Professional Documents
Culture Documents
OUTLOOK
FOR POLYETHYLENE,
POLYPROPYLENE
BERNARDO E. FALLAS
Associate Editorial Director, Petrochemicals (Americas)
13 Congreso Argentino de Petroqumica
June 14-15, 2016
KEY AGENDA ITEMS
Global ethylene expansions where they are and how they affect PE
Status of North American olefins/polyethylene projects
South America as target for US, Middle East surpluses
Asias insatiable demand and its effect on region
Impact of lower crude prices on CTO/MTO economics
US propylene expansions and their effect on PP availability, pricing
Global PP supply/demand balance who has material to sell?
Latin America at a crossroads Opportunity versus challenges
PLATTS AT A GLANCE
PLATTS MARKET COVERAGE
Price
Polymers
Assessment
s
Aromatics
News &
Independent Commentary Platts is your source for
independent information on the
Upstream integrated global petrochemical markets
Olefins
Globally connected
Over 100 years experience
Robust methodology Data &
Analysis Solvents
Real-time
4
GLOBAL ETHYLENE EXPANSIONS
5
Source:S&PGlobalPlatts,EIA
OLEFINS INVESTMENT ASIA, US LEAD
PACK
28% 2% CTO/MT
North America O
3%
37% Middle East 40% Butane
Europe Propane
Asia
Naphtha
Africa
37%
14% 18%
Source:PlattsAnalytics
MAJOR EXPANSIONS COMING IN US
Company Location mt/yr Startup
Occidental/Mexichem Texas 550,000 H1 2017
Dow Chemical Texas 1,500,000 H2 2017
ExxonMobil Chemical Texas 1,500,000 H2 2017
Chevron Phillips Chemical Texas 1,500,000 H2 2017
Formosa Plastics CUSA Texas 1,500,000 2018
Shintech Louisiana 500,000 2018
Axiall/Lotte/Westlake Louisiana 1,200,000 2018/2019
Sasol Louisiana 1,500,000 2018/2019
ShellChemical Pennsylvania 1,500,000 2020/2021
PTTGC Ohio 1,000,000 2021/2022
Source:S&PGlobalPlatts
HISTORICAL ETHYLENE PRODUCTION
COSTS
$/MT
1.400 WE Naphtha
1.200
SE Asia
Naphtha
1.000
NE Asia
800 Naphtha
US Ethane
600
400 US E/P
oct-14
dic-14
ene-15
may-15
ago-15
oct-15
dic-15
ene-16
jun-14
jul-14
sep-14
nov-14
feb-15
mar-15
abr-15
jun-15
jul-15
sep-15
nov-15
feb-16
Source:PlattsAnalytics
NORTH AMERICAN PE EXPANSIONS
Capacity
Company Location Product (,000 mt/year) Startup
Nova Joffre, Canada LLD 431 2016
Braskem-Idesa Coatzacoalcos, Mx HD, LD 750, 300 2016
Ineos/Sasol JV LaPorte, US HD 460 2016
LyondellBasell Corpus Christi, US HD, LLD 227, 227 2016
CP Chem Sweeney HD, LLD 500, 500 2017
Dow Freeport, US LD, LLD 400, 650 2017
Exxon Mobil Mont Belvieu, US LLD, HD 650, 650 2017
Formosa Point Comfort, US HD, LD, LLD 225, 300, 225 2018
Sasol Lake Charles, US LLD, LD 450, 420 2018
Total additions 7,365
9
Source:S&PGlobalPlatts
GLOBAL POLYETHYLENE OUTLOOK
Source:PlattsAnalytics
N. AMERICA TO BE SUPPLY HEAVY ON PE
30.000
25.000
20.000
,000 MT
NA HDPE demand
15.000
NA LLDPE demand
10.000 NA LDPE demand
Total NA production
5.000
0
11
Source:PlattsAnalytics
A KEY RELIEF VALVE FOR US PE
SURPLUS
Source:PlattsAnalytics
LATIN AMERICA AT A GLANCE
Latin Americas population Latest IMF projections
(real GDP growth, annual % change)
Near 600 million, yet PE capacity totals only 5 Country 2015 2016 2017
million mt/year Argentina 1.2 -1.0 -2.8
Bolivia 4.8 3.8 3.5
Production: 0 mt/year
Production: 518,000 mt/year
Demand: 376,000 mt/year
Demand: 698,000 mt/year
14
Source:S&PGlobalPlatts
ARGENTINA POLYETHYLENE BALANCE
800
700
600
500
400
,000 MT
Source:PlattsAnalytics
MIDDLE EAST WELL POSITIONED TO
EXPORT
25.000
20.000
,000 MT
15.000
Middle East PE Production
10.000
Middle East PE Demand
5.000
16
Source:PlattsAnalytics
ASIA LEADS WAY IN PE DEMAND SHARE
Source:PlattsAnalytics
ASIA EXPANDING, STILL NET SHORT
ChinaandIndiaKeyDrivers
85.000
65.000 IndianDemand
45.000 RestofAsiaDemand
25.000
ChineseDemand
5.000
15.000
35.000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Source:PlattsAnalytics
CHINAS ANSWER: CTO/MTO PROJECTS
Inourforecastweexpectaround30MTO/CTOprojectswillcomeonstreamby2020
ThebulkoftheCTO/MTOethyleneprojectsareexpectedby2018
44%offutureproductionofethyleneisatrisk
Source:PlattsAnalytics
MTO/CTO PROJECTS SEE ADVANTAGE
ERODED
InnerMongoliaSelfownedmine Jan16 Jun14 EasternChinanaphthacracker Jan16 Jun14
FeedstockCost NaphthaFeedstockCost
CoalPrice(explant) $42.88 $63.83 Naphthaprice(explant) $340.63 $991.63
CoalConsumptionper/tonMeOH 1.4 1.4 Naphthaconsumptionpertonolefins 2 2
MethanolConsumptionper/tonolefins 3 3
TotalFeedstockCostpertonolefins $180.11 $268.10 Feedstockcostpertonolefins $681.26 $1,983.26
CoProducts CoProducts
Totalcoproductcredits $69.52 $158.03 Totalcoproductcredits $419.03 $879.16
Electricity Electricity
Totalelectricitycostpertonolefins 103.7234 103.723 Totalelectricitycostpertonolefins $22.15 $22.15
DepreciationandLabor DepreciationandLabor
TotaldepreciationandLabor $91.19 $91.19 TotaldepreciationandLabor $54.40 $54.40
Watercost WaterCost
Totalwatercost $31.91 $31.91 Totalwatercost $4.99 $4.99
Effluenttreatmentcost Effluenttreatmentcost
pertonolefins $17.33 $17.33 pertonolefins $2.50 $2.50
Others Others
others $126.14 $126.14 others $159.36 $159.36
Transportationcostforolefinsproduct Transportationcostforolefinsproduct
Transportationcostpertonolefins $86.63 $86.63 Transportationcostpertonolefins 0 0
Totalproductioncostpertonolefins $567.51 $566.99 Totalproductioncostpertonolefins $505.63 $1,347.50
20
Source:PlattsAnalytics
NAPHTHA IF CURRENT RATIOS HOLD
21
Source:PlattsAnalytics
CHINA EXPANSIONS NOT ENOUGH
Source:PlattsAnalytics
ADDITIONAL PE REQUIRED POST 2024
Source:PlattsAnalytics
$/bbl
$15,00
$35,00
$55,00
$75,00
$95,00
$115,00
$135,00
Jan-10
Jun-10
Nov-10
Apr-11
Sep-11
Source:PlattsAnalytics,Bentek Products
Feb-12
Jul-12
Dec-12
May-13
Oct-13
Mar-14
Aug-14
Jan-15
Jun-15
Nov-15
Apr-16
Sep-16
Feb-17
Jul-17
Dec-17
May-18
Oct-18
Bentek Oil Forecast
Mar-19
Aug-19
Jan-20
Jun-20
Nov-20
Apr-21
Sep-21
WTI
Brent
CRUDE DECLINES IMPACT PROPYLENE
WTI Forecast
Brent Forecast
24
ASIA C3 MARGIN SHRINKS AS SUPPLY
RISES
CFR China PGP vs Naphtha marker
1.800
1.600
1.400
1.200
1.000 Propylene
$/mt
Poly Grade
800 CFR China
600 Weekly
400
200 Naphtha C+F
0 Japan Cargo
Sep
Sep
Sep
Sep
May
May
May
May
May
Jan-
Nov
Jan-
Nov
Jan-
Nov
Jan-
Nov
Jan-
Mar
Mar
Mar
Mar
Mar
Jul-12
Jul-13
Jul-14
Jul-15
IN US, WEAKER RGP PULLS PGP
USG Propylene
$1.850
$1.650
$1.450
USD per mt
$1.250
Source: Platts
26
PRODUCTION REMAINS STRONG
8.500
8.000
7.500
7.000
6.500
in million lb
6.000 Propylene
5.500 Production
5.000 Refinery
Sourced
4.500
Chemical
4.000 Sourced
3.500
3.000
2.500
Source: AFPM
82
84
86
88
90
92
94
96
Source: EIA
Jan-13
Feb-13
16 March 2016
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
4-Week Average US % Utilization of Refinery Operable Capacity
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
28
NORTH AMERICAN PDH EXPANSIONS
29
Source:S&PGlobalPlatts
PP MARGINS IMPROVE
95
65
Propylene Poly Grade FD
USG cts/lb M1
55
45
PP Homo Inj US Domestic
35 Dlvd Railcar cts/lb Weekly
25
Oct-13
Apr-14
Oct-14
Apr-15
Oct-15
Nov-13
Dec-13
Nov-14
Dec-14
Nov-15
Dec-15
Sep-13
Jan-14
May-14
Jun-14
Aug-14
Sep-14
Jan-15
May-15
Jun-15
Aug-15
Sep-15
Jan-16
Feb-14
Feb-15
Feb-16
Jul-14
Jul-15
Mar-14
Mar-15
Source: Platts
Source:PlattsAnalytics
ARGENTINA POLYPROPYLENE BALANCE
400
300
200
,000 MT
-100
-200
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Source:PlattsAnalytics
KEY TAKEAWAYS
Source:PlattsAnalytics
THANK YOU
CONTACT DETAILS:
BERNARO FALLAS, ASSOCIATE EDITORIAL
DIRECTOR