APIC ANNUAL MEETING, South Korea

Bio-based Acrylic Acid:

Markets and Commercial Scale Development

Chommanad Thammanayakatip
Managing Consultant, Nexant Asia Limited
chommanadt@nexant.com
8 May 2015
Nexant business model is geared to end to end service
of the complete energy value chain

OIL AND GAS CHEMICALS AND CLEANTECH

UPSTREAM MIDSTREAM DOWNSTREAM CHEMICALS GREEN CHEMICALS RENEWABLE ENERGY

Syngas Biomass
Oil & Gas Service Processing Petroleum Refining Gas & Naphtha Based
Petrochemicals Biopolymers Gasification
Sector Planning LNG Liquefaction Product Market
Assessment Olefins & Aromatics Olefins Solar (Thermal &
Shale Gas & Oil LNG Shipping & PV)
Regasification Coal to Liquids Polymers Alcohols
Coal Wind Power
Oil & Gas Pipelines Gas to Liquids Fertilizers Aromatics
Clean Coal
Gas Processing Specialty Chemicals Sourced from Biomass,
and Advanced Algae, Wastes, and CO2 Capture and
Gas Distribution
material Agricultural Sources Sequestration
Fuel Cells &
Hydrogen
Geothermal

NEXANT CAPABILITY

APIC Annual Meeting 2015

Actionable Solutions & Time-to-Value Approach
INDUSTRY AND MARKET EXPERTISE STRATEGY EXPERIENCE
AND NEXANT CHEMSYSTEMS DATABASES AND METHODOLOGY

Supply, Demand and Business Attractiveness

Competitor Analysis
Market Dynamics
Market growth and size
0.15
Ability to differentiate
0.1 Competitive pressures
Supply
0.05
Customer pressures
Demand Entry barriers
0
0 0.5 1 Threat of substitutes
1995 2000
STRATEGIC
DEVELOPMENT
Cost, Technology and Financial Performance AND Strategic Position
Competitive Position and Benchmarks
PERFORMANCE

High
INVEST OR FIX REINVEST

Consider:
SPECIAL
Target ROCE
RESINS

MARKET GROWTH RATE

COMPOUNDS
COST CURVE
Cost position PP
Percent

Technology
Cash Cost

OLEFINS
HDPE AROMATICS

Size FILM

Capacity
Integration
PIPE
ROCE
CFROA
Differentiation FIX CASH

Low
1997 1999 2001 2003 2005 2007 2009 2011
Low High
PROFITABILITY (ROCE, %)

Comments
APIC Annual Meeting 2015
 Agenda
Acrylic acid markets and value chain

Supply dynamics and the challenges in the coming years

Development of Bio-based production technologies

Conclusion

APIC Annual Meeting 2015

Acrylic Acid Markets and Value Chain
Acrylic acid is produced predominantly via two-stage
oxidation of propylene

PROPYLENE DEMAND BY APPLICATION (2014)

Isopropanol Others
Acrylic Acid

Cumene/
Phenol

Feedstocks
Acrylonitrile

Propylene
oxide PP

Total Demand = 90 Million tons

Source: Nexant

Approximately four percent of propylene is consumed in the production of acrylic acid

APIC Annual Meeting 2015

Acrylic acid value chain

Feedstocks Derivatives Applications / End Uses

Diapers, sanitary products, agriculture,
SAP insulation (cable & battery)
Polyacrylic
Glacial Acrylic Acid Acid Detergents, pulp and paper, textiles, surface
Other coatings and water treatment

Methyl Acrylate Acrylic Fibre Textiles, clothing

Commodity Construction ;Paints & Coatings, Resins,
Acrylates Ethyl Acrylate Dispersions
Propylene Crude Acrylic Acid
Others include inks, adhesives, sealants,
Butyl Acrylate
pressure sensitive tapes
2-EH Acrylate

Alkyl acrylates Polymer modifiers, inks, adhesives, coatings

Specialty Acrylates
Dialkylaminoethyl acrylates
Hydroxyalkyl acrylates
and sealants, enamels, varnishes and
polishes, water treatment and paper
processing.

Acrylic acid is used in a diverse range of applications including construction, automotive, packaging,
health and personal care products its broad range of use supports growth rate marginally higher
than GDP

APIC Annual Meeting 2015

Global acrylic acid consumption

ACRYLIC ACID DEMAND BY APPLICATION (2014) ACRYLIC ACID DEMAND GROWTH BY APPLICATION
(Million tons)
Others
16%
Others

Acrylates SAPs
50%
SAPs Acrylates
34%
0 1 2 3 4
Total Demand = 5 Million tons 2005 2014 2020
Source: Nexant Source: Nexant

SAP is the fastest-growing derivative of acrylic acid. The sector is forecast to grow from around 30% to
35% of global acrylic acid consumption over 2005-2020
Acrylate ester sector has historically benefited from the move towards water-based paint and coatings,
and strong construction and automotive sectors in developing regions

APIC Annual Meeting 2015

Global commodity acrylate consumption will be mainly
driven by construction, automotive and packaging sectors

ACRYLATES DEMAND BY APPLICATION (2014)

The majority of surface coating sector is for
Others paint & coating in construction and
23% Surface automotive industries.
coating
35% Adhesive sector is largely driven by pressure
sensitive adhesives (PSA) for packaging
sector, and to a lesser extent construction
Resin adhesives
modifiers
14%
Butyl acrylate is largest application
accounting for around 60 percent of total
acrylates demand, driven mainly by coating
Adhesives application
28%
Total Demand = 4 Million tons
Source: Nexant

APIC Annual Meeting 2015

Global SAPs consumption

SAP DEMAND BY APPLICATION (2014)

Others
Feminine 7%
hygiene
10%

Adult
incontinen
ce
13%
Baby
diaper
70%
Total Demand = 2 Million tons
Source: Nexant

Disposable baby diaper is the largest sector of SAP.Nevertheless, the demand growth is limited to
developing countries, while the more developed regions have reached maturity

APIC Annual Meeting 2015

Developing countries will be a key driver for future SAP demand
the sector is primarily being driven by the baby diaper sector.

GLOBAL SAP CONSUMPTION PER CAPITA

12%
Asia Pacific
Market Growth - % CAGR 2014- 2020

10%

8%

6% South America

4% North America

2%
Western Europe
0%
0 0.5 1 1.5 2
Consumption per Capita (2014), Kg/Capita

APIC Annual Meeting 2015

Adult diaper sector is the main driver in developed countries,
such as the United States, Western Europe and Japan

PROPORTION OF POPULATION AT AGE OVER 65 YEARS OLD

40%
35%
30%
25%
20%
15%
10%
5%
0%
North South Western C/E Europe Japan Rest of Asia World
America America Europe
2000 2015 2035
Source: UN Census

APIC Annual Meeting 2015

Demand growth of global acrylic acid will be concentrated in
Asia, particularly in North-East Asia and China

ACRYLIC ACID DEMAND BY REGION (2014) ACRYLIC ACID DEMAND GROWTH BY REGION
(Million tons)
ROW North
6% America ROW
23%
Asia Pacific

Western Europe
Asia Western
Pacific Europe
54% North America
17%

0 2 4 6
Total Demand = 5 Million tons
2005 2014 2020
Source: Nexant Source: Nexant

Consumption growth in mature regions, namely North America and Western Europe, will be limited by
weak domestic consumption and major investments in consuming countries
The development of world-scale acrylic complexes in South America, Central/Eastern Europe, the
Middle East and South-East Asia will provide strong growth from a small base

APIC Annual Meeting 2015

Supply dynamics and the challenges in the coming years
The industry is relatively consolidated with the top five
producers accounting for around 60 percent of capacity

ACRYLIC ACID PRODUCER (1990) ACRYLIC ACID PRODUCER (2014)

Others
Union 7% BASF
Carbide Atochem 17%
Others
7% 23% 38%
Huels
8%
Dow
16%
Rohm &
Haas
BASF Nippon
17%
21% Jiangsu Shokubai
Celanese Jurong Arkema
12%
17% Chemicals 9%
8%
Total Capacity = 1 Million tons Total Capacity = 7 Million tons
Source: Nexant Source: Nexant

There were <10 producers/players in the business back in 1990, compared to >30 today
The position of Asian players has grown strongly over the past decade

APIC Annual Meeting 2015

Acrylic Acid Value Chain

Raw Materials Primary Derivatives Secondary Derivatives

Glacial
Polyacrylic
Acrylic
Crude Acid/SAPs
Acid
Propylene Acrylic
Acid Acrylic Acrylate
Esters Polymers
Company

DOW
BASF
Arkema
Nippon Shokubai
Jiangsu Jurong
LG Chem
Formosa

Source: Nexant

All leading producers are forward integrated into acrylate esters and many into SAP. Monomer shipping
costs are relatively high and this has promoted high levels of consumption at or near to the AA unit

APIC Annual Meeting 2015

Current investment wave will result in lower operating
rates in the short-term before recovering gradually
ACRYLIC ACID CAPACITY ADDITIONS ACRYLIC ACID SUPPLY/DEMAND BALANCE
2 10 100%

Operating Rate
Million Tons
Million tons

1 5 50%

0 0 0%
2011 2012 2013 2014 2015 2016 2017 2018

2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Americas EMEA Asia Consumption Capacity Operating rates
Source: Nexant Source: Nexant

APIC Annual Meeting 2015

Acrylic acids long-distance trade is minimal, unlike its
derivatives acrylates and SAPs
2014 2015 2020

Americas EMEA Asia

50 50 50

-50 -50 -50

GLOBAL ACRYLIC ACID NET TRADE (Thousand Tons)

APIC Annual Meeting 2015

Development of Bio-based Production Technologies
 Oil and gas companies are becoming very active in the Bio area.
Many important chemicals are being targeted

Chemical Routes Players

Acrylic Acid Fermentation, Glycerine to Acrolein

Ethylene, EO, EG Ethanol Dehydration

Isoprene Fermentation

Butadiene Fermentation, Conversion of bio- BDO

Isobutylene Fermentation, Isobutanol Dehydration

BTX APR, Pyrolysis

PX Fermentation, Catalysis

APIC Annual Meeting 2015

Drivers behind new technology developments
FEEDSTOCK AVAILABILITY AND PRICES
?????

Impact from Shale Oil/Gas

Coal-based chemical
Refinery operation/Condensate production

????? GREEN INITIATIVES COST COMPETITIVENESS

?????

Less dependence on oil/gas feedstock SIGNIFICANT CHANGES IN

Lower OPEX
COMMERICIAL TECHNOLOGY
Sustainability growth concept Lower CAPEX
OF ACRYLIC ACID
Consumer perception

PRODUCT DEMAND/QUALITY/INNOVATION
?????

Increasing demand and market prices

Higher product quality - Penetration into
hygiene/medical grade with low impurity

Bio-based routes offer potential reductions in production costs as well as protection against market
volatility (the latter of which is has recently been associated with propylene availability and costs).
APIC Annual Meeting 2015
Many technology developers have made huge strides in reaching
commercially-viable bio-based processes over the past five years

Glycerol Acrolein

3-HP
Dehydration

Acrylic Acid
Lactic Acid
Dehydration/Ester
Sugar
ification

Fumaric Acid
Cross-metathesis Pilot Plant

Large pilot/
Demonstration
Poly scale planned
Bio-based EO propiolactone
degradation

APIC Annual Meeting 2015

Active players in emerging technologies

3-HP Route PHA Route

EO Route Lactic Acid Route

Glycerol Route Fumaric Acid Route

APIC Annual Meeting 2015

Cost comparison
GLACIAL ACRYLIC ACID COST OF PRODUCTION SUMMARY (INDICATIVE)
CRUDE ACRYLIC ACID COST OF PRODUCTION SUMMARY, 2012
Petro-based Bio-based
dollars per ton

Two-step via Acrolein from via 3-HP via EO and beta- via Lactic Acid
Propylene Glycerol Propiolactone
Oxdiation
Variable Cost Fixed Cost Other Costs

The developing bio-based processes are currently still in the development stage and have not been
proven at commercial scale. As such, the presented production costs of these developing processes
are only theoretical estimates
The analysis showed that these bio routes would be competitive if implemented at a global scale
APIC Annual Meeting 2015
Conclusion

Acrylic acid consumption is driven mainly by hygiene, construction, automotive and

packaging sectors:
Bright prospect will be supported by ageing population, higher standard of living and
urbanization
Recent strong demand growth and licensing opportunity have unlocked new developments
in acrylic acid supply, reflecting current oversupply situation
The bio-based production remains at its early stage. None of the bio based technologies
have been successfully proven at commercial scale.
Bio-based technologies that are expected to come close to commercialization within the
next five years include 3-HP and EO routes.
Key success factors include:
Results from demonstration scale
Feedstock availability and access to feedstock
Scale and Costs of production vs. Oil Prices

APIC Annual Meeting 2015

Data in todays presentation is sourced from Nexants Petroleum and
Petrochemical Economics and Biorenewable Insights programme

APIC Annual Meeting 2015

 Thank You
Nexant, Inc.

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