Price Influencers in Polymer MarketsMacroeconomic view and East/West divide in polymersCOVID-19 and extreme weather-related plant outages

Stephanie LiewCommodity Specialist Petrochemicals

stephanie.liew@spglobal.comOct 28, 2021

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Asia ethylene margins narrow on capacity growth as tight global container market constrains polymer trade

Pre-Pandemic Pandemic

High margin

Asia

Low naphtha prices favor Asia/EU crackers

US/EU Outages

Rising container freight price

Rising US/EU plastics demand

Low margin US Rising Asia

ethylene capacity

Source: S&P Global Platts Analytics

Ethylene Margins

Forecast$/mt

EU TA, US storms

Polymer sales show sector specific strength with people shopping online more

Sources: American Chemistry Council (ACC), US Census

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75

150

225

Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2

2015 2016 2017 2018 2019 2020 2021

Billions$

US Online Retail Sales

• Polymers for PPE

• PET into plastic bottles

• LL films in packaging

• Fibres• Durable HDPE

and PP grades for automotive

• Butadiene for tires

0.0

0.5

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Jan-18 Jan-19 Jan-20 Jan-21 Jan-22

Millionmt/month

North America Polyolefins Production

HDPE LDPE LLDPE PP

Ethylene end-product demand driven by packaging, construction, manufacturing and consumer buying

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Source: S&P Global Platts Analytics

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$/mtUS SPOT ETHYLENE

PRICE PARITIES

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$/mt ASIA SPOT ETHYLENEPRICE PARITIES

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$0 P

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$/mt EU SPOT ETHYLENEPRICE PARITIES

China bucks the trend again—record volumes of ethylene derivative imports in 2020 supports global ethylene demand, however 2021 is weak

Source: S&P Global Platts Analytics, NBS

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Mar-18 Oct-18 May-19 Dec-19 Jul-20 Feb-21

ktTrillionsRMB

China Retail Sales and Plastics Production

Retail Sales Plastic Products

(40)

(35)

(30)

(25)

(20)

(15)

(10)

(5)

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2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Million mt/yr

China’s Ethylene and Derivative Import Projections

Ethylene HDPE LDPE LLDPE MEG

Ethylene outages dominate short term price movements

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Kt/month

AMERICAS ETHYLENE OUTAGES

RANGE (16-20) 2020 2021

2022 AVG (16-20)

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GLOBAL ETHYLENE OUTAGES

RANGE (16-20) 2020 2021

2022 AVG (16-20)

USGC Winter storms

USGC Hurricane

Ida USGC Winter storms

NEA, EU Outages

USGC Hurricane season + EU TAs

Source: S&P Global Platts Analytics

Medical application-based chemicals remain strong during the pandemic.

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US Spot Propylene Price Parities ($/mt)

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$0 2

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EU Spot Propylene Price Parities ($/mt)

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$0 2

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mar

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Asia Spot Propylene Price Parities ($/mt)

Source: S&P Global Platts Analytics

The automotive is a significant source of polypropylene demand but the sector has been sluggish in 2020 on COVID-woes

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2015 2016 2017 2018 2019 2020 2021 2022

Million mt

Global Propylene Demand

PP Cumene ACN PO AA IPA 2EH Others

Down about 2.3% YoY

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Million mt

Global ICE Sales

Global (RHS) China United States Western Europe

Sources: S&P Global Platts Analytics

PP demand projections remain bullish however, massive investments across Asia set to limit price movements

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Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22

Jan 2018 = 100 China Demand Index for PP and ABS Applications

MV Cars Computers Mobiles TVsSources: S&P Global Platts Analytics, NBS

NWE, US polymer prices soar to almost double of Asia: Is the open arb too good to be true?

Sources: S&P Global Platts Analytics

As freight issues begin to normalize, polymer prices are projected to return to normal prices spreads in 2022.

Sources: S&P Global Platts Analytics

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Global HDPE prices

HDPE B/Mldg FAS Houston HDPE B/Mldg CFR FE Asia

HDPE B/Mldg FD NWE

$/mt

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Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22

Global PP prices

PP Homo Inj FAS Houston PP Homo Inj FD NWE

PP Raffia CFR FE Asia

$/mt

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