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Wim Van de Velde, Director of Marketing, Plastic Additives business
Global Propylene & Derivatives summit 2014,
Houston, January 26th 2014
Examining The Competiveness Of North
American Polypropylene And The Role Of
Increased Propylene Supply To Allow For
Improved Economics And Greater
Derivative Market Penetration, an
additives approach
©2013 Milliken & Company
2
• Who we are: our legacy of innovation
• Polypropylene: versatility & sustainability
• Polypropylene vs PET/PS: shale gas development in North-America and
how it effects polypropylene economics
• Replacement of PET/PS by ultra-clear polypropylene: detailed case
studies
• Inter-material replacement: other applications
Agenda
©2013 Milliken & Company
Milliken’s supply chain infrastructure meets your customer service and
distribution needs.
4
Milliken chemical global presence
©2012 Milliken & Company
Milliken Chemical: innovation
5
Hyperform HPR-803i
3 core platforms:Silicone chemistry
Polymeric bound chemistry
Performance plastic additives
Performance plastic additives
R & D projects
Reactint
Liquitint
Stiffness/impact balance
Scratch resistance
Crystallization speed
Crystallization orientation
Barrier
Opticals
Shrinkage
Vivitint
Silicone
Millad NX8000
Hyperform
©2013 Milliken & Company
PP is a functional alternative to other materials options
Polypropylene Properties
Desired property PS PC PMMA SAN PET PVC Glass
Density + ++ + + ++ ++ +++
Design flexibility + ++ ++ + + + ++
Scratch resistance
Relative cost per unit volume + ++ + + + + +
Chemical resistance + + ++ + + +
O2 Barrier properties + +
H2O Barrier properties ++ ++ + + + +
Key – PP is Superior +++, Much Better ++, Better +, Worse , Much Worse
©2013 Milliken & Company
Confidential
A sustainable solution
Low carbon footprint during
production of the granulate
Polypropylene is recyclable
High energy recovery values for
polypropylene
8
Polypropylene
9
Shale gas development in North-America and how it effects
polypropylene economics
Polypropylene vs PET/PS
©2013 Milliken & Company Confidential
The feedstocks used to make these polymers are classified as either
‘olefins’ or ‘aromatics’
Feedstocks: Olefins & Aromatics
10
Feedstock Petrochemical Classification
Xylene Aromatic
Ethylene Olefin
Ethylene Olefin
Ethylene Olefin
Propylene Olefin
Benzene, Ethylene Aromatic, Olefin
©2013 Milliken & Company Confidential
Source of Feedstocks
11
Ultimately, all of these polymers and their feedstocks are derived from
crude oil or natural gas, and made by one of two processes.
Oil
Refinery
Chemical
Plant
Fractional
Catalytic
Cracker (FCC)
Steam
Cracking
Naptha (oil derived)
Natural Gas Liquids
(NGL)
Olefins
Aromatics
Olefins
Aromatics
Crude Oil
PROCESS 1
PROCESS 2
©2013 Milliken & Company Confidential
Steam Cracked feedstocks
12
“Heavy feeds”
Historically (before ~2010/11), steam crackers used “heavy” feed (naptha)
to produce olefins and aromatics. This produced abundance of olefins and
aromatics (good for all polymer types).
Chemical
Plant
Steam
Cracking
Naptha (oil derived)
Olefins
Aromatics
PROCESS 2
Cracker yield from different
feedstock (light vs. heavy feed)Ethane E/P Mix Propane Naptha
Ethylene (olefin) 78% 66% 42% 31%
Propylene (olefin) 3% 7% 17% 16%
Aromatics (benzene, xylene) 2% 3% 7% 17%
©2013 Milliken & Company Confidential
Shale Gas: A Game Changer
13
The US was supposed to be importing PE by now…
Led by new applications of hydraulic fracturing (‘hydro-frac’) technology
and horizontal drilling, development of new sources of shale gas has
offset declines in production from conventional gas reservoirs.
©2013 Milliken & Company Confidential
The Shale Gas Effect
14
Shale gas, while predominantly comprised of methane, is also ethane rich.
The natural gas liquids (NGLs) from these shale plays are almost all ethane
(56%) and propane (24%).
Source: http://www.rbnenergy.com/the-ethane-asylum-big-time-ethane-rejection
©2013 Milliken & Company Confidential
Steam Cracked feedstocks
15
“Light feeds”
With the recent discovery of shale gas reserves in the US, Natural Gas
Liquids, in particular ethane, have become extremely inexpensive and the
feedstock of choice for steam crackers. Result is abundance of ethylene.
Cracker yield from different
feedstock (light vs. heavy feed)Ethane E/P Mix Propane Naptha
Ethylene 78% 66% 42% 31%
Propylene 3% 7% 17% 16%
Aromatics (benzene, xylene) 2% 3% 7% 17%
15
Chemical
Plant
Steam
Cracking
Naptha (oil derived)
Natural Gas Liquids
(NGL)Olefins
Aromatics
PROCESS 2
©2013 Milliken & Company
Confidential
From mid-2010, rationalized feedstock availability for PET, PP & PS is
reflected in market pricing. However, PP continues to be volatile.
Material Pricing
I.H.S. 01/26/2014 NA Contract Pricing Cents/lb delivered
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$/l
b
Resin pricing in North-America
PET PP PS
©2013 Milliken & Company Confidential
Steam Cracked feedstocks
17
“Light feeds”
When the price of propylene gets high enough, these chemical plants will
switch from cracking ethane to propane. Refineries opt to make more
polymer grade propylene as well. Oversupply rapidly drives the price down.
Cracker yield from different
feedstock (light vs. heavy feed)Ethane E/P Mix Propane Naptha
Ethylene 78% 66% 42% 31%
Propylene 3% 7% 17% 16%
Aromatics (benzene, xylene) 2% 3% 7% 17%
17
Chemical
Plant
Steam
Cracking
Naptha (oil derived)
Natural Gas Liquids
(NGL)Olefins
Aromatics
PROCESS 2
©2013 Milliken & Company Confidential
A 3rd feedstock source: On purpose!
18
A bright future for PP in North America
North America will have an abundant supply of propane from shale gas
plays for long-term future. This propane can be converted into
propylene via ‘propane dehydrogenation’ (PDH).
©2013 Milliken & Company Confidential
The source of propylene feedstock has changed dramatically over the
past 5 years, and is poised for continued evolution over the next 5 years.
Source of Propylene Feedstock
19
Polypropylene dynamics
Steam
Crackers
PRESENT
Oil
Refineries
PAST FUTURE
On
Purpose
35%
65%
<1%
Steam
Crackers
Oil
Refineries
On
Purpose
60%
35%
~5%
Steam
Crackers
Oil
Refineries
On
Purpose
55-
60%
17-
25%
15-
20%
~18.5 B lbs PP ~17.5 B lbs PP ~20-22 B lbs PP
©2013 Milliken & Company
Confidential
Polypropylene (for now) is the most susceptible to price volatility due to
ability of crackers to switch from ethane to propane feeds.
Resin Price Volatility
I.H.S. 01/26/2014 NA Contract Pricing Cents/lb delivered
0.0
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$/l
b
Resin pricing in North-America
PET PP PS
©2013 Milliken & Company
Confidential
(g/cm
^3)
Density Matters
PP has a density advantage compared to other materials
Material Density
21
PET 44% more
dense than PP
PS 16% more
dense than PP
©2013 Milliken & Company
Confidential
0.0
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n-1
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-19
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v-1
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r-2
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g-2
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v-2
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r-2
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r-2
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Au
g-2
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No
v-2
01
4
$ p
er v
olu
met
ric
bas
is
Resin pricing in North-America density adjusted
PET PP PS
PP has a tremendous economic advantage when adjusting for density
Density Effect on Resin Pricing
22
I.H.S. 01/26/2014 NA Contract Pricing Cents/lb delivered
©2013 Milliken & Company
Clarifying Agent Performance
Evolution of Polypropylene Clarifying Agents
25
©2013 Milliken & Company
Confidential 26
What if PP can be ultra clear ?
Sheet thickness :
470 µm
Weight : 17,4 g
Sheet thickness :
600 µm
Weight : 14,3 gPET PP
©2013 Milliken & Company
Confidential 27
What if PP can be ultra clear ?
Sheet thickness :
470 µm
Weight : 17,4 g
Sheet thickness :
600 µm
Weight : 14,3 g
PET Ultra Clear PP
©2013 Milliken & Company
Confidential
Heat resistance - microwaveability
30
Polypropylene
Hot water (temp > 80°C, 176 Fahrenheit) is poured in the trays
©2013 Milliken & Company
Confidential
Other parameters
32
Polypropylene
Desired property PET PS PVC
Density ++ + ++
Heat resistance ++ + +++
Chemical resistance + + +
O² Barrier properties
H²O Barrier properties + ++ +
Stiffness
Impact
Ductility +++
Key – PP is Superior +++, Much Better ++, Better +, Worse , Much Worse
©2013 Milliken & Company
Confidential
...Millad NX 8000 allows the ability to tune clarity as needed
35
Clarity and Aesthetics
Millad NX 8000 : medium range
• Improved Aesthetics
• Improved Quality and consistency
• Clear Material Substitution
Millad NX 8000 : high range
• Excellent Aesthetics
• Ultra Clear Material Substitution
©2013 Milliken & Company
Confidential
PP clarified with Millad NX 8000 is lighter than PET, with equal stiffness
36
Light weight material
PET PP clarified with
Millad NX 8000
1 kg PET =
57 containers
1 kg PP =
70 containers
18 % weight
reduction
Sheet thickness:
470 µm
Weight : 17,4 g
Sheet thickness:
600 µm
Weight : 14,3 g
©2013 Milliken & Company
Confidential
PP clarified with Millad NX 8000 is lighter than PET, with equal stiffness
38
Light weight material
PET PP clarified with
Millad NX 8000
1 kg PET =
217 lids
1 kg PP =
263 lids
17 % weight
reduction
Part thickness:
0,20 mm
Weight : 4,6 g
Part thickness:
0,30 mm
Weight : 3,8 g
©2013 Milliken & Company
Confidential
PP clarified with Millad NX 8000 is less expensive than PS
39
Cost efficiency
PS
PP clarified with
Millad NX 8000
Estimated Sheet Costs
3250 $/Ton
Estimated Sheet Costs
2405 $/Ton
26 % * cost
reduction
* Costs reduction calculated for this case study and based on price comparison Oriented PS sheet versus Ultra Clear PP sheet.
©2013 Milliken & Company
Confidential
Clearpackaging
Lightweightmaterial
Costefficient
41
PP clarified with Millad NX 8000
©2013 Milliken & Company
Confidential
Thermoforming/sheet ultraclear PPCommercial cases replacing PS or PET
42
©2010 Milliken, Private & Confidential Confidential internal only
IM 40%
ISBM 9%
EBM 26%
TWIM6%
44
Ultra-clear polypropyleneOther commercial successes
©2013 Milliken, Private & Confidential
Ultra-clear polypropyleneOther commercial successes
45
Forensic vials
(IM)
Jars
(IM)Dome lid
(IM)
Tubing & IV bags
(Extrusion)
Dishware
(IM)
Bottle
(EBM)
Housewares
(IM)
©2013 Milliken & Company
Confidential
Summary
• Polypropylene’s future for North-America looks bright for 3 reasons:
1. Polypropylene is well positioned from an economic point of view
due to the shale gas developments and investments into on
purpose PDH units
2. Polypropylene remains a versatile, recyclable material with a low
carbon footprint, making it well positioned to compete against
other plastics
3. As a result we expect polypropylene’s growth rates and new
applications to continue to prosper for the foreseeable future
4. Milliken & Company remains committed to continue to invest in
research & development of new chemistries to enhance the
physical properties of polypropylene and to allow it continue to
grow at the expense of other materials
©2013 Milliken & Company
47
Wim Van de Velde
Director of Marketing, Plastic Additives
Milliken & Company
920 Milliken Road M-209
Spartanburg,SC 29303
T +1 864 503 6047 / C +1 864 680 7064
wim.vandevelde@Milliken.com
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