Future Trends - Asia

Kuwait

May 2011
Presentation structure

• China’s drive to self

sufficiency
• India – ready to take off?
• Other countries to watch out
for
 China’s next growth phase

• Shifting from export-led

model of growth; new
priorities to support
‘sustainable growth’
– Expansion of domestic
consumption
– Development of new growth
industries and inland
provinces
– Energy efficiency and
protecting the environment
 What does this mean for demand?

Source: CBI

• Huge surge in imports in 2009-10 rescued rest of the world

• But government committed to improving self sufficiency
New capacities – moving inland

Shenhua / Dow
(1.2MTA, 2016 ) Daqing PC
(600 KTA, 2013)

Sichuan PC
(800KTA,
2012-13 ) Fushan PC
(800KTA, 2011-12)

Sinopec Wuhan
(800KTA, 2013)

Source: ICIS
Sinopec-KPC
(1,000KTA )
Coal becomes important

• Very strong interest in

MTO/MTP projects and coal-
MEG
– Around 5mtpa of C2 capacity
planned
– Interest spreading to coastal
companies with imported
methanol/coal
 But this is China

• Expect the unexpected!

• Plants will be built but will
they run consistently?
• Economics of coal-based
production still uncertain
• And govt aims to regulate
growth; pollution and
economics are key concerns
 India has huge potential

• Huge expectations after

China; has the population to
deliver volumes
• But manufacturing base
much smaller
• Steady demand growth over
the last few years means
there is room for capacity
additions
 Moves at a slow pace

• 2008 economic crisis led to

deferment of some projects…
but some are slowly being
revived
• Reliance is leading the way
with massive expansion plans
• Govt too is ambitious with
plans for integrated refining-
petchem hubs
• But land acquisition is a huge Source: Industry estimates
hurdle
 Singapore’s Jurong Version 2

2011 Global Competitiveness

• No feedstock/market
advantage but after 2 new
crackers govt targets 6-8m
tpa ethylene output
• Diversification to bio-based
and LPG feedstocks; also
refinery feeds
• Boosting infrastructure and
logistics to further improve
Source: WEF
competitiveness
 South Korea consolidates

• Companies using cash smartly

to remain worldscale and
retain market share
– More than 1m tpa of cracker
expansions planned
– Plus new investments in
aromatics
• Also investing overseas for
growth (SK, Honam
Petrochemicals)
Source: KPIA
 Malaysia – revitalised to grow

• Petronas spins off

petrochemicals arm and plans
new investments

• Titan also has room to grow

worldscale post acquisition by
Honam
 Indonesia reawakens

• Steady demand growth Indonesia PE & PP demand

presents opportunities for 1400
growth 1200
1000
800
• But what about competition 600
from rest of Southeast Asia 400
post FTA? 200
0
2005 2009 2010 2015

PE PP

Source: Inaplas
Thailand – looking for new avenues

• Legal tangle around

environmental issues
finally resolved paving
way for new projects
• Companies eyeing
expansions at home
• But like Taiwan and
Korea will have to rely
on exports

Source: Industry Associations

 Vietnam

• Strong interest from foreign

investors despite risks
– Petrovietnam, Kuwait
Petroleum, Idemitsu Kosan
and Mitsui Chemicals working
on 200,000 bbl/day refinery
and PP/PX
– Another jv with Siam Cement
for refinery/cracker

Source: Industry
 Conclusion

• China is moving towards greater self-sufficiency and tapping coal

• But country’s economic growth model is changing – big
implications for petrochemicals
• India – robust growth; majors investing to keep pace with
markets
• Rest of Northeast Asia – has relied on China demand so far;
what’s next?
• Southeast Asia a mixture of success and unfulfilled potential
 Japan reinvents
"It is possible that 1.5m-2.0m
tonnes/year of Japanese ethylene
capacity, or three to five less
competitive plants, will be
dismantled in the coming five to
six years”
Ryota Hamamoto
Senior executive adviser,
Accenture Japan
• Alliances formed to boost
competitiveness
• Key strategies – trim
capacities, exit non core
businesses; focus on value
added products and boost
integration with refineries
• Pressure set to grow after
recent earthquake/tsunami
 But Taiwan struggles

• Limited scope for expansion at

home and cracker/refinery
investment in China blocked by
govt

• Powerful green lobby has been

blocking major investments

Source: PIAT