Rubber Market Overview Bill Hyde Director C 4 Olefins and Elastomers [email protected] Chicago Rubber Group September 23, 2010 Singapore Shanghai Houston New York London Düsseldorf Dubai Bangkok
Jan 12, 2016
Rubber Market OverviewRubber Market Overview
Bill HydeDirector C4 Olefins and Elastomers
Bill HydeDirector C4 Olefins and Elastomers
Chicago Rubber GroupSeptember 23, 2010
Singapore Shanghai Houston New York London Düsseldorf Dubai Bangkok
September 2010
Commercial Strategy Transaction Legal
Olefins & DerivativesPolymers &
Plastics
Methanol
Aromatics
Chlor-alkali & Vinyl
Fibers & IntermediatesEngineering
ResinsC4s and
ElastomersOther
Intermediates & Specialty Chems
Project Economics
Asset Valuations
Technical Analysis
Due Diligence
M&A
CMAI’s Global Consulting Business CMAI’s Global Consulting Business Business Advisory Services
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Corporate & Business Planning Support
Market, Value Chain Competitive Analyses
Feasibility Studies
Legal Strategy, Expert Analysis & Testimony, Damage Assessment, Valuation & Arbitration Support
Focused Multi-client
Publications, World
Analyses, Daily, Weekly,
Monthly Services, Training
Corporate Strategies Business Unit Strategies
Functional Strategies
Chicago Rubber Group
CMAI Tire Raw Material IndexCMAI Tire Raw Material Index
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-1080%
100%
120%
140%
160%
180%
200%
West Europe Asia North America
Chicago Rubber Group
What’s Next?What’s Next?
• Fundamental Drivers
• Synthetic Rubber
• Natural Rubber
Chicago Rubber Group
Fundamental Influences
Fundamental Influences
Chicago Rubber Group
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Economic Growth Comparison(Constant 2007 U.S. Dollars)
World N. America S. America W. Europe SE Asia NE Asia
Percent Change
Chicago Rubber Group
2007 2008 2009 2010 2011 2012 2013 2014 201550%
75%
100%
125%
150%
175%
200%
50%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Base Energy Price Outlook
WTI Natural Gas NG as % of Crude
January 2007 = 100 Gas to Oil Ratio
Chicago Rubber Group
The Synthetic Rubber FutureThe Synthetic Rubber Future
• Asia is the dominant factor and China dominates Asia
• Market limits vary by region– Supply/Demand– Feedstock availability
Chicago Rubber Group
Global Synthetic Rubber MarketGlobal Synthetic Rubber Market
NAM23%
West Europe11%
Central Europe13%
Northeast Asia42%
Other11%
Chicago Rubber Group
Is There Enough Capacity?Is There Enough Capacity?
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015-400
-200
0
200
400
600
800
1000
1200
1400
1600
Demand Growth Capacity Additions Surplus CapacityCumulative Surplus
Thousand Tons
Chicago Rubber Group
China Dominates AsiaChina Dominates Asia
China19%
Other81%
2010 Synthetic Rubber Capacity
China59%
Other41%
2010 - 2014 Synthetic Rubber Capacity Additions
Chicago Rubber Group
What is China’s Future?What is China’s Future?
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
500
1000
1500
2000
2500
3000
70%
75%
80%
85%
90%
95%
100%
Production Demand Capacity Self Sufficiency
Thousand Tons
Chicago Rubber Group
North America is UnderutilizedNorth America is Underutilized
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150
500
1000
1500
2000
2500
80%
85%
90%
95%
100%
105%
110%
115%
120%
125%
130%
Production Demand Capacity Self Sufficiency
Thousand Tons
Chicago Rubber Group
Cost Differentials Also Drive PricesCost Differentials Also Drive Prices
• Rubber raw material prices have been historically high, but regional differentials have been even worse
• Rubber producers in North America can expect more of the same
Chicago Rubber Group
BASE PETROCHEMICALSBASE PETROCHEMICALS
Chicago Rubber Group
Surplus Ethylene Peaks In 2010Surplus Ethylene Peaks In 2010
04 05 06 07 08 09 10 11 12 13 140
5
10
15
20
25
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Annual Cumulative Surplus, Tons Surplus As % of Demand
Percent Ethylene, Million Metric Tons
Chicago Rubber Group
On-Purpose Propylene ProductionOn-Purpose Propylene Production
01 02 03 04 05 06 07 08 09 10 11 12 13 140
2
4
6
8
10
12
14
16
18
0%
200%
400%
600%
800%
1000%
1200%
1400%
1600%
1800%
Dehydro Metathesis Olefin Cracking Gas-to-Olefins HS FCC
Others % Total Production
Million Metric Tons Percent
Chicago Rubber Group
Evolving Trends in U.S. Butadiene Feedstock Production
Evolving Trends in U.S. Butadiene Feedstock Production
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 201450%
55%
60%
65%
70%
75%
80%
85%
90%
95%
100%
Ethylene B/E Ratio Crude C
2004 = 100%2004 = 100%
4
Chicago Rubber Group
New Extraction CapacityNew Extraction Capacity
World China India Southeast Asia
Other Northeast
Asia
North America
Other-0.5
0.0
0.5
1.0
1.5
2.0
2.5
BD Expansions and Closures 2010 – 2014Million Metric Tons
Chicago Rubber Group
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
Styrene Capacity Expansions
Americas Europe Middle East Asia CIS & Baltic States World
Million Metric Tons
Average Demand
Chicago Rubber Group
2007 2008 2009 2010 2011 2012 2013 2014 2015(500)
(400)
(300)
(200)
(100)
0
100
200
300
400
North America PBR Cost Dis-advantage Relative to 2007
vs WEP vs NEA
$ per Ton
Chicago Rubber Group
2007 2008 2009 2010 2011 2012 2013 2014 20150
50
100
150
200
250
North America SBR Cost Disadvantage Relative to
2007
vs WEP vs NEA
$ per Ton
Chicago Rubber Group
Natural RubberNatural Rubber
• Demand is recovering
• Market balance tightening
Chicago Rubber Group
Natural Rubber Demand in ChinaNatural Rubber Demand in China
2002 2003 2004 2005 2006 2007 2008 2009 2010*0
500
1000
1500
2000
2500
3000
3500
4000
0%
10%
20%
30%
40%
50%
60%
70%
80%
Demand Percent of Global Demand
ThousandMetric Tons
Percent of Global Demand
* ForecastSource: International Rubber Study Group
Chicago Rubber Group
Natural Rubber InventoryNatural Rubber Inventory
2002 2003 2004 2005 2006 2007 2008 2009 2010*0
20
40
60
80
100
120
140Days Supply
* Forecast
Chicago Rubber Group
ConclusionsConclusions
• Fundamentals– Stabilizing
• Synthetic Rubber– China will be biggest
market driver– Cost differences will
cause price differentials and North America will have the highest of both
• Natural Rubber– Tightening
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