Overcapacity in the Xylenes Chain

Steve Jenkins
PCI Xylenes & Polyesters Asia Sdn Bhd

INDIAN POLYESTER 2014
AUGUST 2014, MUMBAI

Polyester Chain Vital Statistics
•Since 2000, 669 million tonnes of polyester have been produced
•Polyester consumption growth averaged 6.3% globally, 9.3% in India
and 14.7% in China from 2000-2014
•In 2000, China accounted for 18.3% of global polyester production and
6.4% of consumption. India had 5.7% of global production.
•In 2020, China is forecast to account for 53.9% of global polyester
production and 32.3% of consumption. India is forecast to produce 11%
of global polyester by this time.

•Estimated investment in the PX-PTA-Polyester chain since 2000 is
$77.4 bn, over $5bn per year on average.

INDIAN POLYESTER 2014
AUGUST 2014 , MUMBAI

World Polyester Production Growth by Region 7.000 ‘000 Tonnes 5.000 3.000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 Staple INDIAN POLYESTER 2014 AUGUST 2014 . MUMBAI Filament PET Film Others .000 2.000 0 -1.000 6.000 1.000 -2.000 4.

000 -2.000 ‘000 Tonnes 4.000 1.000 3. MUMBAI .000 0 -1.000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 North America South America Europe Middle East/Africa China Indian Subcontinent North East Asia South East Asia INDIAN POLYESTER 2014 AUGUST 2014 .000 2.000 5.000 -3.PTA Production Growth by Region 6.

000 ‘000 Tonnes 3. MUMBAI .Paraxylene Production Growth by Region 4.000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 North America South America Europe Middle East/Africa China Indian Subcontinent North East Asia South East Asia INDIAN POLYESTER 2014 AUGUST 2014 .000 -2.000 0 -1.000 1.000 2.

000 6.000 ‘000 Tonnes 8.Polyester Capacity Growth by Region 10. MUMBAI .000 2.000 4.000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 North America South America Europe Middle East/Africa China Indian Subcontinent North East Asia South East Asia INDIAN POLYESTER 2014 AUGUST 2014 .000 0 -2.

MUMBAI .000 4.000 -4.000 6.000 0 -2.000 2.PTA Capacity Growth by Region 12.000 10.000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 North America South America Europe Middle East/Africa China Indian Subcontinent North East Asia South East Asia INDIAN POLYESTER 2014 AUGUST 2014 .000 ‘000 Tonnes 8.

000 1.000 2.Paraxylene Capacity Growth by Region 7. MUMBAI .000 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 North America South America Europe Middle East/Africa China Indian Subcontinent North East Asia South East Asia INDIAN POLYESTER 2014 AUGUST 2014 .000 ‘000 Tonnes 5.000 6.000 0 -1.000 3.000 4.

000 10.000 1.000 -4.000 0 12.000 0 -1.000 7.000 6.000 2.000 6.000 North America South America Europe Middle East/Africa China Indian Subcontinent North East Asia South East Asia 8. MUMBAI .Polyester/PTA/PX Capacity Growth 2010-2020 ‘000 Tonnes Polyester 10.000 2010 2012 2014 2016 2018 2020 2010 2012 2014 2016 2018 2020 2010 2012 2014 2016 2018 2020 INDIAN POLYESTER 2014 AUGUST 2014 .000 2.000 4.000 2.000 5.000 4.000 4.000 3.000 ‘000 Tonnes PX ‘000 Tonnes PTA -2.000 0 -2.000 8.000 6.

MUMBAI PTA Polyester Polymer .Global Polyester Industry Utilisation 95% Nameplate Utilisation 90% 85% 80% 75% 70% PX INDIAN POLYESTER 2014 AUGUST 2014 .

500 1.000 USD/Tonne USD/Tonne 1.Value Chain for Polyester & Intermediates 2. MUMBAI 2003 Naphtha 2006 PX 2009 PTA 2012 PET 2006 PX 2009 PTA 2012 POY 150 den .500 1.000 USD/Tonne 2.000 500 500 - 2000 Crude Oil 2003 Naphtha 2006 PX 2009 PTA 2000 2012 Crude Oil PSF 1.500 1.000 150 den Polyester Filament Fibre 1.5 den 2003 Naphtha PET Packaging Resin 2.500 1.000 2.500 2.5 den Polyester Staple Fibre 2.500 1.000 500 (500) 2000 Crude Oil INDIAN POLYESTER 2014 AUGUST 2014 .

MUMBAI 2003 2006 POY 150 den PSF 1.5 den Polyester Staple Fibre 500 USD/Tonne 400 300 200 400 300 200 100 100 - 2000 2003 2006 2009 2000 2012 PET Packaging Resin 400 300 200 100 (100) 2000 2003 2006 (200) PET INDIAN POLYESTER 2014 AUGUST 2014 .Polyester Fibre & Packaging Spreads 1.5 den USD/Tonne USD/Tonne 150 den Polyester Filament Fibre 600 500 2009 2012 2009 2012 .

Naphtha. MUMBAI 2006 PX 600 2000 2003 2009 2012 2009 2012 . Paraxylene & PTA Spreads Paraxylene – Naphtha Spread 700 600 USD/Tonne USD/Tonne Naphtha-Crude Spread 160 140 120 100 80 60 40 20 - 500 400 300 200 100 2000 2003 2006 2009 - 2012 2000 Naphtha PTA-Paraxylene Spread USD/Tonne 500 400 300 200 100 2003 2006 PTA INDIAN POLYESTER 2014 AUGUST 2014 .

000 KT 95% 6.000 115% 110% 10.000 100% 8.India Polyester Market Outlook 12.000 70% 0 65% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Staple Filament PET Resin Film Polymer Capacity Polymer Utilisation Rate INDIAN POLYESTER 2014 AUGUST 2014 .000 80% 75% 2. MUMBAI Polymer Utilisation 105% .000 90% 85% 4.

Inventory release from China’s cotton stockpile may negatively impact PSF. with prospect of increasingly competitive PX prices and ongoing margin squeeze for PTA giving some positive outlook. Many polyester assets sit idle in China. MUMBAI . Scale investment continues to drive the business cycle. INDIAN POLYESTER 2014 AUGUST 2014 . although at reduced rate. Korea. and Taiwan but industry wide capacity rationalisation is not progressing. Investment in new assets continues.Outlook for Polyester Margin cycle may have bottomed out for polyester. new assets. Options for cost reduction through investment focused on scale of build. Small old plants scrapped in favour of building large. with less room to drive conversion efficiencies. Idled plants are likely to be scrapped as M&A options are limited.

000 95% 90% KT 6.India PTA Market Outlook 12.000 70% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Production INDIAN POLYESTER 2014 AUGUST 2014 .000 100% PTA investments (RIL. MUMBAI Consumption Capacity Net Trade Utilisation Rate Utilisation Rate 10.000 80% 2.000 85% 4.000 .000 0 75% -2. Self-sufficiency in PTA 2015-2019 8. JBF) wellbalanced with current demand outlook.

Outlook for Polyester & Intermediates Asia margins may stabilise if China’s “cartel” are successful in holding lower production levels. MUMBAI . but this can lead to further unwanted capacity. keeping margins persistently low and extending to current downcycle for several more years to come. but are too small and too few to have any meaningful impact on utilisation and margin in the next 12-18 months Asset renewal is one of the few options for survival.. INDIAN POLYESTER 2014 AUGUST 2014 . but gross oversupply persists in N Asia Rate of investment is slowing. but capacity will continue to be added into 2015. driving down overall industry utilization Plant closures have been carried out and more are planned.

PTA Breakeven Cash Cost Curve 1250 Demand estimate 57. MUMBAI 71406 70071 68121 66836 64746 63246 61651 59681 57731 56081 53281 50431 47281 44681 42891 35855 32505 29055 26870 24280 21505 19195 9345 6605 3935 700 950 .5 million tonnes annualised rate USD Per Tonne 1200 1150 $120/te gap between leader and laggard 1100 1050 1000 Based on PX@$1400/tonne Cumulative Capacity INDIAN POLYESTER 2014 AUGUST 2014 .

000 80% 2.000 85% 3. 7. OMPL) push India slightly long on PX 2015-2020.000 75% 0 70% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Production INDIAN POLYESTER 2014 AUGUST 2014 .India PX Market Outlook 8.000 105% PX investments (RIL.000 90% 4. PX costs likely to remain highly competitive for downstream.000 1.000 100% 6.000 KT 5. MUMBAI Total Consumption Capacity Net Trade Utilisation Rate Utilisation Rate 95% .

Outlook for Paraxylene Margins set to fall as competition between integrated refiners and condensate-based operations intensifies. driving down production costs/improving PX margins INDIAN POLYESTER 2014 AUGUST 2014 . Role of gasoline and middle distillate fuel spreads may play larger role in determining PX production levels the next 2-3 years than previously seen Investments in PX will peak by 2017/2018 based on current project assessments Restructuring has already taken place. with non-integrated assets closed or under severe financial pressure Technology allows more PX to be made from limited supplies of feedstock naphtha. MUMBAI . integrates refinery-based assets further and allowing for more energy efficient operations.

PX Breakeven Cash Cost Curve $300/te gap between leaders and laggards INDIAN POLYESTER 2014 AUGUST 2014 . MUMBAI .

MUMBAI .Any Questions ? Thank You For Your Kind Attention INDIAN POLYESTER 2014 AUGUST 2014 .