2008 APIC – CMAI Seminar2008 APIC – CMAI SeminarSingaporeSingapore ShanghaiShanghai HoustonHouston New YorkNew York LondonLondon DüsseldorfDüsseldorf DubaiDubaiSingaporeSingapore ShanghaiShanghai HoustonHouston New YorkNew York LondonLondon DüsseldorfDüsseldorf DubaiDubai
The Keys to Understanding the Global Aromatics Markets:Shifting Trade Patterns for BTX,
Rapid Demand Growth for Polyester, Consolidation in the Styrenics Industry
The Keys to Understanding the Global Aromatics Markets:The Keys to Understanding the Global Aromatics Markets:Shifting Trade Patterns for BTX, Shifting Trade Patterns for BTX,
Rapid Demand Growth for Polyester, Rapid Demand Growth for Polyester, Consolidation in the Consolidation in the StyrenicsStyrenics IndustryIndustry
Mark FislerMark FislerExecutive Vice PresidentExecutive Vice President
Aromatics, Fibers & Methanol StudiesAromatics, Fibers & Methanol [email protected]@cmaiglobal.com
APIC Marketing Seminar by CMAIAPIC Marketing Seminar by CMAISingapore, May 27, 2008Singapore, May 27, 2008
There are myriad influences on the global aromatics markets ranging, for example, from gasoline related legislation in the United States to refining capacity expansions, rapid polyester demand growth, Asian derivative demand development, through to forecast imbalances in the pace of supply growth between ethylene and propylene. This presentation will focus on the three major pillars of the world aromatics markets, benzene, styrene and paraxylene. Their common theme is weakening supply/demand balances and depressed margins, though each is at a different stage of the process. The rate of benzene capacity addition based on known plans is already well above realistic forecast demand growth, but there is potential for huge additional benzene capacity growth after 2011 that would be very detrimental to operating rates and industry fortunes. The road ahead looks increasingly challenging and complex.Benzene’s biggest derivative, styrene, is going through a transitional phase. Dogged by subdued demand growth in recent years, the styrene industry has reached a degree of maturity and structural overcapacity that has already forced painful consolidation. It has been in a prolonged down cycle while most other petrochemicals have been enjoying top-of-the-cycle earnings, despite record energy costs. Further reconstructive surgery is likely to be required in “traditional” industries as new highly competitive capacity is still being added in the Middle East and Asia. Different parts of the polyester chain are at different stages of their cycle. PX is on the brink of a capacity expansion explosion that will pressure margins, while the worst may already be over for polyester fiber and PTA. However, high crude oil prices have squeezed almost all the margin from the polyester chain, and will cap how much polyester fiber margins can improve. PTA is right at the bottom of the trough. Fewer planned expansions due to miserable margins will help PTA move toward recovery.
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Presentation OutlinePresentation OutlinePresentation Outline• Benzene
– Demand and Capacity Additions– Potential Supply Storms– Perfect Landing?
• Styrene– Capacity Fat Continues– Industry Options– Fitter competition coming
• Paraxylene/PTA– Capacity vs Demand– Trade Changes– What will Happen to Margins?
•• BenzeneBenzene–– Demand and Capacity AdditionsDemand and Capacity Additions–– Potential Supply StormsPotential Supply Storms–– Perfect Landing?Perfect Landing?
•• StyreneStyrene–– Capacity Fat ContinuesCapacity Fat Continues–– Industry OptionsIndustry Options–– Fitter competition comingFitter competition coming
•• ParaxyleneParaxylene/PTA/PTA–– Capacity Capacity vsvs DemandDemand–– Trade ChangesTrade Changes–– What will Happen to Margins? What will Happen to Margins?
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
2007 World Benzene Demand2007 World Benzene Demand2007 World Benzene Demand
CumeneCumene 19%19%
CyclohexaneCyclohexane 12%12%
Nitrobenzene 8%Nitrobenzene 8%
Others 2%Others 2%AlkylbenzeneAlkylbenzene 3%3%
MaleicMaleic Anhydride 2%Anhydride 2%
ChlorobenzeneChlorobenzene 1%1%EthylbenzeneEthylbenzene53%53%
Total Domestic Demand = 39.9 Million TonsTotal Domestic Demand = 39.9 Million Tons
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Benzene Derivative Demand GrowthBenzene Derivative Demand Growth
World Northeast Asia China0 5 10 15 20
Alkylbenzene
Chlorobenzene
Cumene
Cyclohexane
Ethylbenzene
Maleic Anhydride
Nitrobenzene Global Average Benzene Global Average Benzene Demand Growth = 3.1%Demand Growth = 3.1%
Percent Increase, Demand Growth 2007-2012
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
World New Benzene CapacityWorld New Benzene CapacityWorld New Benzene Capacity
AmericaAmerica West EuropeWest Europe Central Europe & CISCentral Europe & CISMiddle East & AfricaMiddle East & Africa Indian SubcontinentIndian Subcontinent Northeast AsiaNortheast AsiaSoutheast AsiaSoutheast Asia Incremental DemandIncremental Demand
--0.50.5
0.00.0
0.50.5
1.01.0
1.51.5
2.02.0
2.52.5
3.03.0
3.53.5
20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012
Million TonsMillion Tons
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
MSAT2
Cracker Expansionsand Liquid Feeds
Refining in Asia
Co-product Fall-out
U.S. Energy Bill
The Chinese Wave
The Supply StormsThe Supply StormsThe Supply Storms
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
United States Legislation ReviewUnited States Legislation ReviewUnited States Legislation Review• February 2007 MSAT
– Impact – Evolutionary– Reduces benzene across entire pool to 0.62 volume
percent in 2011– Expected to increase benzene supply
• December 2007 EISA– Impact – Transformational– Dramatically elevates biofuels – ethanol from all sources– Expected gasoline surplus, octane value reduced– RFS for 2008 increased from 5.4 billion to 9.0 billion!
•• February 2007 MSATFebruary 2007 MSAT–– Impact Impact –– EvolutionaryEvolutionary–– Reduces benzene across entire pool to 0.62 volume Reduces benzene across entire pool to 0.62 volume
percent in 2011percent in 2011–– Expected to increase benzene supplyExpected to increase benzene supply
•• December 2007 EISADecember 2007 EISA–– Impact Impact –– TransformationalTransformational–– Dramatically elevates Dramatically elevates biofuelsbiofuels –– ethanol from all sourcesethanol from all sources–– Expected gasoline surplus, octane value reducedExpected gasoline surplus, octane value reduced–– RFS for 2008 increased from 5.4 billion to 9.0 billion!RFS for 2008 increased from 5.4 billion to 9.0 billion!
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Energy Independence & Security Act 2007 Incremental Octane Index
Energy Independence & Security Act 2007 Incremental Octane Index
00
100100
200200
300300
400400
500500
600600
9494 9696 9898 0000 0202 0404 0606 0808 1010 1212 1414 1616 1818 2020 2222
Ethanol/Ethanol/BioFuelsBioFuels MTBEMTBE
IndexIndex
Assumed Max "Corn" LimitAssumed Max "Corn" Limit
Advanced/Advanced/CellulosicCellulosicTargetsTargets
2000 = 1002000 = 100
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
The Middle East: A More Liquid Evolution?
The Middle East: A More Liquid The Middle East: A More Liquid Evolution?Evolution?
• 20 million tons of new ethylene capacity by 2012
• Ethylene goes long, global propylene balances remain snug
• Over half of new Saudi capacity is now capable of cracking propane, butane or light naphtha
• Greater use of liquids will create more available benzene extraction feed
•• 20 million tons of new ethylene 20 million tons of new ethylene capacity by 2012capacity by 2012
•• Ethylene goes long, global propylene Ethylene goes long, global propylene balances remain snugbalances remain snug
•• Over half of new Saudi capacity is Over half of new Saudi capacity is now capable of cracking propane, now capable of cracking propane, butane or light naphthabutane or light naphtha
•• Greater use of liquids will create Greater use of liquids will create more available benzene extraction more available benzene extraction feedfeed
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
The Middle East: A Liquid EvolutionThe Middle East: A Liquid EvolutionThe Middle East: A Liquid Evolution
0.00.0
0.20.2
0.40.4
0.60.6
0.80.8
1.01.0
1.21.2
1.41.4
1.61.6
20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012 20132013 20142014 20152015
2003 Forecast2003 Forecast2007 Forecast2007 Forecast
Million Metric TonsMillion Metric Tons
Actual ForecastActual Forecast
Middle East Benzene Capacity From Middle East Benzene Capacity From PygasPygas
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
New Middle East Benzene ProjectsNew Middle East Benzene ProjectsNew Middle East Benzene Projects
KARO, Q1 2009KARO, Q1 2009Shuaiba, KuwaitShuaiba, Kuwait
Kayan, Q1 2010Kayan, Q1 2010Al Jubail, Saudi Arabia Al Jubail, Saudi Arabia
Yansab, Mid-2008Yansab, Mid-2008
Mesaieed, QatarMesaieed, Qatar
Saudi ChevPhill, Q1 2008Saudi ChevPhill, Q1 2008Al Jubail, Saudi ArabiaAl Jubail, Saudi Arabia
Oman Oil, Q4 2009Oman Oil, Q4 2009Sohar, OmanSohar, Oman
Borzuyeh PC,2008Borzuyeh PC,2008Bandar Assaluyeh, IranBandar Assaluyeh, Iran
QP/Honamb, 2012QP/Honamb, 2012
Saudi Aramco/Dow, 2012Saudi Aramco/Dow, 2012Ras Tanura,, Saudi ArabiaRas Tanura,, Saudi Arabia
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
China: Is This The Real Storm? China: Is This The Real Storm? China: Is This The Real Storm?
• China adds 6 million tons in 6 years
• Most new capacity driven by backward integration from polyester
• Produces a more balanced trade position
• The current rate of capacity expansion slows after 2012, but will it really?
•• China adds 6 million tons in China adds 6 million tons in 6 years6 years
•• Most new capacity driven Most new capacity driven by backward integration by backward integration from polyesterfrom polyester
•• Produces a more balanced Produces a more balanced trade positiontrade position
•• The current rate of capacity The current rate of capacity expansion slows after expansion slows after 2012, but will it really?2012, but will it really?
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
The Great Wave Of ChinaThe Great Wave Of ChinaThe Great Wave Of ChinaChina Benzene Production CapacityChina Benzene Production Capacity
44
55
66
77
88
99
1010
1111
1212
1313
20072007 20082008 20092009 20102010 20112011 20122012 20132013 20142014 20152015
ForecastForecast Current HypotheticalCurrent Hypothetical
Million Metric TonsMillion Metric Tons
Upside HypotheticalUpside Hypothetical RefineryRefinery--InducedInduced
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
The Supply StormsThe Supply StormsThe Supply Storms
0.00.0
0.50.5
1.01.0
1.51.5
2.02.0
2.52.5
3.03.0
3.53.5
4.04.0
20082008 20092009 20102010 20112011 20122012 20132013 20142014 20152015
China UpsideChina Upside
US Refinery US Refinery
MSAT2 UpsideMSAT2 Upside
PygasPygas UpsideUpside
RefineryRefinery--push Expansionpush Expansion
Additional Million Metric TonsAdditional Million Metric Tons
Global Benzene Production CapacityGlobal Benzene Production Capacity
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
The Impact On Global Operating Rates
The Impact On Global Operating The Impact On Global Operating RatesRates
Global Benzene Operating Rate, PercentGlobal Benzene Operating Rate, Percent
Existing ForecastExisting Forecast
7070
7575
8080
8585
20072007 20102010 20132013 20162016 20192019Upside Capacity: Steady DemandUpside Capacity: Steady DemandUpside Capacity: Stagnation DemandUpside Capacity: Stagnation Demand
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Benzene Conclusions Benzene Conclusions Benzene Conclusions
• Probability of a “Perfect Landing”diminishing
• Supply storms are brewing • Down cycle will likely prolong beyond
2012 • Lower prices are unlikely to regain
share lost since 2003• Global demand remains
extraordinarily sensitive to China’s economic fortunes
• Road ahead unlikely “business as usual”
•• Probability of a Probability of a ““Perfect LandingPerfect Landing””diminishingdiminishing
•• Supply storms are brewing Supply storms are brewing •• Down cycle will likely prolong beyond Down cycle will likely prolong beyond
2012 2012 •• Lower prices are unlikely to regain Lower prices are unlikely to regain
share lost since 2003share lost since 2003•• Global demand remains Global demand remains
extraordinarily sensitive to Chinaextraordinarily sensitive to China’’s s economic fortuneseconomic fortunes
•• Road ahead unlikely Road ahead unlikely ““business as business as usualusual””
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Presentation OutlinePresentation OutlinePresentation Outline• Benzene
– Demand and Capacity Additions– Potential Supply Storms– Perfect Landing?
• Styrene– Capacity Fat Continues– Industry Options– Fitter competition coming
• Paraxylene/PTA– Capacity vs Demand– Trade Changes– What will Happen to Margins?
•• BenzeneBenzene–– Demand and Capacity AdditionsDemand and Capacity Additions–– Potential Supply StormsPotential Supply Storms–– Perfect Landing?Perfect Landing?
•• StyreneStyrene–– Capacity Fat ContinuesCapacity Fat Continues–– Industry OptionsIndustry Options–– Fitter competition comingFitter competition coming
•• ParaxyleneParaxylene/PTA/PTA–– Capacity Capacity vsvs DemandDemand–– Trade ChangesTrade Changes–– What will Happen to Margins? What will Happen to Margins?
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Styrene Process FlowStyrene Process FlowStyrene Process Flow
EthyleneEthylene
BenzeneBenzene EPSEPS
PolystyrenePolystyrene
ABSABS
EB/SMEB/SM
PropylenePropylene PO/SMPO/SM
POPO
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Capacity Fat Continues GrowCapacity Fat Continues GrowCapacity Fat Continues Grow
AmericasAmericas EuropeEuropeMiddle EastMiddle East AsiaAsia
--1.01.0
--0.50.5
0.00.0
0.50.5
1.01.0
1.51.5
2.02.0
2.52.5
0000 0101 0202 0303 0404 0505 0606 0707 0808 0909 1010 1111 1212
Million Metric TonsMillion Metric Tons
WorldWorldAverage Demand GrowthAverage Demand Growth
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Excess Capacity Fat Is Unhealthy
Excess Capacity Fat Is Excess Capacity Fat Is UnhealthyUnhealthy
Excess CapacityExcess Capacity Cumulative Excess CapacityCumulative Excess Capacity
--22
--11
00
11
22
33
44
55
66
0000 0101 0202 0303 0404 0505 0606 0707 0808 0909 1010 1111 1212
Styrene, Million Metric TonsStyrene, Million Metric Tons
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Regionally North America Has The Most To Lose
Regionally North America Has The Regionally North America Has The Most To LoseMost To Lose
-2.0-1.5-1.0-0.50.00.51.01.52.02.5
2004 2005 2006 2007 2008 2009 2010 2011 2012
North AmericaEurope Asia
Million Metric Tons
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
--600600--400400--200200
00200200400400600600800800
1,0001,0001,2001,2001,4001,4001,6001,600
20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012
Rest Of WorldRest Of WorldChinaChina
Styrene, Thousand Metric TonsStyrene, Thousand Metric Tons
Demand Growth Is Very Asian
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
What Are The Industry’s Options?What Are The IndustryWhat Are The Industry’’s Options?s Options?
• Wait for demand growth
• Radical capacity reduction surgery
• The industry has elected – “Capacity liposuction”
•• Wait for demand Wait for demand growthgrowth
•• Radical capacity Radical capacity reduction surgeryreduction surgery
•• The industry has The industry has elected elected –– ““Capacity Capacity liposuctionliposuction””
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
20012001 20022002 20032003 20042004 20052005 20062006
Styrene Capacity LiposuctionStyrene Capacity LiposuctionStyrene Capacity Liposuction
--12001200
--10001000
--800800
--600600
--400400
--200200
00
AmericasAmericas EuropeEurope AsiaAsia
Thousand Metric TonsThousand Metric Tons
20072007
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Stronger Athletes Have Come To Play
Stronger Athletes Have Come Stronger Athletes Have Come To PlayTo Play
• Middle East SM capacity comes on-stream from 2008-2012
• Adds 1850 to 3050 thousand metric tons of styrene in the market
•• Middle East SM Middle East SM capacity comes oncapacity comes on--stream from 2008stream from 2008--20122012
•• Adds 1850 to 3050 Adds 1850 to 3050 thousand metric thousand metric tons of styrene in tons of styrene in the marketthe market
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Middle East Styrene PlantsMiddle East Styrene PlantsMiddle East Styrene Plants
Kuwait TKSC 475 2009
Saudi Arabia Jubail CPChem 777 2008
SADAF 3 700 Pending QatarQP/Honam 600 2012
(Thousand Metric Tons)(Thousand Metric Tons)
Iran Pars PC 600 Pending
IndiaIndian Oil 600 2012
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Changing Styrene Trade Flows
'03'03 '07'07 '11'11
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
World Styrene Supply and Demand
DemandDemand CapacityCapacity Operating RateOperating Rate
00
55
1010
1515
2020
2525
3030
3535
4040
20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012
Million Metric TonsMillion Metric Tons
7676
7979
8282
8585
8888
9191
9494
9797
100100Operating Rate, PercentOperating Rate, Percent
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
How Fit Are You?How Fit Are You?How Fit Are You?
Cumulative Capacity (Million Tons)Cumulative Capacity (Million Tons)
MDE Avg.MDE Avg.
NAM Avg.NAM Avg. NEA Avg.NEA Avg.WEP Avg.WEP Avg.
100100
300300
500500
700700
900900
1,1001,100
1,3001,300
1,5001,500
1,7001,700
00 55 1010 1515 2020 2525 3030 3535
Dollars Per Metric Ton Dollars Per Metric Ton
MDE Avg.
NAM Avg. NEA Avg.WEP Avg.
20082008 20112011
Cumulative Capacity (Million Tons)Cumulative Capacity (Million Tons)
GlobalGlobalStyreneStyreneDemandDemand
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
A Bit Better, But More Is NeededA Bit Better, But More Is Needed
Styrene DemandStyrene Demand Old Operating RateOld Operating Rate
20202121222223232424252526262727282829293030
20062006 20072007 20082008 20092009 20102010 20112011 2012201280808181828283838484858586868787888889899090
Million Metric TonsMillion Metric Tons PercentPercent
New Operating RateNew Operating Rate
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Styrene ConclusionsStyrene ConclusionsStyrene Conclusions• Styrene is in the midst of a
transition, more capacity surgery is expected
• Demand has slowed, but styrene supply continues to come online
• The Middle East will continue to competitively place styrene in major markets
• Existing producers will have to choose – more surgery is necessary
•• Styrene is in the midst of a Styrene is in the midst of a transition, more capacity transition, more capacity surgery is expectedsurgery is expected
•• Demand has slowed, but Demand has slowed, but styrene supply continues to styrene supply continues to come onlinecome online
•• The Middle East will continue to The Middle East will continue to competitively place styrene in competitively place styrene in major marketsmajor markets
•• Existing producers will have to Existing producers will have to choose choose –– more surgery is more surgery is necessarynecessary
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Presentation OutlinePresentation OutlinePresentation Outline• Benzene
– Demand and Capacity Additions– Potential Supply Storms– Perfect Landing?
• Styrene– Capacity Fat Continues– Industry Options– Fitter competition coming
• Paraxylene/PTA– Capacity vs Demand– Trade Changes– What will Happen to Margins?
•• BenzeneBenzene–– Demand and Capacity AdditionsDemand and Capacity Additions–– Potential Supply StormsPotential Supply Storms–– Perfect Landing?Perfect Landing?
•• StyreneStyrene–– Capacity Fat ContinuesCapacity Fat Continues–– Industry OptionsIndustry Options–– Fitter competition comingFitter competition coming
•• ParaxyleneParaxylene/PTA/PTA–– Capacity Capacity vsvs DemandDemand–– Trade ChangesTrade Changes–– What will Happen to Margins? What will Happen to Margins?
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
The Paraxylene Unit Is Integrated Into The Refinery
The Paraxylene Unit Is Integrated Into The Refinery
Naphtha ReformerBTX
ExtractionParaxylene
Unit PX to PTA
TDP
Hydrogen
Benzene
MixedXylenes
MixedXylenesToluene
BenzeneLight and Heavy
Aromaticsto the Gasoline pool
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Paraxylene Capacity Grows Faster Than Demand
ParaxyleneParaxylene Capacity Grows Capacity Grows Faster Than Demand Faster Than Demand
--1.01.0
0.00.0
1.01.0
2.02.0
3.03.0
4.04.0
5.05.0
0202 0303 0404 0505 0606 0707 0808 0909 1010 1111 12124040
5050
6060
7070
8080
9090
100100
ChinaChina Middle EastMiddle East
EuropeEuropeNonNon--China AsiaChina Asia AmericasAmericas
Demand GrowthDemand GrowthOperating Rate Operating Rate
Operating Rate, PercentOperating Rate, PercentParaxyleneParaxylene, Million Metric Tons , Million Metric Tons
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Are Paraxylene And PTA In The Same Marriage?
Are Are ParaxyleneParaxylene And PTA In The And PTA In The Same Marriage?Same Marriage?
00
55
1010
1515
2020
2525
3030
0202 0303 0404 0505 0606 0707 0808 0909 1010 1111 1212
Surplus Capacity, PercentSurplus Capacity, Percent
Surplus PX CapacitySurplus PX Capacity Surplus PTA CapacitySurplus PTA Capacity
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Asia Produces Most ParaxyleneAsia Produces Most Asia Produces Most ParaxyleneParaxylene
00
1010
2020
3030
4040
0202 0707 1212
Million Metric TonsMillion Metric Tons
AmericasAmericas EuropeEuropeMiddle East & AfricaMiddle East & AfricaAsia Pacific Asia Pacific -- ChinaChinaChinaChina
•• Between 2007 and 2012 Between 2007 and 2012 paraxyleneparaxylene production will production will increase by 10 million tonsincrease by 10 million tons
•• Asia will produce 71% of Asia will produce 71% of the Worldthe World’’s s paraxyleneparaxylene by by 20122012
•• The Middle East will The Middle East will become a significant become a significant suppliersupplier
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
And Consumes Most Of It As WellAnd Consumes Most Of It As WellAnd Consumes Most Of It As Well
•• China will produce 40% of China will produce 40% of the Worldthe World’’s PTA by 2012s PTA by 2012
•• High growth is occurring in High growth is occurring in the developing regions of the developing regions of Europe and the AmericasEurope and the Americas
•• In the Middle East & Africa In the Middle East & Africa available capacity is limiting available capacity is limiting production growthproduction growth
00
2020
4040
6060
0202 0707 1212
Million Metric TonsMillion Metric Tons
AmericasAmericas EuropeEurope
Middle East & AfricaMiddle East & AfricaNonNon--China AsiaChina AsiaChinaChina
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Paraxylene Net TradeParaxyleneParaxylene Net TradeNet Trade
0606 0808 1010 1212
9494
--3131
3838
244244
--1818
250250
--250250
--668668
16451645
978978
--19561956--328328
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
Paraxylene Operating Rates And Margins
ParaxyleneParaxylene Operating Rates Operating Rates And MarginsAnd Margins
--150150
--100100
--5050
00
5050100100
150150
200200
250250
300300
0202 0303 0404 0505 0606 0707 0808 0909 1010 1111 1212
ParaxyleneParaxylene, $/MT, $/MT
5555
6060
6565
7070
75758080
8585
9090
9595
100100Operating Rate, %Operating Rate, %
NAM MarginNAM Margin WEP MarginWEP MarginNEA MarginNEA MarginNEA Op RateNEA Op Rate WEP Op RateWEP Op RateNAM Op RateNAM Op Rate
2008 APIC – CMAI Seminar2008 APIC – CMAI Seminar
• The worst may be over for polyester fiber. Operating rates and margins should begin to recover during the next few years
• PET resin markets continue to adding excess capacity in the face of slower demand growth
• PTA markets beginning to recover, but still have a way to go to return to profitability
• Paraxylene on the precipice of significant oversupply
• Entire PX-PTA-Polyester chain will suffer from weak margins during next few years
•• The worst may be over for polyester fiber. The worst may be over for polyester fiber. Operating rates and margins should begin to Operating rates and margins should begin to recover during the next few yearsrecover during the next few years
•• PET resin markets continue to adding excess PET resin markets continue to adding excess capacity in the face of slower demand growthcapacity in the face of slower demand growth
•• PTA markets beginning to recover, but still have PTA markets beginning to recover, but still have a way to go to return to profitabilitya way to go to return to profitability
•• ParaxyleneParaxylene on the precipice of significant on the precipice of significant oversupplyoversupply
•• Entire PXEntire PX--PTAPTA--Polyester chain will suffer from Polyester chain will suffer from weak margins during next few yearsweak margins during next few years
Paraxylene/PTA ConclusionsParaxyleneParaxylene/PTA Conclusions/PTA Conclusions
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