Maleic Anhydride Chain - World Market Overview

(Anna) Zhao Na

Chemicals Committee Meeting at APIC 2015

Seoul, 8 May 2015

• Feedstock Butane & Benzene Price Trends vs. Crude Oil

• Butane and Benzene – Based Production Economics

• Overview of World Supply & Demand Conditions

• UPR and Other Applications

• Conclusions

Source: Tecnon OrbiChem

APIC 2015

AGENDA

0

20

40

60

80

100

120

140

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

$/bbl

Source: US EIA

APIC 2015

WTI & BRENT CRUDE OIL PRICES 2005-2016 (US EIA Short Term Forecast)

WTI

Brent

0

200

400

600

800

1,000

1,200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

$/ton

APIC 2015

US N-BUTANES & CRUDE OIL PRICES

US n-Butanes

Brent Crude

WTI Crude

Source: Tecnon OrbiChem

300

400

500

600

700

800

900

1,000

1,100

30 40 50 60 70 80 90 100 110 120 130 140

N-Butanes ($/ton)

APIC 2015

US N-BUTANES vs WTI CRUDE OIL PRICES

Source: Tecnon OrbiChem

WTI ($/bbl)

200

400

600

800

1,000

1,200

1,400

1,600

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

$/ton

APIC 2015

WE MIXED BUTANES, BENZENE& BRENT CRUDE OIL PRICES

WE Benzene

WE MixedButanes

Source: Tecnon OrbiChem

Brent Crude

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

$/ton

APIC 2015

CHINA BENZENE, ASIA BUTANE& BRENT CRUDE OIL PRICES

Petroleum Benzene

Coal Benzene

Asia Butane

Brent Crude

Source: Tecnon OrbiChem

APIC 2015

UNITED STATES MALEIC ANHYDRIDE MARGIN OVER 1.10 x BUTANE

0

500

1,000

1,500

2,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Margin over 1.10 x Butane

US Maleic Anhydride

1.10 x US Butane

Source: Tecnon OrbiChem

$/ton

APIC 2015

CHINA MALEIC ANHYDRIDE MARGINOVER 1.15 x BENZENE

-100

200

500

800

1,100

1,400

1,700

2,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

$/ton

Source: Tecnon OrbiChem

Margin over 1.15 x China Coal Benzene

ChinaMaleic Anhydride

1.15 x ChinaCoal Benzene

APIC 2015

CHINA MALEIC ANHYDRIDE MARGINOVER 1.14 x BUTANE

0

400

800

1,200

1,600

2,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

$/ton

Margin over 1.14 x Butane

ChinaMaleic Anhydride

1.14 x Asia Butane

Source: Tecnon OrbiChem

0

500

1,000

1,500

2,000

2,500

3,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

North America

South America

West Europe

East Europe

ME & Africa

S & SE Asia

Northeast Asia

China

World Capacity

1,000 Metric Tons

Source: Tecnon OrbiChem

Production | Consumption

APIC 2015

WORLD MALEIC ANHYDRIDE SUPPLY & DEMAND BY REGION

0

1,000

2,000

3,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

1,000 Metric Tons

Source: Tecnon OrbiChem

North America

South America

West Europe

East Europe

ME & Africa

S & SE Asia

Northeast Asia

China

APIC 2015

WORLD MALEIC ANHYDRIDE CAPACITY BY REGION

0

100

200

300

400

500

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

1,000 Metric Tons

Source: Tecnon OrbiChem

Production

Consumption

Capacity

APIC 2015

NORTH AMERICA MALEIC ANHYDRIDE SUPPLY & DEMAND

0

100

200

300

400

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

1,000 Metric Tons

Source: Tecnon OrbiChem

Production

Consumption

Capacity

APIC 2015

WEST EUROPE MALEIC ANHYDRIDE SUPPLY & DEMAND

0

500

1,000

1,500

2,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

1,000 Metric Tons

Source: Tecnon OrbiChem

Production

Consumption

Capacity

APIC 2015CHINA MALEIC ANHYDRIDE SUPPLY & DEMAND

0

500

1,000

1,500

2,000

2010 2012 2014 2016 2018 2020

BenzeneButaneFeedstock

Source: Tecnon OrbiChem

APIC 2015

CHINA BUTANE BASED MALEIC ANHYDRIDE CAPACITY GROWTH & NEW PLANTS

1,000 Metric Tons

93%

7%

57%

43%

2010 2016

Producer Capacity(ktpa)

Start-UpDate

Zhuhai Unicizers (UPC) 30 Apr 2013

Zibo Qixiang Tengda 100 Nov 2013

Ningbo Jiangning 80 End 2013

Puyang Shengyuan 50 Aug 2014

Shandong Huifeng 50 Dec 2014

Dongying Qifa 30 Mar 2014

Dongyin Kede 30 Aug 2014

Shandong Yongshunda 30 Nov 2014

Yizheng Chemical Fibre 100 Mid 2015

Shandong Chenxi 50 H2 2015

Jiangsu Yabang 60 H1 2016

Panjin Union (UPC) 80 End 2015

APIC 2015TOP 10 MALEIC ANHYDRIDE PRODUCERS 2015

Company Location Capacity(ktpa)

% ofTotal

Huntsman Corporation United States 154 5.5Jiangsu Yabang Group China 150 5.4Bohai Chemicals China 140 5.0Sasol/Huntsman Germany 105 3.8Polynt Italy 101 3.6Shanxi Tayiuan Qiaoyou Chemicals China 100 3.6

Zibo Qixiang Tengda Chemical Co. China 100 3.6

Ningbo Jiangning Chemical China 80 2.9

Shandong Hongxin Chemical Industry Co. China 76 2.7Lanxess United States 73 2.6Total Capacity of Top 10 1,079 38.5Total Capacity World 2,800

Source: Tecnon OrbiChem

-80

-60

-40

-20

0

20

40

60

80

100

1,000 Metric Tons

Source: Tecnon OrbiChem

S &

SE A

sia

E E

uro

pe

W E

uro

pe

N A

merica

S A

merica

ME &

Africa

NE A

sia

Chin

a

2011

2010

2012

2014

2013

APIC 2015

WORLD MALEIC ANHYDRIDE NET TRADE 2010 - 2014

0

200

400

600

80020

10

20

14

20

10

20

14

20

10

20

14

20

10

20

14

20

10

20

14

20

10

20

14

20

10

20

14

20

10

20

14

Others

BDO

UPR

Source: Tecnon OrbiChem

NorthAmerica

SouthAmerica

WestEurope

EastEurope

ME & Africa

S & SEAsia

NEAsia

China

APIC 2015

WORLD PURE MALEIC ANHYDRIDE APPLICATIONBY REGION 2010 & 2014

1,000 Metric Tons

• UPR squeezed by feedstocks with very volatile pricing

o Styrene is the biggest component (at more than 35%) of UPR and more volatile than maleic

• Demand should be stimulated by lower prices anda pick-up in downstream applications including:

o Pipe (construction), Marine

o Wind Energy, Automotive

• UPR still faces challenges:

o In Europe & US due to environmental concerns – over styrene in particular.

o In Asia from oversupply - Chinese UPR capacity ran at 50% in 2014 but demand growth slows down further

• Bio-based UPR is a long way off but opportunities exist in styrene-free UPR and other initiatives.

Source: Tecnon OrbiChem

APIC 2015

UPR MARKET

APIC 2015

EUROPEAN ORTHOPHTHALIC RESINCOST OF RAW MATERIAL 2004-2015

0

300

600

900

1,200

1,500

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

€/ton

Source: Tecnon OrbiChem

Product Location Definition Factor

Monopropylene Glycol West Europe Industrial Grade Contract DDP 0.27Phthalic Anhydride West Europe Domestic Molten DDP 0.25

Composite West EuropeStyrene West Europe Contract Barges ARA FOB 0.34

Maleic Anhydride West Europe Molten Contract Price DDP 0.14

Tanks & Pipes18% Building

21%

Marine9%

Transport14%Artificial

Marble15%

Gelcoats7%

Others8%

Electrical8%

APIC 2015

UPR MARKET SEGMENTATION

Source: Cefic European UP/VE Resin Association; Chinese Society for Composite Materials

Infrastructure39%

Marine3%

Others11%

Transport5%

Architecture&

Structure32%

Industrial10%

Europe China

• The impact of low benzene prices on the global maleic market will be felt in terms of demand improvement ,while butane is likely to maintain its cost advantage over benzene as a maleic feedstock in the long run.

• The global maleic market has been showing modest improvement in the past few years in US and Europe, strong growth in the Middle East and Southeast Asia and slowing growth in China

• High transportation costs, for heating etc. mean that maleic remains a largely regional market. However, new trading opportunities have emerged amid lengthening supply in China and Northeast Asia and steady demand in Middle East and Southeast Asia.

• Butane based maleic has continued to grow in China due to its cost advantage over benzene and easier availability of feedstock butane - both of which could lead to increasing maleic exports from China.

• UPR has maintained its dominant share of maleic consumption, but growth has slowed in China.

APIC 2015

CONCLUSIONS

Source: Tecnon OrbiChem

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