• Evyap Sabun Malaysia Sdn Bhd Building Chemistry with You 20 th August 2014 1
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Oleochemical Production & Value chain World Production of Oils & fats Global Splitting Capacity Europe 11% Animal Fat North 14% America South 9% America 1% SE Asia Japan 48% China 2% Vegetable Oil 20% 86% India 9% Oils & Fats Production (2013/14) (193 Mio Tonnes) • Bath Soap • The SEA can boost of the largest • Metal Soap Fatty Acid Fatty Acid • Sorbitan Esters splitting capacity in the world. • Glycol Esters • Mono/Di/Tri Glycerides • The basic oleo chemicals are the • Alkonamides building blocks for downstream or Methyl Ester Methyl Ester • Sugar Ester second generation oleo chemicals. • Methyl Ester Sulphonates • Biodiesel & Lubricants Oils & Fats Oils & Fats • Oleo chemicals have numerous • Alkyl suphate commercial applications like soaps, • Alkyl phosphate Fatty Alcohol Fatty Alcohol • Alkyl Amide cosmetics, pharmaceuticals, rubber, • Alkyl Glucoside plastics, confectionaries and many more. • Glycol Ester Glycerine Glycerine • Polyglycerine • • Monoglyceride Palm Stearin & Tallow 3 Source :www. Worlpalmoil.com & Internal
Present Scenario … Global Supply &Demand for Oleochemicals Global Vs Asia (Production of Fatty Acids, Fatty Alcohols & Glycerine ,2013) 20000 14,000.00 18000 Supply 12,000.00 16000 Global Demand 14000 10,000.00 Asia 12000 8,000.00 MTs MTs. 10000 6,000.00 8000 6000 4,000.00 4000 2,000.00 2000 - 0 Fatty Acid Fatty Alcohols Glycerine 2005 2010 2013 2018-20 Announced capacity expansion in different regions • (2012 - 2015) The Oleochemicals is growing at a CAGR of 5% for the period from 2013 to 2018.(in terms of both 2500 demand and production) 2000 • Fatty Acids, demand is growing at CAGR 6% , the Fatty Acids 1500 increase in demand due to expansion of soap Fatty Alcohols noodles market & fatty alcohol. 1000 • Fatty Alcohol,expected to grow at CAGR 5.6% and 500 will expand to 4.8 Mio Tonnes by 2020 0 • SEA leading region in terms of production estimates and annual growth of 6.6% per annum 4 Source : LMC International
World Oleochemical Capacity (Region-wise) 16,000.00 14,000.00 12,000.00 10,000.00 8,000.00 Asian 6,000.00 Dominance 4,000.00 2,000.00 - 1980 1990 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 1980 1990 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 ROW 100.00 100.00 100.00 190.00 190.00 190.00 190.00 190.00 190.00 190.00 250.00 250.00 SA - - 100.00 100.00 100.00 170.00 250.00 330.00 330.00 380.00 400.00 400.00 Asia 440.00 1,244.00 2,914.00 3,940.00 4,395.00 6,020.00 6,650.00 6,975.00 7,335.00 7,720.00 9,515.00 11,100.0 Europe 1,500.00 1,800.00 2,295.00 2,295.00 2,295.00 2,345.00 2,345.00 2,345.00 2,075.00 2,075.00 2,075.00 2,175.00 NA 1,300.00 1,600.00 1,700.00 1,800.00 1,800.00 1,740.00 1,740.00 1,740.00 1,740.00 1,740.00 1,740.00 1,740.00 • The oleochemical started as Tallow based, in the process of development, plants started utilizing the more competitive sources of raw material available to them, like Palm Oil. • Palm Oil produced primarily in Malaysia & Indonesia is the most competitive source. • The tallow based plants can still be found in Europe, US, Japan (*) • Global Market Shift 5 Source : LMC International
Asian Regional Oleochemical Capacity 12,000.00 10,000.00 8,000.00 MTs 6,000.00 4,000.00 2,000.00 - 1980 1990 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 India 220.00 220.00 460.00 460.00 460.00 475.00 485.00 490.00 590.00 590.00 750.00 1,030.00 China 116.00 116.00 284.00 510.00 570.00 1,550.00 1,830.00 2,030.00 2,110.00 2,220.00 2,360.00 2,480.00 Japan 104.00 108.00 370.00 370.00 370.00 370.00 370.00 370.00 370.00 370.00 370.00 370.00 South East Asia - 800.00 1,800.00 2,600.00 2,995.00 3,625.00 3,965.00 4,085.00 4,265.00 4,540.00 6,035.00 7,220.00 2005 2006 2007 2008 2009 2010 2011 2012 2013 Points : North America 1,800.00 1,800.00 1,740.00 1,740.00 1,740.00 1,740.00 1,740.00 1,740.00 1,740.00 • By 2013 the demand for Europe 2,295.00 2,295.00 2,345.00 2,345.00 2,345.00 2,075.00 2,075.00 2,075.00 2,175.00 oleochemicals has reached Asia, of which 3,940.00 4,395.00 6,020.00 6,650.00 6,975.00 7,335.00 7,720.00 9,515.00 11,100.00 approx 15 Mio Tonne and South East Asia 2,600.00 2,995.00 3,625.00 3,965.00 4,085.00 4,265.00 4,540.00 6,035.00 7,220.00 expected to reach 18 Japan 370.00 370.00 370.00 370.00 370.00 370.00 370.00 370.00 370.00 Mio.Tonnes by 2018/20 China 510.00 570.00 1,550.00 1,830.00 2,030.00 2,110.00 2,220.00 2,360.00 2,480.00 India 460.00 460.00 475.00 485.00 490.00 590.00 590.00 750.00 1,030.00 • Major share in Asia by South America 100.00 100.00 170.00 250.00 330.00 330.00 380.00 400.00 400.00 SEA, followed by China & Rest of the World 190.00 190.00 190.00 190.00 190.00 190.00 190.00 250.00 250.00 India Total 8,325.00 8,780.00 10,465.00 11,175.00 11,580.00 11,670.00 12,105.00 13,980.00 15,665.00 6 Source : LMC International
Structural Changes & Evolution � Upstream integration � Geographical and structural shift w.r.t Production & Demand � Growth of Biodiesel & expansion of Glycerine market � Rationalization and consolidation in Asia Pacific continues. � Diverse strategy of plantation players (Regional vs Global Oil Players) � Fiscal incentive remains major driver of investment � Advent of fracking technology in US & stable crude oil prices , the synthetic oleochemical producers play significant role 7
Challenges for Oleochemical producers � Commoditization of products � Volatility of Palm Oil � Trade Barriers � Higher margins in up stream products � Technical manpower � Competition from Substitutes (Petroleum based products) � Producers outside tax incentive zones will have to cut down on margins to remain competitive � Sustainability & Traceability 8
Way Forward 80,000 GDP per Capita, $K GDP per Capita vs Median Age G-20 � Seek opportunities 70,000 Australia down the value ‘ RICH BUT OLD ’ GDP per Capita = country GDP value relative to 60,000 chain USA = These economics are 79% of global GDP ($70t) Canada � Focus in the growth 50,000 Japan France markets Germany USA 40,000 UK � Strategic tie ups Italy Spain ‘ POOR, BUT 30,000 Y OUNG ’ Emerging Growth Markets South Korea Saudi Arabia 20,000 Brazil Mexico Russia Argentina 10,000 South Africa Turkey China Indonesia India ‘ POOR AND AGEING ’ 0 15 20 25 30 35 40 45 50 M e d i a n a g e / y e a r s **Global Soap Market Income Levels & Age Profiles Source : Internal
Future of Oleo Business � Asia, Middle East & LATAM are going to drive Share of population under age 30 by Region :2030 growth in consumption. Middle East & Africa 61.70% � Emerging economies are future market. � This trend is likely to continue due to World 44.70% demographic reasons. Latin America 43.70% � Growth in Personal care market & Soap & Detergent market will drive oleochemical Asia Pacific 43.70% demand Australasia 37.60% North America 36.50% Western Europe 32.60% Eastern Europe 32.06% � ROW region is moving towards surfactant/alcohol driven consumption. � Growth of Oleo Chemicals is estimated to be in the range of up to 9 to 11%. Considering the volume growth in the emerging markets. Source : Euromonitor
Way Forward � Oleochemical companies going downstream – calls for Govt. encouragement � Differential pricing on oil (raw material) for oleochemical producers � FDI in FMCG sector, which will help increase domestic demand � Support by promoting subsidiaries/tax incentives for investment in R&D, Innovation in downstream sector � Develop Manpower 11
Evyap � Founded in 1927. � One of the largest soap making capacity in the world with 350,000 Ton per year. � Exporting to more than 100 countries. � Market leader in Turkey, Russia & MENA regions. � Operates in Soap, Personal Care, Cosmetics, Hygiene Care & Glycerin. � Operates in multi location plant in Turkey, Egypt and Malaysia. � Started commercial port called Evyap Port in 2003. � Employs 5,000 people.
Our Foray in South East Asia Proximity to a more sustainable feed stock Backward integration for cost optimisation & quality Changing customer preference towards vegetable base Well developed infrastructure & ease of doing business Opportunities in the emerging Asian Markets 13
EVYAP SABUN MALAYSIA SB Now Commissioning … .. • Largest integrated Oleochemical & Personal Care complex. • State of art production facility Splitting • Production capacity of Distillation 400,000 Mts. • Investment of USD 200 Mn. Fractionation Neutralization Evyap Sabun Malaysia Sdn Bhd Jalan Nibong 4,Tanjung Langsat Industrial Estate,81700 Pasir Gudang, Johor, Malaysia Saponification Hydrogenation Oleic Acid Personal Care Product 14
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