Examining The Competiveness Of North American ... … · Wim Van de Velde, Director of Marketing, Plastic Additives business Global Propylene & Derivatives summit 2014, Houston, January

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

3

Who we are


Milliken’s supply chain infrastructure meets your customer service and

distribution needs.

4

Milliken chemical global presence


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

6

Versatility & sustainability

Polypropylene


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


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


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


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


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%


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.


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

http://www.rbnenergy.com/the-ethane-asylum-big-time-ethane-rejection



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.



Ethylene 78% 66% 42% 31%

Propylene 3% 7% 17% 16%


15

Chemical

Plant

Steam

Cracking


Natural Gas Liquids

(NGL)Olefins

Aromatics

PROCESS 2


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

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Resin pricing in North-America

PET PP PS



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.



Ethylene 78% 66% 42% 31%

Propylene 3% 7% 17% 16%


17

Chemical

Plant

Steam

Cracking


Natural Gas Liquids

(NGL)Olefins

Aromatics

PROCESS 2


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).


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


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


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$/l

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Resin pricing in North-America

PET PP PS


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


Confidential

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n-1

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$ 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


23

Detailed case studies

Replacement of PET/PS by ultra-clear

polypropylene


Confidential 24

Current market situation

PET

PP

PET

PP

X

PS

PP

X


Clarifying Agent Performance

Evolution of Polypropylene Clarifying Agents

25


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


Confidential 27


Sheet thickness :

470 µm

Weight : 17,4 g

Sheet thickness :

600 µm

Weight : 14,3 g

PET Ultra Clear PP


Confidential 28


PS Ultra Clear PP


Confidential

Heat resistance - microwaveability

29

Polypropylene


Confidential

Heat resistance - microwaveability

30

Polypropylene

Hot water (temp > 80°C, 176 Fahrenheit) is poured in the trays


Confidential

Easy seal, Easy peal

31

Polypropylene


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


Confidential

PP clarified with Millad NX 8000

34

Clarity and Aesthetics


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


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


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


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.


Confidential

Clearpackaging

Lightweightmaterial

Costefficient

41

PP clarified with Millad NX 8000


Confidential

Thermoforming/sheet ultraclear PPCommercial cases replacing PS or PET

42

43

Other applications

Inter-material replacement through

ultra-clear polypropylene

©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)


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


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

[email protected]

mailto:[email protected]

Documents

Examining The Competiveness Of North American ... … · Wim Van de Velde, Director of Marketing, Plastic Additives business Global Propylene & Derivatives summit 2014, Houston, January