CP 20190521143933

EMEA Chemicals Landscape 2019
21 May 2019, Tel Aviv
Copyright © 2019 by S&P Global.

All rights reserved.
Today’s Presenters
Andrew is a Senior Director at S&P Global Ratings and is currently the Analytical
G. Andrew Stillman
Manager for Chemicals, Materials & Construction portfolio.
Senior Director, Analytical Manager
Andrew.Stillman@spglobal.com Since joining the London based corporate ratings group in 2009, Andrew has
been involved in a range of industries including 6 years as the global sector co-
S&P Global Ratings, London ordinator for business service companies. He also previously covered companies
in the transportation and mining and oil & gas sectors.
Paulina Grabowiec Since joining S&P Global Ratings over 13 years ago, Paulina progressed through
Director, Lead Analyst various roles in the Commodities team responsible for issuers in chemicals and
Paulina.Grabowiec@spglobal.com metals & mining industries.
Paulina is responsible for Chemicals and Building Materials issuers in EMEA,
S&P Global Ratings, London covering several high-profile names including K+S, Yara International, Sika AG,
LafargeHolcim and Israel Chemicals Ltd.
Hetain is a Lead analyst for petrochemicals for S&P Global Platts Analytics. He is
Hetain Mistry
responsible for the global short and long term market analysis and polyolefin and
Lead Analyst, Petrochemicals
aromatics publications.
Hetain.Mistry@spglobal.com
Hetain has close to 15 years’ experience within the oil, NGL and petrochemical
S&P Global Platts Analytics, London consulting and analytics industry in London and in Singapore, working on various
market studies across refinery and petrochemical value chains for all regions.
2
Agenda
• EMEA Chemicals Ratings Landscape Paulina Grabowiec
• Outlook On The Fertilizer Industry Paulina Grabowiec
• Global Polyolefin Outlook Hetain Mistry
• ESG in Credit Ratings G. Andrew Stillman
• Q&A
3
EMEA Chemicals Ratings Landscape
4
Global Chemicals: Trends And Outlook
Developing, Net Outlook
WatchPos, 1% Bias (%)0
2% Negative,
WatchNeg, 8% Apr-19
1% -5
Positive, 4%
-10
-15
-20
Stable, 85%
-25
Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Ratings outlooks data as of May 1, 2019.
• The chemical sector's rating outlook swung into neutral territory briefly in 2018 and in the first part of 2019, after years
of negative bias.
• Prices for especially volatile commodity chemicals, including titanium dioxide, and fertilizers were stable to improving in
2018. Some commodity chemicals prices have benefitted from the closure of capacity in China as part of the
government's focus on environmental issues.
• Agricultural markets in general in 2018 have been in better shape relative to 2017, especially in Latin America. However,
in the second half of 2018, the outlook bias turned negative again, albeit only slightly.
• As of 1 May 2019, negative outlooks slightly outnumbered positive outlooks.
5
EMEA Chemicals: Trends And Outlook
Negative trend Positive trend Stable

Upgrades Downgrades
6%
6% 4
9%
17%4% 3 3
4% 2 2
79% 2
87% 1 1 1 1 1 1
87%
Dec 2017
Dec 2018 0 0
0
Apr 2019
Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019
• The rating outlook in EMEA is largely stable as of April 2019 (87%) and compares well with 85% globally.
• We took a number of rating actions over 2018 and YTD April 30th 2019, with 6 issuers upgraded and 5 downgraded.
• Upgrades (Perstorp, Arkema, Lanxess, Specialty Chemicals International, and Oxea) reflected stronger performance and
consistent deleveraging, while downgrades (Linde, Acetow, Nitrogenmuvek, Akzo Nobel, Flint) followed weak operating
performance, but also financial policy and M&A events. We revised the outlook to stable from negative on Sika AG (on anticipated
deleveraging) and PhosAgro (on improving outlook for fertilizers and stronger cash flows).
• The outlook bias is balanced as of April 2019, with 3 negative and 3 positive outlooks.
Source: Standard & Poor’s Ratings Services. Based on 47 public credit ratings in Chemicals as of April 23, 2019.
6
EMEA Chemicals: Portfolio Evolution
10
BBB
BB+
BB-
A
BBB+
BBB-
CCC+
A+
A-
BB
B+
B-
December 2017 December 2018 April 2019
2%
17% 15%
20% A category
35%
BBB category
As of
As of April
December BB category
2019
2017 B category
30%
24% CCC category
17% 20%
• The share of credits rated in HY category (BB+ and below) increased from 39% in December 2017 to 55% as of April 2019.
• A number of highly-levered or private equity owned issuers made their debut on rated public debt markets in 2018.
• The portfolio is balanced between IG and HY credits.
Source: Standard & Poor’s Ratings Services. Based on approximately 50 public credit ratings in Chemicals as of April 23, 2019.
7
Key Rating Actions In EMEA Chemicals
2nd March 2018: ‘BBB-’ rated Syngenta’s rating was affirmed and removed from CreditWatch Negative. The
affirmation reflects our view of Syngenta having a strategic role in the modernization of China's agriculture, as
confirmed in ChemChina's press release on Jan. 8, 2018, and our expectation that, if needed, ChemChina--
and indirectly the government of China--would ensure timely and full payment of its debt obligations.
2nd October 2018: Rating lowered to 'BBB+' on disposal of specialty chemicals business; outlook stable.
Following the disposal of its specialty chemicals business to the private equity firm Carlyle and sovereign
wealth fund GIC Private Ltd., in our view Akzo's business has reduced in size and scope. We consider a ratio of
funds from operations (FFO) to debt of about 45%-60% as commensurate with the 'BBB+' rating.
12th October 2018: Downgraded To 'B-' On Weak Operating Performance. The downgrade reflects
Nitrogenmuvek's weak operating performance so far this year, leading us to significantly revise our forecasts.
We now expect S&P adjusted debt to EBITDA of above 10.0x and FFO to debt of less than 5% in 2018,
recovering to about 6.5x-7.0x and about 10%, respectively, in 2019. This is in contrast with our previous
expectations of adjusted debt to EBITDA below 6.0x and FFO to debt of about 12%, in both 2018 and 2019.
16th November 2018: Long-term issuer credit rating raised to 'BBB+' from 'BBB'. The outlook is stable. France-
based Arkema S.A. continues to post strong results despite the inflationary raw materials price environment.
We now forecast adjusted funds from operations to debt to materially exceed 45% on a sustainable basis,
thereby reducing the risk of acquisitions putting pressure on the ratings.
29th January 2019: Long-term issuer credit rating downgraded to 'A' on parent's financial policy; outlook is
stable. We believe that Linde AG's current rating level is no longer supported by the group's financial policy,
and that its credit metrics could weaken to ranges in line with our 'A' rating over time. We forecast its S&P
adjusted funds from operations to debt at the higher end of the 35%-40% range in 2019-2020.
8
Chemicals Key Risks And Opportunities 2019
Disruptions to global trade: An escalated and protracted tariff war between the largest chemicals
consumer in the world, China, and an increasingly important chemicals producer and exporter, the U.S.,
could hurt global chemicals prices, and potentially, demand from key end markets such as autos and
general industrial. We do not factor this risk into our base-case scenario because of the uncertainty
related to the still-evolving tariff situation between the two countries.
A sharp downturn in the global economy in 2019: Nearly a decade of demand growth, low interest rates,
and generally friendly capital markets have created a climate that has spurred M&A, shareholder-friendly
policies, and capacity growth. A sharp downturn in 2019 would provide companies with little time to
adjust to a more challenging environment and could weaken their credit quality, especially at lower-rated
speculative-grade companies, where cushions for such shocks are generally lower than at higher-rated
investment-grade companies.
Capacity reductions in some commodity chemicals in China. Several regional, and in some cases, global
markets for commodity chemicals have benefitted from a shutdown of capacity in China in 2017 and
2018, a contributory factor to either stability or improvements in the prices of products including urea,
titanium dioxide, propylene oxide, and methyl tert-butyl ether. The shutdown relates to growing
environmental concerns in China.
9
Chemical Credit Outlook – Stable, But Risks Lurking
EBITDA broadly stable on unchanged supply-demand balance in most

SPECIALTY products, cost-efficiencies, and demand at least in line with global GDP
CHEMICALS with pockets of relative strength especially if linked to stable end-
markets.
Margins could come under pressure due to major ethylene and PE

COMMODITY capacity additions resulting in overcapacity and lower prices. Similar story
CHEMICALS for propylene, with new on-purpose capacity leading to lower prices and
mid-cycle conditions.
Falling inventories and slowly improving grain prices, albeit from a low
AGROCHEMS level, should provide support to farm economics and demand for
fertilizers.
Industry emerging from bottom of the cycle conditions, but delays to

FERTILIZERS planting season, regulatory environment, trade tensions, weak currency,
still weak farmer economics, gains in fertilizer use efficiency, and capacity
additions pose a risk to the strength of price recovery.
Trend #1: Leverage Could Improve, But…
Forecast Forecast
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
• Globally, we expect that stable EBITDA margins and modestly declining rates of revenue growth
will contribute to a very gradual improvement in debt leverage metrics for chemicals companies in
2019 and beyond.
• Debt to EBITDA will strengthen in 2019 from a global perspective, but this primarily reflects a
strengthening in North America and Europe. This is partly because we do not generally forecast
large or transformative M&A due to the unpredictability of such transactions.
• We expect that debt to EBITDA for Asia-Pacific will increase in 2019 versus 2018, partly reflecting
high levels of capital spending in this region.
11
Trend #2: Growth Strategy And Financial Policy Are Key
2007 2009 2011 2013 2015 2017
• We assume that chemicals companies will adjust key elements of their financial policies such as
dividends and shareholder rewards to economic conditions. This is relevant because 2018 saw record-
high dividend payouts and operating cash flow in the global chemicals sector.
• This cash flow, favorable operating conditions, and a decline in M&A spending offset the credit risk
related to the dividend payout increase.
• We would view a similar amount of dividend payouts in a more challenging operating environment as a
reflection of a more aggressive financial policy than we currently factor in our ratings, and therefore as
a credit risk.
• We do not assume record-high dividend payouts for the sector in 2019 if M&A picks up or operating
cash flow weakens.
12
Trend #3: Growth By Selective Bolt-On M&A To Continue
€, bn
100 25% 25 5%
80 20% 20 4%
60 15% 15 3%
40 10% 10 2%
20 5% 5 3 1%
4.2
0 0% 0 0%
2006 2008 2010 2012 2014 2016 2018 2006 2008 2010 2012 2014 2016 2018
Chem sector M&A deals - EU31 (lhs) EU Chem M&A deal count (lhs)
EU31 Chem Sector Deals - % of Total EU31 M&A volumes (rhs) EU Chem sector deal count - % of Total EU M&A deal count (rhs)
• 3 deals involving a European target to April 30, 2019, as issuers

had already been very active in 2016 and 2018.
25%
RoW 46%
• European chemical assets remain principally the target of 25% 67% 67%
North American buyers. North America
31%
APAC
• We assume that targeted bolt-ons will continue to support 50%
33% 33%
growth and diversification. Europe
23%
2016 2017 2018 2019 YTD

Source: Capital IQ, with YTD as of April 30, 2019. European target include transactions announced
with an EV above USD100 million.
13
Moderate Headroom For Many Issuers, With Few Exceptions
FFO-to-Debt 2019 (S&P Projections)
Minimal 60% Modest 45% Intermediate 30% Significant 20% Aggressive 12%
Akzo Nobel
L’Air Liquide
Arkema
BASF
Clariant
DSM
Evonik
SIKA
Lanxess
Linde
Solvay
Syngenta
Debt-to-EBITDA 2019 (S&P Projections)

0.0x 1.5x 2.0x 3.0x 4.0x 5.0x
INEOS Group
Israel Chemicals
S&P forecast (2019) S&P guidance for current rating level (minimum ratio that needs to be maintained)
14
Outlook On The Fertilizer Industry
15
Commodity Prices & Futures
130%
120% • Falling inventories and gradually improving grain

110% prices, albeit from a low level, should provide
100% support to farm economics and demand for
90% fertilizers.
80%
Corn Soya Bean Wheat
• Commodity prices to remain dependent on
70%
weather patterns, climate changes, availability of
60%
17-‫ינו‬ 17-‫יול‬ 18-‫ינו‬ 18-‫יול‬ 19-‫ינו‬ 19-‫יול‬ 20-‫ינו‬ 20-‫יול‬ 21-‫ינו‬ 21-‫יול‬
land and the efficiency of its use, inventory levels,
and growing population and demand for meat.
USD
1,200
1,000
800
600
400
200 Corn Soya Bean Wheat

0
17-‫מאי‬ 17-‫נוב‬ 18-‫מאי‬ 18-‫נוב‬ 19-‫מאי‬ 19-‫נוב‬ 20-‫מאי‬ 20-‫נוב‬
Source: Bloomberg; Chicago Board of Trade (CBOT). Grain prices indexed to Jan 2017.
16
Current Market Conditions: Cereal And Oilseeds
World Rice Thailand World Maize (Corn) FOB Gulf Mexico World Soybeans US Chicago
World Palm Oil Malaysia
World Wheat FOB Gulf Mexico
World Rapeseed Oil Crude FOB Rotterdam
USD USD
500 1000
400 800
300 600
200 400
100 200
0 0
• The estimated 2018 world cereal production is down by 1.8%, • Aggregate production of oilseeds grew by 3% in 2018, higher
largely on account of lower maize and wheat outputs, that soybean and sunflowers production more than offset
more than offset the increase in rice. decreases for peanut and rapeseed productions during the
year.
• Utilization, however, is estimated to increase by 1.1% from
2017 level. The bulk of this growth stems from rising food use • Soybean production recovered post a decline in 2017, growing
and strong demand in Asia. by 6.2% in 2018. US soybean stocks are estimated to be
historically high, pressuring prices. 25% tariff on soybeans
• This implies higher utilization of world cereal stocks during the exported from the US to China (in effect in July 2018) not
year. The estimated global cereal stock-to-use ratio is down helping.
from a relatively high level of 32.6% in 2017 to 30.7% in 2018.
• Global oilseeds stocks are up slightly on the back of higher
Source: Bloomberg. carryover from Brazil soybean stocks.
17
Outlook On Potash
USD/Mt
500
400
300
200
Potash China CFR Potash Brazil CFR Potash Cornbelt granular Potash US Gulf NOLA
Potash Vancouver granular Potash India CFR Potash Saskatchewan granular
100
16-‫ספט‬ 17-‫ספט‬ 18-‫ספט‬
• Risk of overcapacity in the market as Eurochem and K+S ramp up production. Key market players cautious of
supply / demand equilibrium choosing price over volume strategy, but risks remain given concentrated
market.
• 2019 potash demand growth forecast by IFA at 1.8% vs. supply of 4.7%.
• In December 2018, Urakali confirmed that it plans to divert potash sales away from China and India due to
low benchmark prices. The company signed only small volume contracts in China at US$290/tonne CFR
benchmark with no contract has been signed in India.
• Consumption of potash more cyclical in comparison with nitrogen or phosphate.
• Current prices at $290/tonne CFR (India), vs. $240/tonne the year before.
Source: Bloomberg.
18
Outlook On Phosphate
USD/Mt
600 700
500 600
500
400
400
300
300
200
DAP US Gulf NOLA DAP Cornbelt
200
MAP US Gulf NOLA MAP Brazil Bulk CFR
100 DAP Baltic DAP Benelux FCA 100
MAP Cornbelt MAP Eastern Canada
DAP Marroco
0 0
16-‫ספט‬ 17-‫ספט‬ 18-‫ספט‬ 16-‫ספט‬ 17-‫ספט‬ 18-‫ספט‬
• Capacity additions (Ma’aden, OCP) offset by closures (Plant city, Nutrien’s Redwater in Canada).
• Continued consumption growth in India, US, and Brazil will support prices, but limited recovery amid high
inventory levels, at least in the first half of 2019.
• Raw material prices to remain supportive due to capacity additions (ammonia, sulphur).
• Wild card: possible decline in exports from China due to environmental regulations (disposal of gypsum to
Yangtze River) could add to operating costs / capex of local producers and disrupt local supply.
• Current prices at $415/tonne (DAP Morocco), vs. $430/tonne the year before.
• 2019 phosphoric acid demand growth forecast by IFA at 1.7% vs. supply of 1.2%.
Source: Bloomberg. MAP = Monoammonium Phosphate (46% phosphate and 11% nitrogen); DAP = Diammonium Phosphate (46% phosphate and 18% nitrogen)
19
Outlook On Nitrogen
USD/Mt
600 500
500
400
400
300
300
200
200
Urea Cornbelt granular Urea China granular
Ammonia Tampa Ammonia US Gulf NOLA 100
100 Ammonia Black Sea Ammonia Cornbelt
Urea India granular Urea US Gulf prill
Urea Middle East prill Urea Black Sea prill
Ammonia Western Europe CFR
0 0
16-‫ספט‬ 17-‫פבר‬ 17-‫יול‬ 17-‫דצמ‬ 18-‫מאי‬ 18-‫אוק‬ 19-‫מרץ‬ 16-‫ספט‬ 17-‫מרץ‬ 17-‫ספט‬ 18-‫מרץ‬ 18-‫ספט‬ 19-‫מרץ‬
• Several capacity additions outpacing demand over the course of 2016-2018.

• Supply below 2%-3% consumption growth expectations from 2019 onwards. Additions in India, Iran
less certain, too.
• Environmental policies resulting in capacity reductions and lower exports from China clearly positive
for prices, but volumes and prices negatively affected by a delay to planting season in Q1 2019.
• In 2018, margins of European nitrogen producers under pressure due to higher gas prices more than
offsetting modest rebound in selling prices. So far in 2019, margin pressure easing thanks to excess LNG
supply. Structural disadvantage to remain.
• Current prices at $200/tonne (US Gulf Nola), vs. $232/tonne the year before.
• 2019 nitrogen demand growth forecast by IFA at 1.2% vs. supply of 1%.
Source: Bloomberg.
20
Global Polyolefin Outlook
21
Ethylene and Propylene
Ethylene and propylene will see a “cost push” due
to IMO 2020 related naphtha feedstock cost
pressures.
Global Ethylene Price $/mt Global Propylene Price
$/mt
1550 Forecasts 1400 Forecasts
1350
1200
1150
950 1000
750
800
550
350 600
2014 2016 2018 2020 2022 2024 2026 2028 2015 2017 2019 2021 2023 2025 2027 2029
US Asia Europe US Asia Europe
• Tighter gasoline due to refinery yield shift implies more reforming and a battle for aromatics (gasoline blending versus BTX petrochemicals)
• Higher naphtha prices implies steam cracker feed preference shift to max LPG/ethane which further reduces ethylene co product aromatics supply
• Lower severity FCC (max distillate mode) combined with lighter steam cracker feeds implies reduced refinery grade propylene (RGP) and increased
incentive for PDH propylene supply
• Higher freight rates will lower chemical & polymer export netbacks
Source: S&P Global Platts Analytics

23
There will be a cash cost increase in 2020 for
naphtha-based ethylene producers due to IMO,
with NGL-based regions seeing minimal
movement.
$2,000 $/mt Ethylene Production Cost Curves

$1,800
$1,600
$1,400 2014
$1,200
2018
$1,000
$800 2020
$600 Saudi
SE Asia
$400 Ethane NE Asia
Naphtha 2023
NWE Naphtha
$200 US Naphtha 2029
$0 Ethane
- 50 100 150 200 250
Cumulative Capacity (million mt/year)

24
Ethylene capacity additions focused in strong
demand centers as well as low cost feedstock
regions.
Global Marginal Ethylene Global Ethylene Capacity
Capacity Additions Including Additions by Feedstock
12 Million mt Speculative
10
8 13%
4%
Ethane
1%
6 Naphtha
6% 42%
Propane
4
Butane
2 Other
34% CTO/MTO
0
2016 2018 2020 2022 2024 2026 2028
Middle East Europe Asia Source: S&P Global Platts Analytics
Americas Africa
25
Global ethylene demand growth will be driven
by polyethylene and fiber grade MEG for PET
demand.
Ethylene Demand by Ethylene Demand by
Derivative - 2019 Derivative - 2029
2% 1%
5% 11% 5% 10%
7%
8%
11% 11%
63% 66%
PE MEG EDC PE MEG EDC

SM VAM Others SM VAM Others
26
Ethylene overcapacity in coming years leads to
lower prices and down cycle before a sustained
recovery starts from 2024.
Incremental Ethylene Capacity, Global Ethylene Price

Production and Demand $/mt Forecasts
10 Million mt Changes 1550
90% 1350
8
Period of Bearish
1150 Prices
6 89%
950
4
88% 750
2
The current US
550 disconnect to disappear
0 87% once export terminals
2015 2017 2019 2021 2023 2025 2027 2029 350 are built
Capacity Production 2014 2016 2018 2020 2022 2024 2026 2028
Demand Utilization rate (%) US Asia Europe
27
Regional spot ethylene margins. Asia & Europe
experience margin compression while US prices
reach export parity after 2023.
$/mt
$900
$800
$700
$600
$500
$400
$300
$200
$100
$-
US Ethane Asia Naphtha Euro Naphtha
28
The increase in lighter cracking has led to the
emergence of more on-purpose propylene
production in Asia and the Americas dominated
by PDH, CTO and MTO.
Global Propylene Production Propylene Capacity Led by
by Technology Million mt Asia
Million mt
180
160
160
140
140
120
120
100
100
80
80
60 60
40 40
20 20
- 0
2014 2017 2020 2023 2026 2029 2014 2017 2020 2023 2026 2029
Americas Middle East
Cracker FCC
Europe Asia
PDH OCU & Others
Africa
29
PDH operating rates to increase starting in 2H
2019 and 2020 utilizing cheaper propane. FCC
propylene supply will decrease during this period
as a result of IMO 2020 refinery yield shifts.
% Global PDH and FCC Capacity Additions By
Propylene Operating Rates
95% Million mt Technology
6
90%
5
85%
4
80% 3
75% 2
1
70%
2014 2016 2018 2020 2022 2024 2026 2028 -
2016 2018 2020 2022 2024 2026 2028
FCC Propylene Operating rates
PDH Operating Rates FCC PDH Cracker CTO MTO MTP
30
Global propylene demand growth driven by PP
and propylene oxide.
Propylene Demand by Propylene Demand by

Derivative - 2019 Derivative - 2029
5%
4% 5% 4%
3% 1% 3% 1%
7% 7%
7% 6%
68% 70%
4%
5%
PP Cumene ACN PP Cumene ACN

PO Acrylic Acid IPA PO Acrylic Acid IPA
2-EH Others 2-EH Others
31
Propylene market dynamics are tighter than ethylene but
new on-purpose capacity in coming years leads to lower
prices and mild down cycle before a sustained recovery
starts after 2023.
Incremental Propylene
Global Propylene Price
Capacity and Demand $/mt
1300 forecasts
Million mt Changes
7 90%
1200
6
5 1100
4 1000
85%
3
900
2
1 800
0 80%
2015 2017 2019 2021 2023 2025 2027 2029 700
Incremental Capacity Additions 600

2015 2017 2019 2021 2023 2025 2027 2029
YoY Demand Growth
Operating Rate (%) US Asia Europe

32
Polyethylene and Polypropylene
Global virgin polyethylene demand growth
remains above GDP driven by strong Asian
petrochemical demand.
Global Polyethylene Demand Asia Ethylene Demand by
Growth vs GDP Growth Derivative
Million mt
% 100
6.0% 90
80
5.0%
70
4.0% 60
3.0% 50
40
2.0%
30
1.0% 20
0.0% 10
-
2014 2017 2020 2023 2026 2029
Global GDP Growth
PE MEG EDC SM VAM Other
Global Virgin PE Demand Growth
34
PE demand in Asian economies continues to grow faster
than GDP growth as they strive to reach ‘Western’ per
capita demand levels along with increasing levels of
urbanization.
Polyethylene Demand Per Capita (2018 – 2029)
10
9
Projected % CAGR (2018-2029)
8
7
6
5
4
3
2
1
0
0 5 10 15 20 25 30 35 40 45 50
Polyethylene consumption (2018), kg per capita
China Europe South America India Asia (Excluding China and India) USA

35
Polyethylene overcapacity will lead to lower utilization and
down cycle through 2023, with a recovery post 2024.
Investment will be needed from 2024 to keep operating
rates within historical norms.
Global PE Incremental Capacity and Demand Growth
9 Million mt 92%
8 90%
7 88%
6
86%
5
84%
4
82%
3
2 80%
1 78%
0 76%
2014 2016 2018 2020 2022 2024 2026 2028
Incremental Capacity Additions YoY Demand Growth
Utilization Rate (with spec cap) Utilization Rate (w/o spec cap)
36
Overall, Middle East and the US will be key
polyethylene exporters.
Regional PE Net Trade • Shale based ethane expansions
Million mt in the US will result in its
40 emergence as a hub of HDPE
and LLDPE exports alongside the
30 Middle East
20 • Asia, in particular China will

continue to grow as the main
10 importing region due to strong
demand growth, despite capacity
0 additions
-10 • The Middle East will continue to
dominate exports to Asia, Africa
-20 and Europe
-30 • However, the US will have to
-40 compete with the Middle East for
exports into Asia and Europe
2013 2015 2017 2019 2021 2023 2025 2027 2029
• Current uncertainty remains due
Africa Asia to China-US trade war and 25%
Middle East Eastern Europe import tariffs for HDPE & LLDPE
Western Europe Central and South America
North America
37
Regional spot HDPE integrated margins. All
regions experience margin compression into 2023
and Asia remains the high cost region.
$/mt
$1,200
$1,100
$1,000
$900
$800
$700
$600
$500
$400
$300
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
US Ethane Asia Naphtha Euro Naphtha
38
Global PP capacity not as overbuilt as PE allowing for
higher run rates and better margins. PP op rates to quickly
improve post 2023.
Global PP Outlook Global PP Incremental
Million mt Capacity and Demand Growth
120 91%
5 Million mt 91%
100 90%
4 90%
80
89%
3 89%
60
88%
40 2 88%
20 87% 1 87%
0 86% 0 86%
2013 2016 2019 2022 2025 2028 2014 2017 2020 2023 2026 2029
Production
Capacity Incremental Capacity Additions
Demand YoY Demand Growth
O/R (with spec cap)
Utilization Rate (%)

39
Global PP prices and margins to follow same cycle as
PE, showing improvements from 2023 onwards. PP
fundamentals are more constructive than PE but both
will experience volatility.
Global PP Price Forecasts Regional PDH integrated PP
$/mt $/mt margins
1,600
$1,000
1,500 Period of Bearish $900
Prices
1,400 $800
1,300 $700
1,200 $600
$500
1,100
$400
1,000
$300
900
2015 2017 2019 2021 2023 2025 2027 2029
US Asia Euro
Asia Europe US
• Regional PDH integrated polypropylene margins. Asia will
have increasing margins as new PP capacity is absorbed and
international propane prices remain depressed.
Source: S&P Global Platts Analytics 40
Asia will continue to dominate PP imports with North
America transitioning to a net exporter through the
outlook as the integrated PDH/PP projects are built out.
15 Million mt Regional PP Net Trade
10 • Asia to lead the way in terms
of import requirements
5 despite Chinese PDH/PP
capacity additions
0 • The Middle East will
maintain its position as the
-5 key global PP exporter
• Capacity additions in the

-10
USGC & Canada will see
North America emerge as a
-15 growing export region with
2013 2015 2017 2019 2021 2023 2025 2027 2029 PP flowing mainly South
America & Asia
Asia Middle East
Africa Eastern Europe
Western Europe Central and South America
41
Recycling Trends
Virgin PET bottle demand growth will continue
but a greater percentage of the total PET bottle
supply will become RPET.
Global PET Bottle Demand RPET Percent in PET Bottles
45 25%
40
35 20%
30
Millions mt
25 15%
20
15 10%
10
5 5%
-
2012 2015 2018 2021 2024 2027 0%
RPET Bottles 2012 2015 2018 2021 2024 2027
Virgin PET Bottle Demand
43
Our base case for increasing plastics recycling
from current level of 7% to 12% of demand
reduces feedstock usage by 650,000 bpd.
Global recycled PE, PP and PET Feedstock displaced from
recycling
50
700,000
45
40 600,000
35 500,000
Millions mt
30
400,000
BPD
25 PET
20 300,000 PP
15
10
200,000 PE
5 100,000
0
0
2019 2024 2029
2013
2015
2017
2019
2021
2023
2025
2027
2029
PE PP PET
 *assumes that PE is made from ethane and that PP is produced via propane
dehydrogenation
44
Recycled PE demand/supply will eat into Virgin
PE demand growth
Global Polyethylene Demand Growth vs GDP Growth
%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
-1.0%
Recycled % of Total Global PE Demand Growth
Global Virgin PE Demand Growth
Global GDP Growth

45
Key Takeaways
• IMO 2020 expected to increase naphtha prices which will pressure ethylene margins, reduce refinery propylene
supply
• New ethylene capacity will focus on ethane and naphtha feedstocks
• Global ethylene & PE margins will be under pressure as additional capacity comes on line over next few years
and ethylene demand will be driven by PE expansions
• Global propylene & PP margins will also decrease but not as much as ethylene & PE due to less oversupply.
Propylene demand driven by PP expansions
• Global virgin PE demand growth remains above GDP driven by strong Asian petrochemical demand led by
China and India
• Global PE overcapacity will lead to lower utilization and down cycle through 2023, with recovery post 2024
• The US will increase exports of HDPE & LLDPE both of which still have 25% Chinese import tariffs
• Global PP fundamentals are stronger than PE and therefore margins are more stable but will still be under
pressure over the next 3-4 years
• Asian integrated PDH to PP margins will improve as PDH/PP expansions are absorbed and propane remains
cheap
• Recent PP trade dominated by ME exports and Asian imports, other regions have been balanced
• North America to change from balanced to net long PP over next 5-10 years as new PDH/PP facilities start up
in the USGC and Canada
• PET is the most mature recycling market and has the best transparency. Polyethylene and polypropylene are
expected to follow recycled PET bottles market lead. Other plastics including PVC and polystyrene have their
unique recycling challenges.
• Platts Analytics forecasts virgin CAGR growth rates for major plastics to average 3.2% over the next decade
while recycling CAGR is expected to average 8.3%
• Platts Analytics forecast that the amount of recycled PE, PP and PET will double over the next decade and
displace 650,000 bpd of polymer feedstocks. Longer term, mixed plastics wastes to fuels technologies could
replace an additional 750,000 bpd of oil demand.
46
ESG In Credit Ratings
47
ESG & Credit - Look Back Series
48
ESG Factors In Our Rating Methodology
Credit FAQ: How Does S&P Global Ratings Incorporate

Environmental, Social, And Governance Risks Into Its
Ratings Analysis, Nov 21, 2017
49
ESG Factors In Our Rating Methodology
German Potash Producer K+S : In the first quarter of 2017, prolonged low water levels in the Werra river led
to a 25-day outage, but thanks to waste disposal measures implemented by the company, no further
production days were lost in the second quarter. We believe that the production limitations in Germany
should significantly reduce in the second half of 2017, but uncertainty remains as capacity utilization
continues to depend on the Werra River's water levels.
Switzerland-headquartered Sika: In 2018, Sika invested about CHF14.3 million on environmental protection,
health, and safety. This accounted for about 6% of the CHF239 million in total investment. Sika also reached
the objective of reducing its energy consumption by 3% per ton sold, which in 2018 amounted to 424
megajules (2017: 450 megajules). The reduction was achieved through a strategy to improve the energy
efficiency of production plants, which we view as positive because it translates into better profits for the
company.
Cellulose acetate tow producer Acetow: Our view on Acetow and the tow industry takes into account
environmental and social considerations in particular. We recognize the social impact and public health
concerns surrounding cigarette consumption and by extension the tow operating model, and we consider
that public policy making in order to limit the social cost of smoking population could have an adverse
impact on tow manufacturing and marketing over the long term. (…) Our analysis also focuses on the very
low biodegradability of standard acetate tow products, and concerns regarding induced pollution and
littering. A standard tow product could take as long as 12 years to degrade in the natural environment. We
believe, on the back of environmental policy making, this could result in more stringent regulations and the
need for the industry to develop more environment-friendly tow products, possibly with deviating cost-of-
manufacturing, and recycling capabilities or clean-up initiatives in which cigarette manufacturing players
could play a large role.
50
Transparency in Corporate Credit Reports
As with peers, Syngenta can be subject to lawsuits, personal injury complaints, and
changing views of crop protection products on human health and the environment.
We note that Syngenta is focused on mitigating the risks in relation to its products,
notably through extensive research on their safety, collaboration with the authorities
through provision of data on the impact on human health and the environment, and
internal audits and self-reporting processes to ensure compliance with strict and
extensive regulatory standards. The company also supports growers in understanding
the correct use and application of its products via clear labels and market
communication.
Still, in late 2017, Syngenta reached a $1.5 billion settlement in relation to

commercialization of Viptera and Duracade insecticides. Litigation payments of such
magnitude can have an important impact on the company's finances, reputation, and
ultimately the rating.
We view governance as a neutral factor for the ratings, reflecting management's long
standing experience and expertise in the industry, balanced by our view of certain
limitations with regard to transparency and timeliness of communications with
investors.
51
Questions?
Company Focus: Selected Issuers
53
Portfolio Credits Overview – EMEA Chemicals
0
• Israel Chemical (BBB-/Stable)
• Linde Plc (A/Stable/A-1)

Minimal 1
• BASF (A/Stable/A-1) Akzo Nobel
• Akzo Nobel (BBB+/Stable/A-2) Modest

2
• DSM (A-/Stable/A-2) Yara DSM
International, Linde Plc
• L’Air Liquide (A-/Stable/A-2) Intermediate
3
Lanxess
Financial Risk Profile

BASF, Evonik Industries
• Evonik Industries (BBB+/Stable/A-2)
Solvay,
Significant Syngenta
• Solvay S.A. (BBB/Stable/A-2) 4
Israel Chemical L’Air Liquide
Ineos Group Holding
• Yara International (BBB/Stable/A-2)
OCI
Aggressive 5
• LANXESS (BBB/Stable/A-2)
• Syngenta (BBB-/Stable/A-3) Oxea

Highly 6
• Ineos Group Holdings (BB/Stable) Leveraged
• OCI N.V. (BB-/Stable)

7
• Oxea (B+/Stable) 7 6 5 4 3 2 1 0
Vulnerable Weak Fair Satisfactory Strong Excellent
Business Risk Profile
54
Company Focus: Israel Chemical (BBB-/Stable)
Business Risk Key Strengths Key Risks
• One of the leading global potash producers and the largest • Cyclical and competitive nature of the fertilizer industry.
global bromine producer
Satisfactory • Exposure to regulatory changes and political pressure in
• Competitive advantage from mining in the Dead Sea, Israel pertaining to extending the Dead Sea mining
which provides access to unique, high-quality raw concession, which is valid until 2030.
Financial Risk materials; logistical advantages; proximity to ports; and a
more favorable cost position for potash and bromine than
peers.
Significant • A synergy between the manufacturing processes for

different specialty chemicals products that provide added
value.
Anchor
Stable Outlook
The stable outlook on Israel Chemicals Ltd. (ICL) reflects our expectation that ICL will maintain S&P Global Ratings-adjusted debt to
bbb- EBITDA of 3.0x-3.5x in the slowly recovering fertilizer pricing environment. Our expectation is based on the company's plan to
undertake midsize mergers and acquisitions (M&A) in the coming years and maintain its current dividend policy.
We anticipate that ICL will generate EBITDA of about $950 million-$1 billion in 2018, benefiting from a strong position in the
Outlook fertilizer markets and low production costs in Israel. We consider an adjusted debt-to-EBITDA ratio of 3.0x at the top of the
business cycle and 4.0x at the bottom of the cycle to be commensurate with the current rating. We also expect the company to
generate positive free cash flows over time.
Stable
Downside scenario
We would consider a negative rating action if the company's debt to EBITDA was close to 4.0x without near-term prospects of
recovery, and its operating performance deteriorated, contrary to our expectations. In our view, this scenario is possible if ICL
implements aggressive business or financial policies, whether by significantly deviating from its publicly stated dividend policy or
through sizable leveraged acquisitions. Further deterioration in market conditions that may hurt operating results could also lead
to a downgrade. In the medium term, the rating could come under pressure if uncertainty regarding the renewal of the Dead Sea
concession continues. In this scenario, we expect pressure on the company's business risk profile, which currently benefits from its
inherent advantages in the Dead Sea.
Upside scenario
We would consider a positive rating action if ICL strengthened its financial risk profile such that its adjusted debt to EBITDA
dropped below 2.5x on a sustainable basis.
55
Company Focus: Linde Plc (A/Stable/A-1)
• One of the largest global manufacturers in the credit- • Potential volatility in earnings driven by demand swings in its
Excellent supportive industrial gases industry. cylinder and bulk businesses.
• Strong geographic diversity, with significant exposure to • High capital expenditures (capex), potentially weighing on
Financial Risk high-growth markets. free cash flows.
• High and stable profit generation.

Intermediate
• Track record of strong credit metrics and conservative
Anchor financial policy, targeting less than 2.5x reported net debt
to EBITDA.
a+
Stable Outlook
Modifier The stable outlook reflects our view of the combined entity's resilient business and its commitment to balance growth investments
and shareholder returns with credit metrics commensurate with our 'A' rating, including FFO to debt of at least 30% on average.
We note the combined entity's increased profitability and estimate substantial FOCF generation of $3.0 billion-$3.5 billion per
Financial policy : year. This results in meaningful headroom under the rating in 2019-2020 given our forecast of adjusted FFO to debt at the higher
Negative (-1 notch) end of the 35%-40% range.
Outlook Downside scenario

We could lower the rating if the group adopts a more aggressive or more shareholder-friendly financial policy, leading to increased
leverage. Specifically, we would consider a downgrade if adjusted FFO to debt falls below 30% without prospects of a rebound, or
Stable the company's announcement to allow this to occur.
Upside scenario
A positive rating action is unlikely at this stage, given the current financial policy and management's commitment to an 'A' rating.
However, we could consider an upgrade if adjusted FFO to debt remained sustainably above 35% and management committed to
maintaining it at this level.
56
Company Focus: BASF (A/Stable/A-1)
• The world's leading integrated chemicals producer, with an • Cyclicality of the chemicals industry, notably of the
Strong expanding presence in Asia and North America. commodity chemicals segments, with its significant exposure
to the automotive sector
• "Verbund" integrated strategy that offers cost savings
Financial Risk through logistics, energy, and infrastructure advantages. • High post-retirement obligations.
• Diversification benefits of producing commodity and • Historically high shareholder payouts, which have reduced
Intermediate specialty chemicals, complemented by a significant share financial flexibility.
of agrochemicals.
Anchor
• Solid profitability and high free cash flow generation.
a- • Moderate financial debt.
Modifier Stable Outlook

The stable outlook reflects our view of BASF's diversity and resilience. Its business comprises a substantial share of less volatile
specialty chemicals, which should enable it to maintain FFO to debt around 35% over the next couple of years, balancing its
CRA: Positive exposure to more cyclical end-markets such as the automotive sector. We believe that the company's leeway for bolt-on
(+1 Notch) acquisitions at the current rating level is reduced though following the recent series of acquisitions and due to potential slower
GDP growth in North America and Europe, increased environmental concerns and softening demand in key end markets such as
Outlook the automotive industry.
Downside scenario
Stable We could downgrade BASF if it made a significant debt-financed acquisition, or there was a major global slowdown leading to
materially lower demand across the chemical industry. In particular, we would lower the rating if FFO to debt declined below 35%
on a prolonged basis.
Upside scenario
We could raise the rating if the company improves its adjusted FFO-to-debt ratio sustainably above 45% as a result of stronger
EBITDA generation and better free operating cash flow (FOCF). This would likely hinge on a much stronger global macroeconomic
environment than we currently expect and an improved supply-demand balance in commodity chemicals.
57
Company Focus: Akzo Nobel (BBB+/Stable/A-2)
• A leading global producer of decorative paints and • Lower profitability than main competitors and reduced size
Satisfactory coatings. and scope following the sale of the higher-margin specialty
• Strong brand recognition and solid long-lasting chemicals business.
relationships with clients. • Demand for key products mirrors GDP trends, partly offset by
Financial Risk • Sizable, well-diversified operations by country and market exposure to the renovation market in the decorative paints
including in higher-growth emerging and Asian markets. segment.
• Healthy balance sheet, strong liquidity, and ample rating • Potential for margin squeeze from raw materials costs and
Minimal headroom. pricing constraints from end markets.
• Track record of prudent risk management and low • Top and bottom line results exposed to foreign exchange
leverage, given no adjusted debt at present. volatility, especially in high-inflation regions.
Anchor
Stable Outlook
a The stable outlook reflects our view that Akzo's focus on operating efficiencies and cost pass-through will support the growth in its
adjusted EBITDA to about €1.3 billion-€1.4 billion in 2019, up from about €1.2 billion in 2018. We consider a ratio of funds from
Modifier operations (FFO) to debt of about 45%-60% as commensurate with the 'BBB+' rating.
Downside scenario
Financial Policy: We see a downgrade as unlikely, reflecting generous headroom in the rating. However, we could lower the rating if Akzo's growth
strategy results in sizable, debt-financed acquisitions, even though we would weigh such a transaction against the corresponding
Negative (-2 Notch) benefits to the business.
Higher-than-anticipated dividends, share buybacks, or a marked deterioration in the operating performance resulting in a
Outlook sustained FFO to debt ratio below 45% could also lead to a negative rating action.
Stable Upside scenario

We could raise the rating on Akzo if its financial policy supported a higher rating, notably through the commitment to prudent
outlays for acquisitions and shareholder remunerations, and adherence to an adjusted FFO-to-debt ratio of at least 60%. A revision
of our assessment of Akzo's business, for example if it were to clearly and sustainably narrow the profitability gap with peers, could
also lead to a positive rating action.
58
Company Focus: DSM (A-/Stable/A-2)
• Leading market positions in a wide range of nutritional • Potentially material fluctuations in EBITDA generated by its
products including vitamins, carotenoids, lipids, and feed polyamide-based engineering plastics and high-
Strong enzymes. performance resins business.
• Broad product, end-market, and geographic diversity. • Competition from Chinese producers of vitamins (notably
Financial Risk vitamins E and C).
• Robust R&D and technological capabilities.
• Sizable cash outlays to cover shareholder remuneration and
Modest • Strong free operating cash flow generation . share buybacks.
• Exceptional liquidity and considerable headroom under • Lack of management’s commitment towards maintaining
the current rating. financial policy commensurate with a higher rating.
Anchor
Stable Outlook
A The stable outlook reflects our view that Dutch chemicals company Koninklijke DSM N.V. (DSM) will report resilient operating
performance in the coming years, benefiting from a focus on cost efficiencies, working capital management, and innovation.
We consider a ratio of S&P Global Ratings-adjusted funds from operations (FFO) to debt of about 35%-40% as commensurate
Modifier with the 'A-' rating and believe that the company has considerable rating headroom.
Downside scenario
Financial Policy: We see the likelihood of a downgrade as low, reflecting strong headroom in the rating. However, we could lower the rating if
DSM's FFO to debt declined below 35%, for example if DSM's nutrition segment margins weakened as a result of increased
Negative (-1 notch) competition, or if the benefits of the operational efficiency program were not sustainable. Similarly, a weaker financial policy
commitment, demonstrated, for example, by a combination of higher-than-anticipated acquisitions, dividends, or share
buybacks, could also prompt a negative rating action.
Upside scenario
Outlook We could raise the rating on DSM provided that we were confident that the company could sustain an adjusted FFO-to-debt
ratio of above 45%--a level that we view as commensurate with an 'A' rating. We would take this action if we were confident
that DSM would maintain an appropriate balance between potential acquisitions, dividends, and share buybacks, such that the
Stable FFO-to-debt ratio was maintained, and if management committed to higher credit metrics.
59
Company Focus: L’Air Liquide (A-/Stable/A-2)
• Leading global player in the industrial gases sector with • An acquisitive track record including continued bolt-ons and
supportive market fundamentals and favorable growth potential larger acquisitions translating into temporary
Excellent prospects. leverage increases.
• Superior resilience of activity and profitability, benefiting
• Fairly high capital expenditures, including for significant
from long-term contracts, off-take volumes, and energy
growth projects, notably in Asia and emerging markets
Financial Risk pass-through clauses.
• High profitability, with EBITDA margins of 25%-26%, and a • A shareholder-friendly, but very stable, dividend policy.
track record of achieving efficiency targets and realizing
Significant synergies. • Marginal variability in top-line growth linked to regional
macroeconomic changes, modest cyclicality of some markets,
• Prudent and disciplined financial policy, strongly and currency exposures.
committed to the 'A' category.
Anchor
Stable Outlook
a- The stable outlook on France-based industrial gas supplier L'Air Liquide S.A. reflects S&P Global Ratings‘ expectation that the
company will report overall resilient performance and strong free operating cash flow generation that should allow FFO to debt to
remain at about 25% in 2018 and exceed that level in 2019. This assumes Airgas synergies staying well on track, and sustained
activity supported by a high level of industrial production, despite marginal currency exposure. We also acknowledge
Outlook management's disciplined financial policy and commitment to maintain a rating level of at least 'A-'.
Downside scenario
We could raise the rating if market growth and operating margins stay resilient, such that FFO to debt approaches 30% on a
Stable sustainable basis, and management remains committed to balancing investments and shareholder returns to maintain that ratio
level.
Upside scenario
Although unlikely in the near term, given the current comfortable rating headroom, we could lower the rating if weaker operating
performance or further mergers and acquisitions kept the FFO-to-debt ratios significantly below 25% for a prolonged period.
60
Company Focus: Evonik Industries (BBB+/Stable/A-2)
• Stronger-than-peers' end-market diversification, with • Some concentration risk in the product portfolio that could
a high share of sales from the nutrition and health lead to more-volatile profit generation, notwithstanding
Strong care industry, as well as resource-efficient solutions. strategy to further increase the share of specialty chemical
• Average but resilient profitability overall, with products.
potential improvement over the medium term thanks • Cyclicality of chemical activities and exposure to
Financial Risk to cost saving initiatives. • volatile raw material prices.
• Our expectation of ongoing positive free cash flow • Significant postretirement obligations.
generation based on moderate capex and working
capital.
Intermediate • Supportive financial policy and management's
commitment to a solid investment-grade rating, most
recently demonstrated by issuance of a hybrid to
Anchor support an acquisition.
• Strong liquidity.
bbb+ Stable Outlook

S&P Global Ratings' stable outlook on global specialty chemicals group Evonik Industries (Evonik) reflects our expectation that the
group will generate solid adjusted EBITDA of about €2.6 billion in 2018 and at least €2.6 billion-€2.7 billion in 2019. We also factor
Outlook in Evonik's financial policy commitment to a solid investment-grade rating and anticipate that dividends and acquisitions (if any)
will be financed prudently. We view a ratio of adjusted funds from operations (FFO) to debt of 30%-40% as commensurate with the
rating.
Stable Downside scenario

We could lower the ratings if we anticipated that S&P Global Ratings' adjusted FFO to debt would decline below 30% without near-
term prospects of recovery. This could be caused, in our view, by a significant drop in profits due to a weaker market environment,
or if Evonik pursued material debt-funded acquisitions.
Upside scenario
Upside rating potential could emerge over time, depending on Evonik's ongoing resilient performance thanks to a higher share of
specialty chemicals in the product portfolio, visible EBITDA contributions from acquisitions and expansion projects, and a financial
track record of adjusted FFO to debt in the 40%-45% range, including increased free cash flow after dividends. Financial policy
commitment to a higher rating would be important in any upgrade considerations.
61
Company Focus: Solvay S.A. (BBB/Stable/A-2)
• Top-tier market positions for products representing 90% of • Exposure to GDP swings and various cyclical end markets,
Solvay's revenue. such as construction and automobile.
Strong
• Favorable portfolio repositioning after strategic • Relatively high sensitivity of pension deficits to discount
acquisitions and the divestments of noncore businesses. rates.
Financial Risk
• Strong liquidity and a supportive debt amortization profile.
Significant
Anchor Stable Outlook

The stable outlook reflects our view that Solvay's funds from operations (FFO) to debt ratio will exceed 25% in 2019, the level we
view as commensurate with the current 'BBB' rating. We also forecast that Solvay will generate adjusted free operating cash flow
bbb (FOCF) of €400 million to €500 million in 2019 and factor in the sale of its integrated polyamides business for cash proceeds of €1.1
billion by year-end. We expect the company's FFO to debt will strengthen, reaching 30% in 2019 and more than 30% in 2020.

A deterioration of adjusted FFO to debt significantly below 25% without the prospect of an immediate recovery could put pressure
Stable on the rating.
Upside scenario
We could raise our rating on Solvay to 'BBB+' if its ratio of adjusted FFO to debt sustainably improves above 30%. The rating upside
would also depend on the company's financial policy and management's commitment to maintain this higher ratio.
62
Company Focus: Yara International (BBB/Stable/A-2)
• World's largest distributor of fertilizer by volume, with • Profits anchored in the highly cyclical nitrogen fertilizer
good geographic diversity. industry.
Satisfactory • Joint ventures in low-cost gas areas and large-scale • Exposure to volatile--and currently increasing--European gas
efficient production facilities. prices.
• Higher-margin specialty fertilizers that are a large • Cash flow swings reflecting cyclicality of the fertilizer
Financial Risk contributor to profits. industry.
• Capital intensity and long lead time to add or expand
capacity.
Intermediate
Stable Outlook
Anchor The stable outlook on Yara reflects our view that it will maintain adjusted FFO to debt of about 30%-45% through the cycle, which
we view as commensurate with the rating. This is based on our assumption that, in 2019, Yara's adjusted EBITDA will recover to
$2.1 billion-$2.2 billion, benefiting from its improvement program; additional volumes from capacity expansions and acquisitions;
bbb and recovery in prices of fertilizers from the bottom of the cycle conditions seen in 2016-2017.
Downside scenario
We could lower the rating if Yara's adjusted FFO-to-debt ratio declined below 30%. This could occur, in our view, if Yara's margins
Outlook declined as a result of further pressure from the European natural gas prices, or if the company increased its capital expenditure
(capex), acquisitions, or shareholder distributions.
Stable Upside scenario

Over time, upside potential could emerge and would depend on our confidence that Yara was able to sustain adjusted FFO to debt
of more than 45% through the cycle, and that the company's financial policy and growth strategy would support a higher rating.
63
Company Focus: LANXESS (BBB/Stable/A-2)
• Portfolio realignment (including exiting commodity • Debt-funded acquisitions related to the business-portfolio
chemicals) expected to result in higher, less volatile realignment strategy.
Satisfactory margins. • Operating margins are improving, but still lag investment-
• Solid market position among the top three players in niche grade specialty chemical peers' 17% average.
and midsize specialty chemicals business. • Exposure to some cyclical end markets and volatile raw
Financial Risk • Well-diversified exposure by geography and end markets, material prices.
with six key end markets accounting for 75% of revenues.
• Improving leverage metrics in 2018-2019 following
disposal of the 50% stake in ARLANXEO for €1.4 billion.
Intermediate • Public commitment to maintaining a solid investment-
grade rating.

The stable outlook reflects our expectation that, following the disposal of ARLANXEO, LANXESS will keep its FFO-to-debt ratio
comfortably above 30%, which we consider commensurate with a 'BBB' rating.
bbb In our base-case scenario for the rating, we assume that FFO to debt will be around 40% in 2018 and above 45% in 2019, indicating
some headroom to absorb moderate business underperformance, higher capex, or small debt-financed acquisitions. We also
expect the adjusted EBITDA margin will improve by up to 200 basis points (bps) in 2018 and 2019 to about 15%, thanks to the
integration of Chemtura and related synergies, as well as various debottlenecking and manufacturing efficiency projects. At the
Outlook same time, we forecast free operating cash flow (FOCF) to debt slightly below 10% in 2018, and at about 15% in 2019-2020.
Downside scenario
We might lower the rating if the ratio of FFO to debt fell below 30% without short-term prospects of a quick recovery. In our view,
Stable this may happen if LANXESS pursued a large debt-financed acquisition in excess of €1 billion, which we see as the main risk to the
rating. However, we believe that, in such a scenario, the group would likely manage to protect its credit metrics in light of its
commitment to maintain a solid investment-grade rating. Prolonged operating pressure associated with a significant reduction of
our adjusted EBITDA margin to below 13%, or inability to dispose of ARLANXEO, could also lead to a downgrade.
Upside scenario
We could consider an upgrade if LANXESS improved its credit metrics, specifically with FFO to debt comfortably exceeding 45% and
FOCF to debt above 25% on a sustained basis. However, we view such a scenario as unlikely, since we believe that the company
would most likely use any financial flexibility it gained to increase capex, acquisitions, or shareholder returns.
64
Company Focus: Syngenta (BBB-/Stable/A-3)
• Leading producer of crop protection products and No. 3 in the • High seasonality of working capital requirements due to
high-value commercial seeds market. geographic sales mix and tied to purchases timed for
Strong • Significant barriers to entry from material research and growing seasons.
development (R&D) investments, resulting in resilient • Dependence on agricultural commodity products' cyclical
profitability given the high-value-added nature of the sector. price patterns, farmers' incomes, and weather.
Financial Risk • Important growth opportunities in China following Syngenta's • Need for considerable R&D spending totaling 9%-10% of
acquisition by ChemChina. sales.
• Financial policy commitment from both ChemChina and • High litigation risk.
Syngenta to maintain an investment-grade rating.
Significant
Stable Outlook
Anchor
The stable outlook reflects S&P Global Ratings' forecast that Syngenta will demonstrate a resilient operating performance, with
adjusted EBITDA of about $2.5 billion in 2019 and $2.5 billion-$2.6 billion in 2020. Our outlook also factors in ChemChina's
commitment, as Syngenta's 100% shareholder, to maintaining credit metrics in line with an investment-grade rating, and ensuring
bbb timely payment of Syngenta's debt obligations if necessary.
Downside scenario
We could take a negative rating action on Syngenta if its adjusted funds from operations (FFO) to debt at declined to below 12%
Modifier without near-term prospects of recovery. This could be caused by higher-than-currently-assumed dividends, or significant debt-
financed acquisitions, which in turn would cause us to reconsider Syngenta's importance for ChemChina and its commitment to
maintaining the investment-grade rating on Syngenta. Pressure on liquidity could also cause us to revise downward Syngenta's
CRA (-1notch) stand-alone credit profile (SACP). Based on our view of Syngenta's strategically important status within ChemChina's group and
corresponding three-notch uplift, we could revise downward Syngenta's SACP to 'bb-' before it would affect the long-term issuer
credit rating on the company. Conversely, a one-notch downgrade of ChemChina to 'BBB-' would not affect the rating on Syngenta
because, in such scenario, we do not anticipate ChemChina would negatively influence Syngenta by requesting higher dividends,
Outlook for example.
Upside scenario
Stable The current rating is constrained by our base-case forecast of Syngenta's FFO-to-debt ratio remaining at about 20%-22%, on
average, in 2019-2020. It is further constrained by our assessment of ChemChina's credit quality, notwithstanding the corporate
governance structure--in which four of the 10 board members serve as independent directors--and ChemChina's strong
commitment to maintaining credit metrics in line with our investment-grade ratings on Syngenta at all times.
65
Company Focus: Ineos Group Holdings (BB/Stable)
• Strong market position as the second-largest producer of • Possible lower EBITDA in 2019 and 2020 due to a
high-density polyethylene and third-largest producer of deterioration from the cyclical industry peak, new capacity
Satisfactory linear low-density polyethylene in Europe. hitting the market in 2019, and increasing risks to global
economy growth.
• Geographic diversity with a presence in the U.S., and
Financial Risk access to advantaged feedstock for its U.S. operations and • Volatile earnings and cash flows, reflecting the cyclicality of
part of its European operations. the commodity chemical industry.
• Strong liquidity, with a comfortable debt maturity profile. • Complexity and contingent risks related to group structure
Significant and entrepreneurial ownership.
• Continued deleveraging, thanks to voluntary debt
repayments and strong operating performance, on the
Anchor back of top-of-the cycle conditions and structural
improvements.
Stable Outlook
bb+
The stable outlook reflects S&P Global Ratings' view that Ineos Group Holding S.A. will report continued resilient EBITDA in 2019-
2020 of about €2.0 billion-€2.3 billion. This is despite our view that industry conditions could deteriorate over the same period.
Outlook In our base case for 2019, we assume gradually decreasing oil prices to flatten the global cost curve, and that significant capacity
additions in North America to come on stream. We forecast Ineos will generate meaningful positive FOCF of about €400 million-
€600 million, even under mid-cycle conditions in 2019-2020, and we view positively management's commitment to balance capital
Stable expenditures (capex) and mergers and acquisitions (M&A) to preserve a ratio of adjusted debt to EBITDA below 3x over the
industry cycle, which we regard as commensurate with the 'BB' rating.
Downside scenario
Rating pressure could arise if Ineos' adjusted debt to EBITDA materially exceeded 3.0x in mid-cycle conditions. This would, for
instance, correspond to EBITDA declining to below €2 billion or a material change in the group's financial policy--for example if
Ineos were to engage in large-scale, debt-financed M&A or pay sizable dividends.
Upside scenario
Rating upside would depend on adjusted debt-to-EBITDA ratios staying at or below 2.0x over the cycle, with sufficient visibility on
financial policy, capex, and M&A plans of the wider Ineos Group.
66
Company Focus: OCI N.V. (BB-/Stable)
• Favorable position on the global cost curve as a key • Vulnerability to cyclical sectors with high price volatility.
strength.
Fair • Relatively modest size with some concentration in geography
• Transforming capacity expansion plan nearing completion, and manufacturing footprint.
leading to a young and state-of-the-art asset base.
Financial Risk
• Strong positions in fragmented markets.
• Anticipated strong free operating cash flow (FOCF)

Aggressive generation.
Stable Outlook
Anchor The stable outlook reflects our view that OCI will show a substantial strengthening in operating performance and a steep
deleveraging in 2018. We anticipate that this will follow the ramp-up of volumes and higher capacity utilization across new and
existing assets in the recovering market environment for both fertilizers and methanol, along with the large cash dividend
bb- anticipated from Natgasoline. The completion of large capital expenditure (capex) programs will lead to materially reduced capex
and continuous strong free cash flow generation, which we expect OCI will use for deleveraging. The stable outlook also factors in
our expectation that the company's funds from operations (FFO)-to-debt ratio will approach 20% in 2018 and exceed 20% in 2019.

We could lower the rating if the improvement in operating performance and the subsequent deleveraging were below our
expectations, such that adjusted FFO to debt remained below 20%. This could follow weaker-than-expected market conditions,
Stable slower ramp-up of production volumes, and lower plant efficiency because of unexpected operational issues. In addition, negative
free cash flow, insufficient headroom under financial covenants, or a less supportive financial policy than we expected would also
result in downward pressure on the rating.
Upside scenario
We could raise the rating if the expected improvement in operating performance, driven by successful completion of current
expansion projects and volume ramp-up, were to materialize in the next 12-18 months, such that the adjusted FFO to debt was
consistently and sustainably above 20%. In such a case, the company would also demonstrate sustained generation of significant
free cash flow over a cycle, and a financial policy in line with a higher rating.
67
Company Focus: Oxea (B+/Stable)
• Leading position as a European and U.S. producer of oxo • Exposure to Europe where plants are less competitive
intermediate and derivative chemicals
Fair • Overall medium size of operations
• long-term supply contracts and an efficient pass-through
mechanism that mitigates some of the innate volatility • Supplier concentration for some of its key raw materials
Financial Risk seen in the propylene spot price markets
• OXEA’s status as a moderately strategic operating

subsidiary and strategic investment of the state-owned
Highly Leveraged Oman Oil Company (OOC)

The stable outlook reflects our expectation that OXEA's adjusted EBITDA in 2017 will amount to approximately €210 million-€220
b million, and that it will be sustained at about €200 million-€210 million in 2018, notwithstanding the planned outage at
Oberhausen and increasing propylene prices. We forecast adjusted debt to EBITDA below 5.0x at year-end 2017, and between
4.8x-5.0x in 2018, in line with the 5x-6x range we view as commensurate with the rating.
GRM Downside scenario

We could lower the rating if OXEA is unable to continue the momentum seen in 2017, and adjusted debt-to-EBITDA were to
weaken back toward 6x. In our view, this could happen if the company faced difficulty in passing through higher feedstock prices
Moderately strategic (notably of propylene) to customers, if the propanol project incurred delays or additional costs, or if OXEA faced renewed
competitive pressure--as occurred in 2016 in its intermediates business. Further pressure could arise if OXEA's liquidity
(+1 notch from deteriorated, if it were unable to generate positive FOCF, or if there were to be a change in our assessment of the likelihood of
SACP) extraordinary support provided by OXEA's parent, OOC.
Outlook Upside scenario

We do not expect to raise the ratings over the next 12-18 months given our assumption of relatively limited EBITDA upside in
2018. An upgrade could materialize over time, however, if we see adjusted debt to EBITDA sustainably and clearly below 5x and
adjusted FFO to debt comfortably in excess of 12%, combined with a commitment from management and the shareholder to
Stable maintain such leverage.
68
Appendix 1:
S&P Global Ratings
Chemical Portfolio
EMEA Chemicals Team
G. Andrew Stillman
Senior Director and Analytical Manager
Andrew.Stillman@spglobal.com
London
Paulina Grabowiec • Israel Chemicals Ltd • Sika AG

Director and Lead Analyst • K+S Aktiengesellschaft • LafargeHolcim Ltd
Paulina.Grabowiec@spglobal.com • Yara International ASA • Ferguson Plc
Lucas Hoenn • Inovyn Ltd • Atotech UK TopCo Ltd

Rating Analyst • Archroma Holdings S.a.rl. • Travis Perkins Plc
Lucas.Hoenn@spglobal.com
Oliver Kroemker • Evonik Industries AG • Linde Aktiengesellschaft

• Solvay SA • Koninklijke DSM N.V.
Director and Lead Analyst
Frankfurt
• Lanxess SA • Akzo Nobel N.V.

Oliver.Kroemker@spglobal.com
Wen Li • OCI N.V. • Specialty Chemicals International B.V.

• Nitrogenmuvek • Brenntag AG
Associate
• Novacap • Oxea
Wen.Li@spglobal.com • Synthos
• Arkema S.A. • BASF SE

Gaetan Michel • L’Air Liquide S.A. • BCP VII Jade
Associate Director • Orion Engineered Carbons, S.A. • S.P.C.M SA
Gaetan.Michel@spglobal.com
Paris
• Imerys S.A. • INEOS Styrolution

• OCP S.A.
Tatjana Lescova • Clariant AG • Flint Group GmbH

Associate Director • Eurochem Group AG • Geberit AG
Tatjana.Lescova@spglobal.com
Moscow
Anton Geyze • PJSC PhosAgro • PJSC Uralkali

Associate Director
Anton.Geyze@spglobal.com
What Is Behind Most Recent Rating Actions?
Date Issuer Rating Action To From Rationale
Mar 20, 2019 Perstorp Holding AB Upgrade B/Stable B-/Stable On Debt Reduction And Stronger Credit Metrics
Nov 16, 2018 Arkema S.A. Upgrade BBB+/Stable BBB/Stable On Rising Metrics Leeway
Aug 09, 2018 LANXESS AG Upgrade BBB/Stable BBB-/Stable On ARLANXEO Disposal Announcement
6
Jul 23, 2018 Perstorp Holding AB Upgrade B-/Stable CCC+/Positive On Sustained EBITDA Growth And Deleveraging
Specialty Chemicals
May 29, 2018 Upgrade B+/Stable B/Stable On Strong Performance Post Merger
International B.V.
Feb 28, 2018 OXEA S.a.r.l., Luxembourg Upgrade B+/Stable B/Positive On Stronger Credit Metrics
On Stronger Cash Flows and higher phosphate
Feb 25, 2019 PhosAgro PJSC Outlook Revised BBB-/Stable BBB-/Negative
and nitrate fertilizers prices
On Anticipated Deleveraging And Prudent 2
Feb 13, 2019 Sika AG Outlook Revised A-/Stable A-/Negative
Financial Policy
Jan 29, 2019 Linde AG Downgrade A/Stable A+/Stable On Parent's Financial Policy
Dec 19, 2018 BCP VII Jade (‘Acetow’) Downgrade B/Stable B+/Stable On Weaker-Than-Expected Performance
Oct 12, 2018 Nitrogenmuvek Zrt. Downgrade B-/Stable B/Stable On Weak Operating Performance 5
Oct 02, 2018 Akzo Nobel N.V. Downgrade BBB+/Stable A-/Negative On Disposal Of Specialty Chemicals Business
Apr 25, 2018 Flint HoldCo S.a r.l. Downgrade B-/Stable B/Negative On Lower Earnings Forecast
Positive Outlook Rating Rationale Negative Outlook Rating Rationale

EuroChem Group AG BB-/Positive Recovering prices and weakened rubble K+S AG BB/Negative On Ongoing Weak Ratios
Orion Engineered BB/Positive Debt improving sustainably Monitchem Holdco B-/Negative Prolonged weakness in crop-protection
Carbons S.A. 2 S.A. industrypre
Uralkali OJSC BB-/Positive Recovering prices and weakened rubble OCP S.A. BBB-/Negative Following Sovereign Outlook Revision
71
Recent S&P Publications
 Russian Fertilizer Producer PhosAgro Outlook To Stable On Stronger Cash Flows; 'BBB-' Rating Affirmed, Feb. 25,
2019
 Sika Outlook Revised To Stable On Anticipated Deleveraging And Prudent Financial Policy; 'A-' Rating Affirmed,
Feb. 13, 2019
 Sika AG's Proposed Mandatory Convertible Bond Assessed As Having High Equity Content And Assigned 'BBB'
Issue Rating, Jan. 22, 2019
 Sika Outlook Revised To Negative On Uncertainty Over Ultimate Financing For Parex Acquisition; 'A-' Rating
Affirmed, Jan. 8, 2019
 Ireland-Incorporated Industrial Gases Company Linde PLC Assigned 'A/A-1' Ratings; Outlook Stable, March 5,
2019
 Nouryon Holding, Consolidating Entity Of Nouryon Group, Rated 'B+'; Outlook Stable; Nouryon Cooperatief
Ratings Withdrawn, Feb. 26, 2019
 Praxair Inc. Ratings Affirmed On Downgrade Of Merger Partner Linde AG; Off CreditWatch; Outlook Stable, Jan.
29, 2019
 Industrial Gases Producer And Engineering Co. Linde Downgraded To 'A' On Parent's Financial Policy; Outlook
Stable, Jan. 29, 2019
 Akita MidCo, Parent Of Chemicals Distributor Azelis Affirmed At 'B' On Debt-Funded Acquisitions; Outlook
Stable, March 11, 2019
 Specialty Chemicals Company Perstorp Upgraded To 'B' On Debt Reduction And Stronger Credit Metrics;
Outlook Stable, March 20, 2019
 Industry Top Trends 2019 - Chemicals, Nov. 12, 2018

Macroeconomic Outlook
Chemical Industry Revenue Growth (local currency) Chemical Industry EBITDA Margin (adjusted)
Forecast Forecast
2015 2016 2017 2018 2019 2020 2015 2016 2017 2018 2019 2020
S&P Global Ratings Macroeconomic Forecasts

Regions GDP 2015 2016 2017 2018 2019F 2020F 2021F 2022F
Key Assumptions: (Real, YoY%)
Asia Pacific 5.5 5.6 5.6 5.5 5.2 5.3 5.4 5.2
• Our key assumptions include steady global demand for Europe 1.6 1.9 2.9 2.2 1.4 1.9 1.8 1.7
chemicals products despite the potential for slower GDP Mid. East - North
3.7 3.5 1.1 2.9 3 3.2 3.2 3.4
growth in North America and Europe, offset by a pickup in Africa
Latin American GDP and solid GDP growth in Asia-Pacific. North America 2.9 1.6 2.2 2.9 2.2 1.7 1.7 1.8
• We assume steady demand from key end markets such as World 3.5 3.3 3.8 3.7 3.4 3.6 3.6 3.6
housing, automotive, and general industrial. Oil Brent ($/bbl) 52 43 50 70 60 60 55 -
• We anticipate that global supply and demand should be Natural Gas
generally in balance, and capacity additions should be largely Henry Hub ($/mil. 2.6 2.5 3.0 3.0 3.0 3.0 3.0 -
absorbed. Btu)
• We also assume generally stable oil prices at $60/bbl in 2019. Source: S&P Global Ratings; First-Quarter 2019 Regional Credit Conditions Commentaries.
WTI Crude Oil Price Assumptions For 2019 And 2020 Raised To $55 Per Barrel; Apr 22, 2019
).
73
Appendix 2:
S&P Global Platts
Additional Data
HDPE will continue to dominate recycled PE
markets and is expected to reach 15% of virgin
demand by 2029.
Virgin and Recycled PE Demand
Million mt
160 16.0%
140 14.0%
120 12.0%
100 10.0%
80 8.0%
60 6.0%
40 4.0%
20 2.0%
0 0.0%
2013 2015 2017 2019 2021 2023 2025 2027 2029
Virgin PE Demand Recycled PE (% of Virgin Demand)

Recycled HDPE (% of Virgin Demand) Recycled LDPE (% of Virgin Demand)
Recycled LLDPE (% of Virgin Demand)

75
Environmental pressures and social media has led
to the adoption of ambitious PET recycling targets
from leading global F&B brands.
Announcements by brands: Announcements by Governments:
Target: 50% R.PET use by 2030 • Japan: 100% PET recycling ratio by 2030
Target: 50% R.PET use by 2030

• EU Package: 65% recycling by 2025 and
70% recycling by 2030
Target: 50% R.PET use by 2025

• Australia: 70% recycling by 2025 and all
packaging to include 30% average recycled
content by 2025
Target: 50% R.PET use for
waters and beverages; 100% for
selective products by 2025
Appendix 3:
S&P Global Ratings
Criteria
Corporate Ratings Criteria Framework
78
Anchor
• When two anchor outcomes are listed for a given combination of business risk profile assessment and financial
risk profile assessment:
• If the FRP is 3 or stronger, the anchor will be based on the comparative strength of its competitive position.
• If the FRP is 4 or weaker, the anchor will be based on the comparative strength of its cash flow/leverage.
79
Financial Risk Profile
• We calculate the indicative ratio by weighting the previous two years (10-15%), the current year (25%) and the
forecasted two years (25%-25%).
• Preliminary financial outcome might be adjusted down by a category, depending on our assessment of volatility
and cyclical downside to our base case forecast.
80
Specialty Chemicals Industry Key Credit Factors
“Low-risk (2)” industry given its intermediate Competitive Position – Capital or Asset focus
cyclicality risk and low degree of competitive Components Aspects considered Weight
risk and growth. • Market position, robustness and sustainability of
business strategy, track record of execution;
• Key drivers of cyclicality in the specialty chemicals Competitive
• Product or service profile, including differentiation 30%
industry include the level of global economic growth, Advantage attributes, technical expertise, and service capabilities;
industrial and manufacturing production, capacity • Ability to maintain sufficient R&D and capital investment.
utilization, and the balance of industry supply and • Depth and breadth of its product offering;
demand. • Diversity of raw material inputs and end-markets;
Scale, Scope
• Relative size of revenue base and target markets; 30%
• To assess competitive risk and growth, we assess : & Diversity
• Geographic balance of sales and manufacturing footprint
• Level of supplier and customer concentration.
Effectiveness of barriers to entry Low risk
• Relative cost position;
Level and trends of industry profit margin Medium risk • Flexibility of cost structure in absorbing volatility of
Operating demand or input costs; 40%
Risk of secular change and substitution Low risk Efficiency • Success in passing through raw material costs;
• Flexibility of production.
Risk in growth trends Low risk
Cash Flow Leverage analysis

• Debt to EBITDA and FFO to debt are the core ratios used
We determine level of profitability on a three point scale:
to measure cash flow leverage for Specialty Chemicals.
"above average," "average," and "below average”.
• As a supplementary ratio, we emphasize FOCF to debt
when core ratios point to intermediate or stronger, or CFO to
debt for working capital-intensive companies
• EBITDA to interest when core ratios point to significant risk
profile or weaker, or FFO interest coverage when non-cash
interests are large.
Key Credit Factors for the Specialty Chemicals Industry, published December 31, 2013
81
Commodity Chemicals Industry Key Credit Factors
“Moderately high-risk (4)” industry given its Competitive Position - Commodity Focus/Cost Driven
moderately high risk cyclicality and Components Aspects considered Weight
moderately high degree of competitive risk • Market position;
and growth. Competitive • Sustainability of business strategy;
15%
Advantage • Ability to maintain sufficient capital investment; and
• Key drivers of cyclicality include economic growth, • Execute projects successfully.
industrial and manufacturing production, the balance of • The relative size of its revenue base and that of its target
industry segment supply and end-market demand. markets; and
• Depth and breadth of product offering;
Scale, Scope
• To assess competitive risk and growth, we assess : • Diversity of raw material inputs and end markets; 35%
& Diversity
• Geographic balance of sales, profits and manufacturing
footprint;
Effectiveness of barriers to entry High risk • Level of supplier and customer concentration.
Level and trends of industry profit margin High risk • Relative cost position compared with that of industry
peer;
Risk of secular change and substitution Medium risk Operating
• Flexibility of its cost structure in absorbing volatility of 50%
Efficiency demand or input costs;
Risk in growth trends Medium risk • Flexibility of production.
Cash Flow Leverage analysis

• Debt to EBITDA and FFO to debt are the core ratios used
We determine level of profitability on a three point scale:
to measure cash flow leverage for Commodity Chemicals
"above average," "average," and "below average”.
• As a supplementary ratio, we emphasize FOCF to debt
when core ratios point to intermediate or stronger, or CFO to
debt for working capital-intensive companies
• EBITDA to interest when core ratios point to significant risk
profile or weaker, or FFO interest coverage when non-cash
interests are large.
Key Credit Factors for the Commodity Chemicals Industry, published December 31, 2013
82
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EMEA Chemicals Landscape 2019

21 May 2019, Tel Aviv

Copyright © 2019 by S&P Global.

• EMEA Chemicals Ratings Landscape Paulina Grabowiec

• Outlook On The Fertilizer Industry Paulina Grabowiec

• Global Polyolefin Outlook Hetain Mistry

• ESG in Credit Ratings G. Andrew Stillman

Ratings outlooks data as of May 1, 2019.

• As of 1 May 2019, negative outlooks slightly outnumbered positive outlooks.

Negative trend Positive trend Stable

EBITDA broadly stable on unchanged supply-demand balance in most

Margins could come under pressure due to major ethylene and PE

Industry emerging from bottom of the cycle conditions, but delays to

2007 2009 2011 2013 2015 2017

• 3 deals involving a European target to April 30, 2019, as issuers

2016 2017 2018 2019 YTD

Debt-to-EBITDA 2019 (S&P Projections)

120% • Falling inventories and gradually improving grain

200 Corn Soya Bean Wheat

• Several capacity additions outpacing demand over the course of 2016-2018.

Source: S&P Global Platts Analytics

$2,000 $/mt Ethylene Production Cost Curves

Source: S&P Global Platts Analytics

PE MEG EDC PE MEG EDC

Source: S&P Global Platts Analytics

Incremental Ethylene Capacity, Global Ethylene Price

US Ethane Asia Naphtha Euro Naphtha

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

Propylene Demand by Propylene Demand by

PP Cumene ACN PP Cumene ACN

Source: S&P Global Platts Analytics

Incremental Capacity Additions 600

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

20 • Asia, in particular China will

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

• Capacity additions in the

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

Credit FAQ: How Does S&P Global Ratings Incorporate

Still, in late 2017, Syngenta reached a $1.5 billion settlement in relation to

• Linde Plc (A/Stable/A-1)

• Akzo Nobel (BBB+/Stable/A-2) Modest

Financial Risk Profile

• Syngenta (BBB-/Stable/A-3) Oxea

• OCI N.V. (BB-/Stable)

Business Risk Profile

Significant • A synergy between the manufacturing processes for

• High and stable profit generation.

Outlook Downside scenario

a- • Moderate financial debt.

Modifier Stable Outlook

Stable Upside scenario

bbb+ Stable Outlook

Stable Downside scenario

Anchor Stable Outlook

Outlook Downside scenario

Stable Upside scenario

Anchor Stable Outlook