Large China Supply Depressing US CBO Exports

Vincent J. Guercio CTC International

2014 Platts Bunker & Residual Fuel Oil Conference June 2014 - Houston

vjguercio@aol.com

1

I n t r o d u c t i o n Heavy Aromatic Oils - HAO Carbon Black Oils - CBO Carbon Black Feedstock - CBFS CBF

------------------------------------------------ FCC Decant Oils - DO Slurry Cracked Ethylene Tar - ET EBO ECR PFO Coal Tar Oils - CT Anthracene oil (Creosote) - ATO ATO / Soft Pitch Mixture - CBO Mix

KT = Kilotons 2

T o p i c s

Carbon Black Capacity Global CBFS Types China Coal Tar & CBFS China CB & CBFS Exports U.S. CBO Exports Asian CBFS Supply

3

CB Capacity History by Area

China

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

11000

12000

13000

14000

15000

16000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

USA

NE Asia

4

CB Capacity History by Company

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

11000

12000

13000

14000

15000

16000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

China Other

Sid Rich

Orion

Black Cat

Birla

CSRC

ROW

Cabot

PCBL

5

China CB Capacity by Company

0

1000

2000

3000

4000

5000

6000

7000

8000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

China Other

Black Cat

6

2013 Carbon Black Capacity

World(15.7 million TPY)

Balance

Other China

Bridgestone

Black Cat Huadon

g

BoahuaOCI

Sid

Rich

Omsk

Orion

Yaroslavel

Cabot

CSRC

Birla

PCBL

Toka

i

Long

xing

Asia(10.0 million TPY)

OCI

LongxingPCBL

CSRC

Boa

hua

Bridge

ston

e

Orion

Hua

dong

Tokai

Balance

Other China

Birla

Cabot

Black Cat

7

Demand

Northeast Asia

SouthAsia

China

USA

OtherAmericas

Europe

Rest ofWorld

Supply

Northeast Asia

SouthAsia

China

USA

Other Americas

Europe

Rest ofWorld

2012 World CBO (20 million Tons Total)

8

2012(20 million Tons Total)

OtherCoal Tar

3042

Local Decant2500

ChinaCoal Tar

7160

US Decant5240

EthyleneTar

2060

2004(14.4 million Tons Total)

OtherCoal Tar

2355

Local Decant2128

ChinaCoal Tar

1450

US Decant 5735

Ethylene Tar2760

World CBFS Types Coal tar surpassed decant oil in 2011

9

2012 World Coal Tar CBO Use(10,200 KT Total)

India

NortheastAsia JKT

China

Russia/Ukraine

EuropeUnion

10

China - Coal Tar CBFS

Neat Anthracene Oil Soft Pitch + Anthracene Oil

Raw Coal Tar + Anthracene Oil Naphthalene Depleted Coal Tar

11

China Coal Tar Availability & Distillation

High Steel Production Growth 90% via Blast Furnace Iron

Moderate Aluminum Output Anode Pitch Not Driving Distillation Pitch Modification Necessary Soft Pitch Priced Below Coal Tar

Strong Naphthalene Demand CBFS & Naphthalene are Major Products Large ATO & CBO Mix Exports 2012+

12

Regional Tar Product Markets

Binder Wood treat

Chemicals

Binder + CBFS

CBFS + export

Chemicals

Binder + CBFS + NCFS

USA Europe Asia

Pitch 50%

Distillate 30% Naphthalene 10% Wash Oil + 10%

CBFS

Chemicals

13

Regional Distillation Drivers

Binder Creosote Naphthalene

Binder CBFS Naphthalene

CBFS Naphthalene Binder

USA Europe Asia

14

China CB Balance History

CB Imports

Domestic Supply

CB Exports

Unused Capacity

0

1000

2000

3000

4000

5000

6000

7000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

15

China CB Export History

South Asia

North

Asia

EuropeNAmerMid-East

Other

0

100

200

300

400

500

600

700

800

900

1000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

16

North Asia CB Supply

Traditional CB

China CB

0

200

400

600

800

1000

1200

1400

1600

1800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

17

South Asia CB Supply

Traditional CB

China CB

0

200

400

600

800

1000

1200

1400

1600

1800

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

18

China CBFS Export HistoryTypes

Anthracene Oil

CBO Mix

0

50

100

150

200

250

300

350

400

450

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

19

China CBFS Export HistoryRegions

North Asia

South Asia

0

50

100

150

200

250

300

350

400

450

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

20

CBFS Equivalent to RegionsChina CB + CBFS displacing US CBO

North Asia

South Asia

0

200

400

600

800

1000

1200

1400

1600

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

21

US CBO Demand

Domestic Demand

Export Demand

0

1000

2000

3000

4000

5000

6000

7000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

22

US CBO Export Destination

South Asia

North Asia

Europe

Americas + Africa

0

500

1000

1500

2000

2500

3000

3500

4000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

23

US CBO Export Source

Gulf Coast

West CoastGreat Lakes

E Coast

0

500

1000

1500

2000

2500

3000

3500

4000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

24

Gulf Coast CBO Exports

South Asia

North Asia

Europe

Americas +Africa

0

500

1000

1500

2000

2500

3000

3500

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

25

North Asia CBFS Supply

Domestic Supply

US CBO

China CBFS

0

500

1000

1500

2000

2500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

26

South Asia CBFS Supply

Domestic Supply

US CBO

China CBFS

0

500

1000

1500

2000

2500

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Kilo

tons

27

Thank you!

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