiddle East & AfricaMiddle East & AfricaAsia Pacific Asia Pacific -- ChinaChinaChinaChina
•• Between 2007 and 2012 Between 2007 and 2012 paraxyleneparaxylene production will production will increase by 10 million tonsincrease by 10 million tons
•• Asia will produce 71% of Asia will produce 71% of the Worldthe World’’s s paraxyleneparaxylene by by 20122012
•• The Middle East will The Middle East will become a significant become a significant suppliersupplier
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
And Consumes Most Of It As WellAnd Consumes Most Of It As WellAnd Consumes Most Of It As Well
•• China will produce 40% of China will produce 40% of the Worldthe World’’s PTA by 2012s PTA by 2012
•• High growth is occurring in High growth is occurring in the developing regions of the developing regions of Europe and the AmericasEurope and the Americas
•• In the Middle East & Africa In the Middle East & Africa available capacity is limiting available capacity is limiting production growthproduction growth
00
2020
4040
6060
0202 0707 1212
Million Metric TonsMillion Metric Tons
AmericasAmericas EuropeEurope
Middle East & AfricaMiddle East & AfricaNonNon--China AsiaChina AsiaChinaChina
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Paraxylene Net TradeParaxyleneParaxylene Net TradeNet Trade
0606 0808 1010 1212
9494
--3131
3838
244244
--1818
250250
--250250
--668668
16451645
978978
--19561956--328328
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Paraxylene Operating Rates And Margins
ParaxyleneParaxylene Operating Rates Operating Rates And MarginsAnd Margins
NAM MarginNAM Margin WEP MarginWEP MarginNEA MarginNEA MarginNEA Op RateNEA Op Rate WEP Op RateWEP Op RateNAM Op RateNAM Op Rate
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
• The worst may be over for polyester fiber. Operating rates and margins should begin to recover during the next few years
• PET resin markets continue to adding excess capacity in the face of slower demand growth
• PTA markets beginning to recover, but still have a way to go to return to profitability
• Paraxylene on the precipice of significant oversupply
• Entire PX-PTA-Polyester chain will suffer from weak margins during next few years
•• The worst may be over for polyester fiber. The worst may be over for polyester fiber. Operating rates and margins should begin to Operating rates and margins should begin to recover during the next few yearsrecover during the next few years
•• PET resin markets continue to adding excess PET resin markets continue to adding excess capacity in the face of slower demand growthcapacity in the face of slower demand growth
•• PTA markets beginning to recover, but still have PTA markets beginning to recover, but still have a way to go to return to profitabilitya way to go to return to profitability
•• ParaxyleneParaxylene on the precipice of significant on the precipice of significant oversupplyoversupply
•• Entire PXEntire PX--PTAPTA--Polyester chain will suffer from Polyester chain will suffer from weak margins during next few yearsweak margins during next few years