Market intelligence for the energy, chemical and fertilizer industries www.icis.com 1
Market intelligence to support your commercial planning & decision making Pricing News intelligence Training and Analysis Conferences Supply and Consultancy Demand www.icis.com 2
Plastics markets in transition – preparing for a new world Malini Hariharan Head of South Asia Markets ICIS March 2018 www.icis.com 3
Rising crude oil Trade Strong prices issues economy US Strong Plant demand Inspections & closures Trade China 2 nd war? investment New wave Rise in capacities imports Ban on plastic waste New imports capacities India Demand recovery Investment activity up Start up of new plants www.icis.com 4
Global upswing underway Global PMI Global GDP growth projections revised 65 upwards - expected to hit 3.9% in 2018 & US, Europe acceleration 60 2019, up from 3.7% in 2017 EXPANSION 55 Big boost from acceleration in economic 50 activity in the US, Europe 45 40 PMI numbers from US, Europe and China CONTRACTION 35 support outlook 30 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Faster economic expansion will boost demand for oil and other commodities and US Eurozone China also support higher interest rates and tighter monetary policies www.icis.com 5
Crude surges as supply and demand move closer to balance www.icis.com 6
Petrochemical prices were up in 2017 and most markets have seen a strong start to 2018 Asia IPEX v Brent US$/bbl 400 160 350 300 120 250 200 80 150 100 40 50 0 0 2006 2008 2010 2012 2014 2016 2017 2018 Brent Crude Oil ($/bbl) Asia IPEX Markets largely supported by demand and supply issues; Chinese buying and firmer crude oil prices www.icis.com 7
China crackdown on pollution – a game changer April 2017 – China begins air pollution inspections in Beijing, Tianjin and 26 other cities in the Northeast (‘2+26 Plan’) – 25 rounds in 1 year, intensifying in the winter Ban on imports of waste plastics announced July 2017, went into effect end of 2017 More stringent environmental regulations have shut down chemical plants – some permanently Chemical markets have tightened. Only larger, well funded players can compete. China will export inflation vs deflation www.icis.com 8
China imports show strong growth in 2017 even as the country adds new capacities 5 PS 2017 Vs 2016 ABS LDPE 16% PP LLDPE 16% HDPE 21% HDPE PP 4% LLDPE ABS 6% LDPE PC 5% - 1 2 3 4 5 6 7 M tonnes 2017 2016 2015 www.icis.com 9
Polymer markets www.icis.com 10
A number of factors drive polymer prices • Health of the economy • Health of downstream sectors – • Operating rates Supply packaging, auto and construction • Shutdowns and outages • Seasonal factors and holidays • New plant start-ups • Trade policies • Product substitution • SENTIMENT Demand Costs • Feedstock costs • Freight rates • Currency fluctuations www.icis.com 11
LLDPE - spread between India and China has widened 1500 India has moved from net 1400 deficit to surplus Commissioning of new 1300 capacities has pushed Indian prices below China 1200 Spread has widened to ~US$70 this year 1100 1000 900 Jan-2015 Feb March April May June July Aug Sep Oct Nov Dec Jan-2016 Feb March April May June July Aug Sep Oct Nov Dec Jan-2017 Feb March April May June July Aug Sep Oct Nov Dec Jan-2018 Feb LLDPE Film CFR China USD/tonne LLDPE Film CFR India USD/tonne Average 2015 Average 2016 Average 2017 USD 1180/cfr China USD 1110/cfr China USD 1130/cfr China USD 1230 cfr India USD 1150 cfr India USD 1150 cfr India www.icis.com www.icis.com 12 12
Similar trend for HDPE but delta between India and China has narrowed China-India spread 1500 widened to over US$80 end of last year but has 1400 since fallen 1300 Tight supply especially for pipe, blow moulding 1200 and film grades Pipe grade prices have 1100 increased by 30% in last year largely supported by 1000 China’s shift from coal to gas policy shift 900 Jan-15 Feb March April May June July Aug Sep Oct Nov Dec Jan-16 Feb March April May June July Aug Sep Oct Nov Dec Jan-17 Feb March April May June July Aug Sep Oct Nov Dec Jan-18 Feb Prices currently at a 8- year high HDPE Blow CFR China USD/tonne HDPE Blow CFR India USD/tonne Average 2016 Average 2017 Average 2015 USD 1070/cfr China USD 1120/cfr China USD 1160/cfr China USD 1140 cfr India USD 1130 cfr India USD 1230 cfr India www.icis.com www.icis.com 13 13
PP capacity growth in China; India’s surpluses gradually getting absorbed 1500 PDH/CTO/MTO led 1400 capacity growth in China 1300 over the last few years 1200 India surplus gradually easing as the country 1100 turns to a net importer 1000 With propylene prices 900 also moving up, PP faces upward pressure 800 700 Jan-2015 Feb March April May June July Aug Sep Oct Nov Dec Jan-2016 Feb March April May June July Aug Sep Oct Nov Dec Jan-2017 Feb March April May June July Aug Sep Oct Nov Dec Jan-2018 Feb PP Injection CFR China USD/tonne PP Injection CFR India USD/tonne Average 2015 Average 2016 Average 2017 USD 1070/cfr China USD 950/cfr China USD 1055 cfr China USD 995 cfr India USD 1125 cfr India USD 1130 cfr India www.icis.com www.icis.com 14 14
India PE growth outlook robust but surplus likely to take few years to digest Polyethylene (‘000 tonnes) Polypropylene (‘000 tonnes) 2020 2020 2019 2019 2018 2018 2017 2017 2016 2016 0 200 400 600 800 1000 1200 0 100 200 300 400 500 600 Addition to Demand Addition to Capacity Addition to Demand Addition to Capacity PP capacity additions at MRPL, OPaL, BCPL PE capacity additions at GAIL, BCPL, OPaL during 2016-2017 and Reliance Due 2018- 19: Indian Oil’s 700kta plant at Paradeep www.icis.com 15
Polycarbonate at historic highs Polycarbonate (USD/tonne) 4300 3800 3300 2800 2300 1800 1300 800 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 GP Moulding CIF China GP Extrusion CIF Taiwan/China Healthy global demand Multiple production issues (hurricane Harvey etc) tightened global supply Strong push from feedstock costs – bisphenol A prices also rose by 40% last year; but spread between PC and BPA widened to well above the typical US$900 level www.icis.com 16
ABS has broadly followed styrene Styrene Monomer and ABS price trend 2500 ABS 2017average: US$1800 ABS 2016 average: US$1336 5 24% 2000 6 15% 5 40% China imposes ADD on South Korea, Taiwan and the US 6 27% 1500 5 17% 5 43% 1000 Styrene 2017 average: US$1243 Styrene 2016 average: US$1055 500 Styrene Monomer CFR China USD/tonne ABS CFR India USD/tonne Robust ABS demand (China imports up 6% to 1.789m tonnes) Environmental controls in China/restriction on imports of waste plastics - impact on local industry www.icis.com 17 Source: ICIS
ABS-styrene spreads widen ABS-Styrene spread has moved up ABS - Styrene spreads (US$/tonne) sharply in 2017 900 Butadiene prices have been running below the high of US$2800 seen in early 800 2017; but volatile 700 Supply constraints have pushed 600 acrylonitrile higher 500 400 300 200 100 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD www.icis.com 18
Supply issues in Europe and US spell trouble for nylon buyers Nylon price trend (USD/tonne) 4800 4300 3800 3300 2800 2300 1800 1300 800 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Nylon 6 Inj Mould Unfilled (industrial Grade) FD NWE Nylon 6,6 Virgin Polymer FD NWE Global markets experiencing shortages amid plant shutdowns and force majeures across the value chain Demand has been good; tightness expected to persist in 2018 But threat of lower priced competitng materials for certain applications www.icis.com 19
US capacity wave www.icis.com 20
New US crackers complete, under construction, FID made C2 capacity Company Downstream (kt/year) Location Start-Up (kt/year) OxyChem/Mexichem 544 Feed existing VCM plant of 1,050 Ingleside, Texas Q1 2017 (done) Q3 2017, LDPE Q4 2017, EPDM ELITE PE (400); LDPE (350) – Plaquemine, Dow Chemical 1,500 Freeport, Texas early 2018, elastomers late Louisiana; EPDM (200); elastomers (320) 2018 mLLDPE plus LLDPE (650 x2) at Mont ExxonMobil Chemical 1,500 Baytown, Texas Q2 2018 Belvieu Bimodal HDPE (500), mLLDPE (500) both Chevron Phillips Chemical 1,500 Cedar Bayou, Texas Q1 2018 at Old Ocean Formosa Plastics 1,200 HDPE (400), LDPE (400), EG (800) Point Comfort, Texas Q4 2018 LDPE (450), LLDPE (450), EO/EG (300), H2 2018, LDPE early 2019, Sasol 1,500 Lake Charles, Louisiana ethoxylates, detergent alcohols (300) alcohols H2 2019 Shintech 500 VCM (300), PVC (300), caustic soda (200) Plaquemine, Louisiana 2018 MEG (700) by Lotte, feed into existing Westlake/Lotte 1,000 St Charles, Louisiana 2019 PVC for Westlake Shell 1,500 HDPE/LLDPE (550 x2), HDPE (500) Monaca, Pennsylvania Early 2020s 9 new crackers = 10.7m tonnes/year Through 2019 = 9.2m tonnes/year www.icis.com 21
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