Flame retardants & magnesium

Confidential. © 2021 IHS Markit®. All rights reserved.Confidential. © 2021 IHS Markit®. All rights reserved.

Flame retardants & magnesium chemical markets outlook Wed 30 June 2021

Samantha Wietlisbach

Director Minerals Research and Analysis

+41 44 283 6336

[email protected]

Confidential. © 2021 IHS Markit®. All rights reserved.

Agenda

>Magnesium sources>Processes

Magnesium sulfate

Overview magnesium chemicals

Magnesium hydroxide (MDH)

>World producers >Consumption, import developments

Samantha Wietlisbach IHS Markit / June 2021

>Flame retardant market>Environmental market, FGD


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Refractory magnesia

54%CCM34%

Magnesium hydroxide

5%

Magnesium chloride

4%

Magnesium sulfate

3%

© 2021 IHS Markit

5

World consumption of magnesium resources in 2019


Source: IHS Markit


CCMMagnesium Oxide

Non-refractory

Kieserite or other minerals

Magnesium sulfate

Magnesiteor other minerals Seawater Brines

H2SO4 Magnesium Chloride

Magnesium Hydroxide

evaporation

Calcined dolomite or lime slurry

HCl

Magnesium Oxide (CCM) and Chemicals Flowchart

Thermal decomposition

calcination

Magnesium Carbonate CO2

Brucite mineral


© 2021 IHS MarkitSource: IHS Markit


86% of magnesium chemicals derived from magnesite

86% 7% 4% 2% 1%

Mineral magnesite and serpentine Brine Seawater Kieserite Brucite Byproduct and other

Magnesite and other minerals

Brine, solution mining

Seawater, with

dolomite or limestone

Brucite Mg(OH)2mineral


© 2021 IHS Markit


Flame retardants are one of the higher value larger market size Mg applications

0

500

1000

1500

2000

2500

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Average price vs market size

Average price / USD per ton

Magnesium sulphate Magnesium hydroxide


© 2021 IHS Markit


Flame retardants are one of the higher value larger market size Mg applications

0

50

100

150

200

250

300

350

400

450

0

500

1000

1500

2000

2500

© 2021 IHS Markit

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Average price vs market size

Average price / USD per ton Market size / m USD

Magnesium sulphate Magnesium hydroxide



Magnesium SulphateGlobally, about 74% is used in agriculture

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Confidential. © 2021 IHS Markit®. All rights reserved.11

China55%EMEA

33%

Total North America

5%

South America

4%

Other Asia3%

Source: IHS Markit

The worlds largest producer is based in Germany


Magnesium sulfate capacity by region–2019

© 2021 IHS Markit

Confidential. © 2021 IHS Markit®. All rights reserved.12

Magnesium sulfate consumption varies considerably by region

0%

20%

40%

60%

80%

100%

Americas W Europe NE Asia

Other

Sorel Cement

Consumer Segment/Epsom SaltABS Polymerization

Detergents

Pulp and Paper

Agriculture

Total consumption - 2019 estimated >1.4 million metric tons

© 2021 IHS Markit


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0

50

100

150

200

0

100

200

300

400

500

600

2014 2015 2016 2017 2018 2019 2020 2021f

New Zealand

Australia

Philippines

Vietnam

Thailand

Indonesia

Malaysia

Average Price

Magnesium sulfate imports–South East Asia

South East Asia is the major importing region for magnesium sulfate


US$/kgkt



Magnesium HydroxideFlame retardants are a high value application

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15

Magnesium Hydroxide Consumption

2016 2019 2024

Other

Pulp & Paper

FlameRetardantsChemicals

Environmental

© 2021 IHS Markit

Total Mg(OH)2 consumption forecast – world

Total consumption - 2019 estimated at >1 million metric tons


Source: IHS Markit


-4

-2

0

2

4

6

8

2017 2018 2019 2020 2021 2022 2023 2024 2025

• 3.5% contraction in 2020 Real GDP growth

• 5.7% surge in 2021• Strongest advance since 1973• Robust 4.5% growth 2022• Settling back to 3.1 in 2023• Materials Price Index (MPI)

highest level since Oct 2011

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Real GDP growth expected to surge at 5.7% in 2021




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0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

0

20

40

60

80

100

120

140

160

2016 2017 2018 2019 2020 2021f

OtherJapanAustriaUSARussiaNetherlandsChinaAverage Price

Total Mg(OH)2 exports– world

Magnesium hydroxide exports from Netherlands and Russia increasing


US$/kgkt

© 2021 IHS Markit


Flame Retardant Market


ATH – alumina trihydroxide is the most important flame retardant by volume

Aluminum Trihydroxide

38%

Magnesium Hydroxide and

Minerals<5%

Brominated17%

Organophosphorus18%

Chlorinated4%

Antimony Oxides9%

Other9%

© 2021 IHS Markit

19

World consumption of flame retardants by type - 2019

Total >2 million metric tons

Source: IHS Markit

All flame retardants AAGR 2020-2025 ca 3.4%

Mineral flame retardantsAAGR 2020-2025 ca 4%



Mainland China has become the most region for flame retardants by value

North America18%

Europe21%

Japan8%

Other25%

Mainland China28%

20

World consumption of flame retardants by region and value- 2019

WE shrunk by 6%, China 2%

Source: IHS Markit

Mainland China grows to 28% by value in 2019

In 2020, market shrunk by 6-7%

© 2021 IHS Markit



The largest flame retardant producers

ICL-IP Lanxess Huber Nabaltec

Israel; #1 phosphorus based, brominated, MDH

Germany; Brominated,

phosphorus basedUSA; ATH and MDH Germany; ATH




Residential buildings

23%

Other buildings

9%

Vehicle13%

Grass brush20%

Rubbish14%

Forests2%

Other19%

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Almost than half of fires are reported from structures and vehicles

© 2021 IHS MarkitSource: World Fire Statistics, CTIF, 2020

Distribution of fires by origin of fire in 2019• Over 3 million fires were reported in 24

countries over 2019

• Almost half the fires were structural or vehicle

• Could use flame retardants to reduce risk, slow down the fire and allow people to escape

• 22% environmental and 14% by rubbish

• About 19,000 people died in fires, greatly reduced from 48,000 10 years ago



Plastics and resins are the largest consumers of flame retardantsMajor customers are for mineral flame retardants are

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Independent compounders and processers that manufacture flame retardant blends

Plastic resin producers / captive compounders that manufacture flame retarded material grades

Cable manufacturers that produce in-house compounds



Polyolefins now account for over half the global plastic demand

HDPE17%

LLDPE12%

LDPE8%

Polypropylene28%

PVC16%

PET9%

Polystyrene6%

ABS3%

Polycarbonate1%

2020 World thermoplastic resin & fiber demand


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PVC ca 3% AAGR 2020 to 2025

Total Polyethylene Demand 37%


Total Polyolefins demand 65%


Global AAGR 2020 to 2025 polyethylene demand by end use application

- 1.0 2.0 3.0 4.0 5.0 6.0

Film & Sheet

Injection Molding

Pipe & Profile

Extrusion Coating

Blow Molding

Wire & Cable

Fiber

Demand growth, 2020-2025

% AAGR, 2020-25

25

2020 - 2025AAGR 3.2%

2020 - 2025AAGR 4.5%


Confidential. © 2021 IHS Markit®. All rights reserved.Confidential. © 2020 IHS Markit®. All rights reserved.

IMO - as of 1 Jan 2020 max permitted sulfur content of marine bunker fuel reduced from 3.50% by mass to 0.5% by mass

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The Global Sulfur Cap



Three choices for shipping companies

Switch to low sulfur bunker fuel

Change to alternative fuels such as LNG, biofuel, methanol, sails

Install exhaust gas cleaning systems - Scrubbers


© 2021 IHS Markit


Chemicals for wet scrubbing

MgOpowder

MDH50% slurry

NaOH50% solution

Soda Ashpowder


Magnesium oxide and hydroxide easy to handle, safe for the environment


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• Magnesium hydroxide from Europiren

Suppliers of MgO / Mg(OH)2 for marine scrubbers

• ActiveMag® 95 highly reactive CCM

• MH53S mare magnesium hydroxide slurry



518

310

480 433

336227

371 308

0

100

200

300

400

500

600

2019 2020 2021 2022 2023 2024 2025 2026NWE Bunker Fuel 0.5% NWE Residual 3.5% CIFNWE Marine Gasoil, ECA 0.1%

• Difference 110 to 125 $/ton

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0.5% sulfur heavy fuel oil is always more expensivePrice comparison of bunker fuels in North Western Europe

3.5% HFO

0.5% HFO


© 2021 IHS Markit


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0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Jan-19 May-19 Sep-19 Jan-20 May-20 Sep-20 Jan-21

Vessels fitted - on the water Vessels to be fitted - retrofit

Vessels to be fitted - under construction Forecast: Vessels fitted - on the water

Vessels with exhaust gas cleaning systems installed or on order

Source: IHS Markit © 2021 IHS Markit

Vess

el c

ount

Delays and cancellations

Scrubber uptake has been strong and will likely grow further still, but delays in scrubber installations over 2020 have had a significant impact

• Rate of retro-fitting vessels between January 2019 and January 2021 slowed considerably.

• There are currently just over 4000 scrubber-fitted ships, in the middle of 2021, up from 2,010 ships in January 2020.



Sector assumptions: Global refined products demand growth recovers post COVID-19 but peak demand is still expected mid-2030s

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COVID-192020

Recovery2021

Mid-term2022-2025

Long-term2026-2050

Economy -3.5% 5.7% 3.5% 2.5%

Gasoline -13.1% 10.1% 1.4% -0.8%

Transport diesel -10.4% 6.9% 1.0% -0.3%

Jet fuel -44.0% 24.6% 11.0% 0.7%

Marine fuels -3.2% 1.2% 0.8% -2.5%

Naphtha -0.2% 1.9% 2.5% 2.0%


Source: IHS Markit


0

500

1000

1500

2000

2500

3000

3500

4000

International bunkers production forecast

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Bunker fuel production and demand will continue decline after 2025International bunkers production forecast

2020




Other magnesium chemicals - smaller but important markets

Magnesium Sources• Magnesite minerals, brucite, kieserite• Seawater and underground brine

Magnesium sulfate• Reduced imports SE Asia• Many industrial uses

Magnesium hydroxide• Flame retardants growth• Maritime scrubbing systems

34Samantha Wietlisbach IHS Markit / June 2021

• Global consumption of magnesium resources grew by 3% on average per year 2016 to 2019

• Imports by the main importing region, SE Asia have declined over the last 2 years

• Overall growth expected 1.3% on average 2019 to 2024

• Flame retardant markets declined by 6-7% on average globally over 2020

• Retrofitting ships with scrubbers has slowed down, new build market is promising.

• Demand for alkali still unclear with relatively low prices for VLSFO

Source: IHS Markit © 2021 IHS Markit


IHS Chemical offerings

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• Over 300 chemical markets• Leading the way since 1950• One stop resource for chemical

marketing information

• By market or functional area• Flame Retardants• Plastic Additives• Catalysts

• Edition June 2020• Leading source for magnesium • Capacities, supply, demand,

consumption and 5 year outlook


https://ihsmarkit.com/products/magnesium-oxide-chemical-economics-handbook.html

IHS Markit Customer [email protected] and the Pacific RimJapan: +81 3 6262 1887Asia Pacific: +604 291 3600Europe, Middle East, and Africa: +44 1344 328 300Americas: +1 800 447 2273

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