Acetic Acid • Vinyl Acetate

Tecnon OrbiChem Seminar at KICHEM 2012

Seoul - 2 November, 2012

Keiji Wakatsuki
KICHEM 2012
PRESENTATION OUTLINE

• Current Acetic Acid Market Conditions

• Major Downstream Markets

• Summary and Conclusions

Source: Tecnon OrbiChem

KICHEM 2012
TECNON ORBICHEM’S VIEW OF THE MARKET
Acetic Acid
• Global acetic acid markets have not been as robust in 2012 as
originally expected due to ongoing economic headwinds in Europe and
overcapacity in Asia. Market participants expected to retain a wait-and-
see attitude in Q3-Q4.
• Despite the gloomy macro-economic outlook, global acetic acid
consumption was expected to increase by more than 5% in 2012
compared to 2011.
• Global acetic acid prices spiked briefly in March-April 2012 but fell just
as quickly as major production outages failed to offer long-term support.
Production problems in the US led to moderate price increases in August.
• Capacity increases are set to continue in China for next 1-2 years, but
the period of seemingly non-stop acetic acid plant expansions in the
country is coming to an end.
• Global utilisation rates at 70-75% in 2012 as producers cut production
in order to reduce supplies and maintain margins.

Source: Tecnon OrbiChem

KICHEM 2012
WORLD CAPACITY TO PRODUCE ACETIC ACID
16%
29%
21% 6%

12%

4%
50%
1% 15%
9%

China 4%
15%
15% 3%
E Europe
ME/Africa
Total 2005 Total 2012
SE Asia
10.554 Million Tons 17.949 Million Tons
NE Asia
W Europe
Americas

Source: Tecnon OrbiChem

KICHEM 2012
ACETIC ACID CAPACITY DISTRIBUTION
WORLD and CHINA 2012

North America Northeast

EE & Russia
South & SE 16% 3%
3% West Europe Southwest
Asia 6% 8%
9%
Northwest
ME & Africa 5% East China
4% 55%
Cent. China
5%

NE Asia
12%

North China
China 24%
50%

Global Capacity: 17.9 Million Tons China Capacity: 8.6 Million Tons

Source: Tecnon OrbiChem

KICHEM 2012
WORLD ACETIC ACID CONSUMPTION:
2005 vs 2012

2005 = 8.474 Million Tons 2012 =12.489 Million Tons

16%
28%
19%
38%
14%

23%
1%

10%
China
12%
ME/Africa
3% 9%
19% SE Asia
NE Asia
W/E Europe
Americas
Source: Tecnon OrbiChem
KICHEM 2012
WORLD ACETIC ACID SUPPLY & DEMAND - 2012

Consumption Production
12.4 Million Tons 12.4 Million Tons
20% 21%

10%
37% 15%
41%

15%
15%

3%
China 8%
10% 5%
ME & Africa
S & SE Asia
NE Asia
E & W Europe
N & S America
Source: Tecnon OrbiChem
KICHEM 2012
ACETIC ACID PRICES: Q1 2009-2012

Dollars per Ton

1,050
USG
950 Export

850
Taiwan
Import
750

650 China
Import
550
Euro
450 Contract

350
China
250 Export

n-09 pr-09 ul-09 ct-09 n-10 pr-10 ul-10 ct-10 n-11 pr-11 ul-11 ct-11 n-12 pr-12 ul-12
Ja A J O Ja A J O Ja A J O Ja A J

Source: Tecnon OrbiChem

KICHEM 2012
WORLD ACETIC ACID CAPACITY ADDITIONS

Company Country Change Year

(ktpa)
Anhui Huayi Coal Chemical China 500 2012
Ningxia Yinglight Chemical China 300 2012
Henan Yima Gas Co China 200 2013
Henan Longyu Coal Chemical China 400 2014
Celanese USA 250 2014(?)
Yangtze River Acetyls (YARACO) China 650 2015
Reliance India 790 2015/6
BP-IOC India 1000 2016
Petrobras Brazil 200 2017
Other projects Egypt, India, US ~1000 2016

Source: Tecnon OrbiChem

KICHEM 2012
WORLD ACETIC ACID CAPACITY CLOSURES

Company Country Change Year

(ktpa)
MSK Serbia (100) 2011
Shaanxi Yanchang China (250) 2012
Wacker Germany (100) 2012
Celanese Singapore *(600) 2012
Celanese Nanjing, China **(300) 2013

* -- Celanese temporarily idled its Singapore AA plant in March 2012

** -- Celanese ‘de-rating’ AA output due to ethanol production

Source: Tecnon OrbiChem

KICHEM 2012
ACETIC ACID REGIONAL NET TRADE

1,000 Metric Tons

900
750 2007

Northeast Asia
ME & Africa
S America

W Europe
600 2008
450

China
2009
300
2010
150
2011
0
-150
N America

E Europe

S & SE Asia
-300
-450
-600
-750
-900

Source: Tecnon OrbiChem

KICHEM 2012
CHINA ACETIC ACID IMPORTS and EXPORTS

1,000 Metric Tons US Dollars

800 800

700 Import Price

600 600
Export Price
500
Export Volume
400 400
Import Volume
300

200 200

100

0 0

e
00

01

02

03

04

05

06

07

08

09

10

11

12
20

20

20

20

20

20

20

20

20

20

20

20

20
Source: Tecnon OrbiChem
KICHEM 2012
PRESENTATION OUTLINE

• Current Acetic Acid Market Conditions

• Major Downstream Markets

• Summary and Conclusions

Source: Tecnon OrbiChem

KICHEM 2012
TECNON ORBICHEM’S VIEW OF THE MARKET
Acetic Acid Derivatives

• Global VAM supplies remained tight overall in 2012 even though

demand has been flat since the second quarter.
• Several new VAM projects scheduled for 2013-2014 are expected
to ease concerns about global supply tightness.
• Global purified terephthalic acid capacity to produce will increase
by about 30% between 2012-2016 due to tremendous growth
expected in China and South Asia polyester markets.
• Acetic anhydride demand will increase steadily in the medium-term
led by consumer goods purchases in developing nations and steady
growth for acetate tow in Asia.
• Ester solvents are used in a wide spectrum of industrial and
consumer applications; over-capacity in ethyl acetate supplies
dampening margins.
Source: Tecnon OrbiChem
KICHEM 2012
GLOBAL ACETIC ACID CONSUMPTION 2012

Others VAM
15% 33%

PTA
19%
Anhydride
14%

Butyl Acetate Ethyl Acetate

7% 12%

Source: Tecnon OrbiChem Total = 12.4 Million Metric Tons

KICHEM 2012
ACETIC ACID/ACETYLS CHAIN
Natural Coal
NaturalGas
Gas Coal

Methanol
Methanol

Ethylene
Ethylene
Acetic
AceticAcid
Acid

Vinyl Acetate Acetic

MCAA Vinyl Acetate PTA Acetic Ester
MCAA Monomer PTA Anhydride EsterSolvents
Solvents
Monomer Anhydride

Ag/Pharma, Polyvinyl
Polyvinyl Polyester/
Polyester/ Acetate Flake/
Acetate Flake/ Ethyl Acetate
Acetate PET Resin Acetate Tow Ethyl Acetate
Consumer Acetate PET Resin Acetate Tow
Goods
Construction, Polyvinyl Textiles, Consumer Goods, Butyl
Paper,
Polyvinyl
Alcohol ButylAcetate
Acetate
Alcohol Auto, Textiles,
Packaging Packaging Ag/Pharma
Polyvinyl Automotive, Paints, Coatings,
Polyvinyl
Butyral Solar Automotive,
Butyral
Consumer
Goods, Cosmetics
Adhesives, Film,
EVA/VAE
EVA/VAE Solar, Coatings

Source: Tecnon OrbiChem

KICHEM 2012
ACETIC ACID CONSUMPTION GROWTH
1,000 Metric Tons % Utilisation
15,000 100
AA Utilisation
90

80 All Others

70 PTA
10,000
60 Butyl/Other
Acetates
50
Ethyl Acetate
40
5,000 Anhydride
30

20 VAM

10

0 0
2009 2010 2011 2012 2013

Source: Tecnon OrbiChem

KICHEM 2012
GLOBAL VAM CAPACITY TO PRODUCE 2012
ME/Africa North America
5% 23%

West Europe
13%
China
32%

E Europe
2%

SE Asia NE Asia
3% 22%

Source: Tecnon OrbiChem Total = 7.346 Million Tons

KICHEM 2012
PTA CAPACITY TO PRODUCE 2012
N America S America
10% ~1% W Europe
7%
China
40%

PTA installed
capacity in NE Asia
23%
China to reach
36 million tpa
during 2013/14

SE Asia
E Europe ME/Africa 16%
~1% 3%

Source: Tecnon OrbiChem Total = 59.6 Million Metric Tons

KICHEM 2012
ETHYL ACETATE CAPACITY TO PRODUCE 2012

N America S America
4% 5% W Europe
8%
NE Asia
6%
China Etac plants
operating close to SE Asia
50% rates in 2012 13%

ME/Africa
1%
E Europe
China 3%
60%

Source: Tecnon OrbiChem Total = 4.2 Million Metric Tons

KICHEM 2012
ACETIC ANHYDRIDE CAPACITY TO PRODUCE 2012
NE Asia
9%
South/SE Asia N America
5% 37%

ME & Africa
2% Majority of Acetic
Anhydride output
E Europe
1%
used for production
of acetate flake/tow

W Europe
13%

China
33%
Source: Tecnon OrbiChem Total = 3 Million Metric Tons
KICHEM 2012
PRESENTATION OUTLINE

• Current Acetic Acid Market Conditions

• Major Downstream Markets

• Summary and Conclusions

Source: Tecnon OrbiChem

KICHEM 2012
SUMMARY AND CONCLUSIONS

• Growth in downstream derivative capacity has not kept pace with

acetic acid capacity growth, but expansion over the next 2-3 years
in VAM, PTA and acetate esters markets are expected to make
headway into lessening the oversupply of acetic acid.
• Acetic acid utilisation rates globally are forecast to remain between
70%-75% during the period of 2012-2018 based on current
capacity figures. Improved business conditions and further
rationalisation will impact operating rates moving forward.
• Acetic acid prices remain more sensitive to regional supply/demand
problems rather than changes in feedstock prices, but not immune.
Feedstock volatility is a constant threat throughout the value chain.
• US acetic acid producers currently enjoy low production costs
compared with other regions. Development of shale gas supplies
could help US producers maintain cost advantage over many years.

Source: Tecnon OrbiChem

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