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  • 2014 Platts, McGraw Hill Financial. All rights reserved.

    Evaluating the performance cracker co-products

    1

  • Key Takeaways - Propylene

    Cracking light feedstocks changes C2, C3 trade flows means EU C3 could stay at premium

    Higher EU propylene prices could suck in imports

    US, Asia eye PDH expansions to fill propylene shortage

    Europe on high end of propylene investment curve

    Like with ethylene, CTO/MTO are big question mark 2

  • 3

    The Global Feedstock Slate Is Getting Lighter

    62%

    20%

    11%

    3%

    4%

    Global Feedstock Use 2014

    Naphtha

    Ethane

    Propane

    Butane

    Gas oil

    57% 28%

    9%

    3% 3%

    Global Feedstock Use 2024

    Naphtha

    Ethane

    Propane

    Butane

    Gas oil

    Source: Platts

  • 4

    European LPG Versus Naphtha (%)

  • 5

    US LPG Export Cause Global Price Pressure

  • 6

    Propylene Pricing At Premium To Ethylene

    Source: Platts

    Record propylene premium on ethylene

    0

    200

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    Ethylene CIF NWE

    Propylene Poly Grade CIF NWE

    Propylene at a record premium to ethylene

    $/mt

  • European C3 Imports Rise

    7 Source: Eurostat

    0

    50000

    100000

    150000

    200000

    250000

    2012 2013 2014

    EU Imports Rise

    Propylene Imports

    mt

  • Impact of the Increase to the EU Custom Tariffs not felt on PP

    8

    0

    200,000

    400,000

    600,000

    800,000

    1,000,000

    1,200,000

    HDPE LLDPE LDPE PP

    Jan-Nov 2013

    Jan-Nov 2014

    Source: Eurostat

  • 9

    On Purpose Expansions Form Bulk of Capacity Addition in Propylene

  • Asian PDH Projects

    10

  • 11

    CTO/MTO Expansion in China

  • PDH Expansions Drive Asian C3 Lower

    12 Source: Platts

    0

    200

    400

    600

    800

    1000

    1200

    1400

    1600

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    Supply Glut In Asia

    Propylene Poly Grade FOB Korea

  • 13

    North American PDH Projects

  • Europe To Become More C3 Import Reliant

    14

  • Key Takeaways Butadiene

    Increased global supplies depress prices

    EU producers wary of expansions as export demand fails to materialise

    Asia aiming for self sufficiency, adding to European sellers woes

    Downside to prices on falling natural rubber prices, tyre demand

    15

  • Butadiene Prices Unlikely To Recover to 2011,2012 Highs Soon

    16 Source: Platts

    0

    1000

    2000

    3000

    4000

    5000

    6000

    07/01/2011 07/01/2012 07/01/2013 07/01/2014 07/01/2015

    CIF USG

    CFR Taiwan

    FOB Rotterdam

  • European Export Demand Fails To Materialise

    17

    Western Europe, the second largest

    butadiene producing region with

    18% capacity share (1.925 million

    in 2013) expected rapid export

    increase

    About 500,000 mt of capacity

    growth between 2014-2016

    0

    50000

    100000

    150000

    200000

    250000

    300000

    2012 2013 2014

    Exports

    Source: Eurostat

  • EU producers re-think expansions

    Versalis suspends Dunkirk, France butadiene plant

    Ineos shuts Grangemouth butadiene plant

    18

    Expansions still underway

    Plant Capacity (000) Notes

    OMV , Austria 20 May 2014

    BASF, Belgium 155 Started up Sep 2014 (delayed from Q1 start up)

    TVK, Hungary 130 May 2015

    OMV, Germany 60 Q2 2015

    Evonik, Belgium 100 2015

    Source: Platts

  • Asia aims for self sufficiency

    Butadiene plants Capacity Notes

    PetroChina Sichuan, China 150 Started up in late March 2014

    Wanda Chemical, China (Dehydrogenation) 150 Started up in Q1-Q2 2014 BCPL, India 16 Expansion

    PT Chandra Asrii, Indonesia 100 Started up in December 2013

    PTTGC, Thailand 75 Started up June 2014

    Shanghai SECCO, China 90 Started up August 2014

    Fujian Refining & Petrochemical, China 60 To start in Q4 2014

    Petrochemical Corp of Singapore, Singapore 100 To start in Q4 2014

    Zhuhai Zhongguan, China (Dehydrogenation) 70 To start in Q4 2014

    19

    Asia 2014 expansion to amount to about 800,000 mt of butadiene, of which

    there are couple of on-purpose butadiene producers

    Source: Platts

  • Derivatives Also Facing Overcapacity

    0

    1000

    2000

    3000

    4000

    5000

    6000

    7000

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    2011 2012 2013 2014E 2015E

    ('0

    00

    t)

    SBR supply and demand balance

    Capacity

    Demand

    Source: Standard Chartered

  • Fall In Auto Sales Trend In China

    21 Source LMC, Marklines

  • Negative Substitution Effect From Natural Rubber

    22

    $/mt

    0

    500

    1000

    1500

    2000

    2500

    3000

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    4000

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    03/10/2011 03/10/2013

    Rubber FOB Singapore

  • Propylene -

    Change to light feed will see C3 trade at a premium over C2

    European ethylene, propylene trade flow changes ethylene exports increase, propylene imports increase

    Butadiene-

    Butadiene supply and demand fundamentals point to further downside risks

    Natural rubber price slump weighing on prices too

    23

    Conclusions:

  • 2014 Platts, McGraw Hill Financial. All rights reserved.

    Thank You!

    24

    Nandita Lal, Team Leader, Polymers

    nandita.lal@platts.com

    mailto:nandita.lal@platts.com