Global Plasticizer Trends-brasil Plast 2007

Making it SafeMaking it Safe

Jayflex PlasticizersJayflex Plasticizers



PresenterMr. Shane P. WalkerOxo Regional Sales Manager, Americas

Global Plasticizer Industry TrendsGlobal Plasticizer Industry Trends



Overview

Simplified Integrated Plasticizer Production

ExxonMobil Chemical Global Oxo Capability

Global Alcohol Supply/Demand and Average Capacity Utilization

Plasticizer Market Structure Changes

Global Plasticizer Demand by Region

Energy and Raw Material Costs

Future Landscape



Refinery CatCracking

Butenes

Propylene

Ethylene

C7-C13 Oxo

Alcohol

LinearAlcohols

LinearPlasticizers

PLASTICIZER

BranchedHigher Olefin

(C6-C12)

Linear Olefins

RefineryReforming Orthoxylene

PhthalicAnhydride

(PAN)

OXOALCOHOL

Steam Cracking

HIGHER OLEFINLIGHT OLEFIN

DINP (C9)DIDP (C10)

Other (C7-C13)HMW

Simplified Plasticizer Production Steps -Alcohol Step most complex



ExxonMobil Chemical Oxo Global Capability

Higher Olefin Mfg. Site

Alcohol Mfg. Site

Plasticizer Mfg. Site

Technology Center

Phthalic Anhydride Site

ExxonMobil Chemical is the largest WW Supplier of Plasticizers and the OXO Alcohols used to make them



Capacity:

Announced capacity additions lagging demand growth feed availability an issue

Limited capacity investment in US and Europe

Recent alcohol additions all in Asia Pacific

Average WW 2EH alcohol capacity reduction of 4% from 05 to 06.

Reductions in EU and US

Global Alcohol Supplies & Average Capacity Utilization Tightening

kta

0

1000

2000

3000

4000

5000

6000

7000

2004 2005 2006 2007 2008 2009 2010 2011 2012

Global 2EH/HMW Alcohol Capacity

WW Demand

WW Capacity

Source external consultants and EMCC estimates

Average Capacity Utilization (CU):

Average Global capacity utilization tightening

Significant supplier outage could swing balance quickly

AP capacity utilization higher than rest of the world >90% WW 2EH CU predicted for near term future

Expect inter-regional plasticizer price differentials minimized at high average CU.

Source external consultants and EMCC estimates



Structural changes ongoing globally less integrated most vulnerable:

Americas: 2000 Solutia sells business to Ferro (BBP); Atanor (Argentina) s/d

PAN and PLA; Sunoco acquires Mitsubishi

2002 Shell s/d 2EH/butanol plant; Elekeiroz (Brazil) buys Ciquine 2004 BASF purchases Sunoco 2EH/PLA/PAN: Announces plan to

convert Pasadena 2EH to alternative product slate; BP announces 05 s/d of Pasadena LAO

2005 BP Pasadena LAO s/d in Sept. 2006 -- Pasadena 2EH s/d to convert to 2PH; Sterling Linear alcohol

plant to s/d; Elekeiroz announces s/d of Taubate (Brazil) plant

Announced investments providing no additional Alc/Pla capacity; attempt only to improve feedstock economics

Europe: Since 2000, 600 kT of Oxo assets mothballed or closed in Europe. No new investments announced Further mergers/consolidations in 2EH and derivative markets

expected

AP Plasticizer market structure most fragmented (esp. China): DOP has ~75% market position. Low esterification margins in Asia Pacific Alcohol key to supply reliability

Market Demand Shifts & Profit Pressures Driving Changes

Integration key for long-term supply assurance

0

50

100

150

200

250

'00 '01 '02 '03 '04 '05

C

A

P

A

C

I

T

Y

,

K

T

Neste, Fl BP, UK Driftal, P BASF - SpOxeno, G Noroxo BASF, GR/BE

Plz Alc or Ester EU Capacity closures/mothballEMC est based on Tecnon

0

40

80

120

160

200

0 25 50

06

WE '98

NA '98

06

China '98

06

Bubble size: demandJapan 98

SA '98

06

Industry Structural ChangesAvg size, kT

Source: Trade Publications, EM estimates



Global Plasticizer Demand Environment Specifics by Region

All Other Uses1%

Cal - Film & Sheet for Packaging

11%

Resellers and Compounders

15% All Other Paste

Process Uses3%

Mold - All Other Molding Uses3%

Coat - Flooring3%

Coat - Textile and Paper Coating

2%

Adhesives and All Other Coating Uses

2% Ext - Wire and Cable

16%

Ext - Film and Sheet17%

All Other Extrusion Uses10% Protective Coatings

1%

All Other Calendering Uses16%

Americas -06 Plz market ~915 kT (NA 750/SA 165) 06 NA PVC domestic sales declined vs. 05 with sales down

3.3% (APC Data) 06 NA Flexible market decline estimated down 4% vs. 05. PVC Imports, which increased +30% during 05 (some

Hurricane impacts), declined 13% during 06. Dispersion PVC appears to be most of the growth

Key Flexible markets reflected declines since 04 - esp. Calendaring/Coating W&C slowed 2H06 (Housing start decline).

Planning basis remains phthalate growth @ less than GDP Imported finished goods affect demand in multiple markets

NA Flexible PVC Breakdown (estimated from ACC PVC Resin sales)

Compounding28%

Films/Sheets/Calendering

22%

Shoes20%

Extrusion8%

Wire and Cable4%

Toys6%

Under Body Coats

4%

Distributor4%

Others4%

SA Flexible PVC Breakdown (EMCC estimates)

ACC PVC Sales for Key Flexible Markets

60%65%70%75%80%85%90%95%

100%105%110%115%

J

a

n

F

e

b

M

a

r

A

p

r

M

a

y

J

u

n

J

u

l

A

u

g

S

e

p

O

c

t

N

o

v

D

e

c

%

2

0

0

6

v

s

.

2

0

0

5

V

o

l

u

m

e

s

Calendering Coating Wire & Cable

Source: American Chemistry Council Monthly Statistical Report



Global Plasticizer Demand Environment Specifics by Region

Coated Fabrics10%

Hoses2%

Compounding31%

Wall Covering5%

UBC6%Wire & Cable

16%

Film and Sheet12%

Sealants3%

Flooring15%

European Market (06 Plz market ~ 1000 kT) 06 market up 6% vs. 05 stronger construction demand. DOP now less than 20% of market driven by consolidating

manufacturing base and HMW conversion (shift to DINP/DIDP).

Example: BASF exited 2EH/DOP market Sept 05. High demand growth in Russia and Baltic regions (6-8%/yr) in

Flooring, Wallcovering, and Underbody Auto Coatings EU Risk Assessments conclude no risk reduction required

for DINP and DIDP in current applications REACH Legislation enters into force mid-2007 Lower value stationary and coated fabrics are targets for

imported finished foods from AP. $/Euro exchange - Large fluctuations influence trade.

Asia Pacific Market (06 Plz market ~ 3000 kT) 2006 Region GDP (ex Japan) estimated @ 8% Long term growth estimates robust with focus on China and

India. Chinas near term growth 7-8%/year DOP represents 75% of the market Faster HMW Plasticizer Growth (DINP vs. DOP) particularly

for export markets Esterification margins have been well below reinvestment

lowest in the world for non-integrated esterifiers China PVC investments focus on cost advantaged coal vs.

ethylene-based (65% now based on coal).

EU Plasticizer Demand by End-use (2005)

$/t

Gross Margins Over FeedstockAP Independent Esterifier

05

10152025303540

J

a

n

-

0

3

A

p

r

-

0

3

J

u

l

-

0

3

O

c

t

-

0

3

J

a

n

-

0

4

A

p

r

-

0

4

J

u

l

-

0

4

O

c

t

-

0

4

J

a

n

-

0

5

A

p

r

-

0

5

J

u

l

-

0

5

O

c

t

-

0

5

J

a

n

-

0

6

A

p

r

-

0

6

J

u

l

-

0

6

O

c

t

-

0

6

J

a

n

-

0

7

$/T



Chemical Raw Material Cost impacted by Chemical Raw Material Cost impacted by Global Crude Oil & Energy MarketsGlobal Crude Oil & Energy Markets

Crude Multiple events affect crude oil markets: Strong fuel demand, OPEC production constraints, and renewed tension in

the Middle East supports higher Global crude prices through March and April OPEC production in March held at ~26.6 MBPD in March (per US Dept of Energy), flat with February. Total Global demand is ~85MBPD.

Demand relatively inelastic, even at higher price levels: IEA February Oil Market report O/Ls global oil demand growth in 07 of about 1.5 MBD (1.8%).

Limited spare capacity: OPEC production restraint implies higher levels of spare production capacity which, if sustainable, could ease reduce market concerns on supply security DOE estimates that world spare oil production capacity will recover to over 2 MBD in 2007



Plasticizer Raw Material CostsPlasticizer Raw Material Costs Record Costs and Volatility pressure profitability GloballyRecord Costs and Volatility pressure profitability Globally

Oxo Feedstock Costs

Propylene - influenced by energy markets, mogas reformulation, steam cracker feed slates, and derivative demands. 1Q07 trends upward with energy costs, improved derivative demand (Polypropylene), as well as typical 1Q07 cracker downtimes limiting supply.

Ethylene - influenced by energy markets, steam cracker feed slates (relative economics and light/heavy feeds), and derivative demands (Polyethylene). 1Q07 cost trend upward.

Orthoxylene - influenced heavily by octane demand (for mixed xylenes) associated with motor gasoline reformulations (MTBE phase out). 1Q07 cost trend upward.



Future Landscape Key Points to Consider

Tightening global alcohol supply/demand conditions Higher average CU minimizes inter-regional price differences Reduction in opportunistic exports Non-integrated esterifiers most vulnerable

High energy prices and continued volatility will challenge non-integrated suppliers

Transitions in North American market underway BASF reducing/restructuring their product portfolio to compete Announced rationalization of linear alcohol production and conversion of 2-EH

capacity to alternate chemistry

ExxonMobil advantageously positioned with fully integrated alcohol production at multiple sites globally

+ Investments tailored by Region to meet customer needs+ US/Europe: Project focus on feedstock utilization and efficiency+ 2006: Expansion of Singapore INA plant to 180 - 220 kta+ Progressing potential second steam cracking train and derivative units in

Singapore



Disclaimer

2007 ExxonMobil Corporation. To the extent the user is entitled to disclose and distribute this document, the user mayforward, distribute, and/or photocopy this copyrighted document only if unaltered and complete, including all of its headers,footers, disclaimers, and other information. You may not copy this document to a Web site. ExxonMobil does not guarantee thetypical (or other) values. Analysis may be performed on representative samples and not the actual product shipped. Theinformation in this document relates only to the named product or materials when not in combination with any other product ormaterials. We based the information on data believed to be reliable on the date compiled, but we do not represent, warrant, orotherwise guarantee, expressly or impliedly, the merchantability, fitness for a particular purpose, suitability, accuracy, reliability,or completeness of this information or the products, materials, or processes described. The user is solely responsible for alldeterminations regarding any use of material or product and any process in its territories of interest. We expressly disclaimliability for any loss, damage, or injury directly or indirectly suffered or incurred as a result of or related to anyone using or relyingon any of the information in this document. There is no endorsement of any product or process, and we expressly disclaim anycontrary implication. The terms, we, our, "ExxonMobil Chemical", or "ExxonMobil" are used for convenience, and mayinclude any one or more of ExxonMobil Chemical Company, Exxon Mobil Corporation, or any affiliates they directly or indirectlysteward. The ExxonMobil Chemical Emblem, the Interlocking X DeviceJayflex and Exxal are trademarks of Exxon Mobil Corporation.

Global Plasticizer Trends-brasil Plast 2007

Documents

Transcript of Global Plasticizer Trends-brasil Plast 2007