Global Plastics Industry Update Conference 9... · 2019-08-26 · Global Plastics Industry Update Howard Rappaport Global Practice Leader - - Plastics. ... Japan China Southeast Asia

2007 Plastics Processors Conference2007 Plastics Processors ConferenceSingaporeSingapore ShanghaiShanghai HoustonHouston New YorkNew York LondonLondon DüsseldorfDüsseldorf DubaiDubai

Global Plastics Industry Update Global Plastics Industry Update Global Plastics Industry Update

Howard RappaportHoward RappaportGlobal Practice Leader Global Practice Leader -- PlasticsPlastics

[email protected]@cmaiglobal.com

September 17September 17--18, 200718, 2007Huntington Beach, CA U.S.A.Huntington Beach, CA U.S.A.

2007 Plastics Processors Conference2007 Plastics Processors Conference

WTI Crude Oil PricesWTI Crude Oil Prices

Source: Purvin & Gertz

U.S. Dollars Per BarrelsU.S. Dollars Per Barrels

0

10

20

30

40

50

60

70

80

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

66.0066.00ForecastForecast

57.3057.30


U.S. Burner Tip Natural Gas PricesU.S. Burner Tip Natural Gas Prices

Source: Purvin & Gertz

Dollars Per MMbtuDollars Per MMbtu

0

1

2

3

4

5

6

7

8

9

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

7.007.007.607.60

ForecastForecast


The Third Wave Is Not A MythThe Third Wave Is Not A MythThe Third Wave Is Not A MythMiddle East Capacities, Million Metric TonsMiddle East Capacities, Million Metric Tons

00

551010

1515

2020

2525

3030

3535

4040

1980

1980

1982

1982

1984

1984

1986

1986

1988

1988

1990

1990

1992

1992

1994

1994

1996

1996

1998

1998

2000

2000

2002

2002

2004

2004

2006

2006

2008

2008

2010

2010

2012

2012

EthyleneEthylene PropylenePropylene


Iran: West Ethylene PipelineIran: West Ethylene PipelineIran: West Ethylene Pipeline

Bandar Assaluyeh

Bandar Imam

Mahabad (LDPE/HDPE, Butene-1)

Kordestan(LDPE)

Lorestan (LDPE/HDPE, Butene-1)Kermanshah(HDPE)

Gachsaran (MEG/DEG/TEG, EO)

Miandoab (S-PVC, Caustic Soda)

Hamedan (PVC)

Charmahal va Bakhtiari (LLDPE/HDPE)

Mamasani (HDPE)

Andimeshk (LDPE) Dehdasht (HDPE)


•• PLA (polylactic acid) represents over 40% of the PLA (polylactic acid) represents over 40% of the ““nonnon--petroleum basedpetroleum based”” polymer market todaypolymer market today

•• Projection Projection -- PLA consumption could reach 150 PLA consumption could reach 150 -- 200 200 thousand metric tons by 2011thousand metric tons by 2011

Degradables, Bio-Polymers & PLADegradables, BioDegradables, Bio--Polymers & PLAPolymers & PLA


ConclusionsConclusionsConclusionsNov. 1944 Mechanix IllustratedNov. 1944 Mechanix Illustrated • Global economy stable and

growing • Energy to remain above

historical averages • Middle East projects mostly on

time • Iranian capacity is coming• Ethane supply is limited in the

region • Middle East to diversify

downstream • Be wary of environmentalist

claims, know the facts...

•• Global economy stable and Global economy stable and growinggrowing

•• Energy to remain above Energy to remain above historical averageshistorical averages

•• Middle East projects mostly on Middle East projects mostly on timetime

•• Iranian capacity is comingIranian capacity is coming•• Ethane supply is limited in the Ethane supply is limited in the

regionregion•• Middle East to diversify Middle East to diversify

downstreamdownstream•• Be wary of environmentalist Be wary of environmentalist

claims, know the facts...claims, know the facts...

2007 Plastics Processors Conference2007 Plastics Processors ConferenceSingaporeSingapore ShanghaiShanghai HoustonHouston New YorkNew York LondonLondon DüsseldorfDüsseldorf DubaiDubai

PET – It’s A Buyer’s Market, So Why Aren’t They Celebrating?

PET PET –– ItIt’’s A Buyers A Buyer’’s Market, So Why s Market, So Why ArenAren’’t They Celebrating?t They Celebrating?

Chase WillettChase WillettDirector Director –– Polyester & Polyester &

Polyester Raw MaterialsPolyester Raw [email protected]@cmaiglobal.com

September 17September 17--18, 200718, 2007Huntington Beach, CA U.S.A.Huntington Beach, CA U.S.A.


PET OutlookPET OutlookPET Outlook•• Supply/DemandSupply/Demand

–– Regional GrowthRegional Growth–– N. American N. American

growing supplygrowing supply•• Raw Material Raw Material

EconomicsEconomics•• TradeTrade•• PricingPricing


Global PET Capacity GrowthGlobal PET Capacity Growth

AmericasAmericas Europe, Middle East, AfricaEurope, Middle East, AfricaAsiaAsia Global Demand GrowthGlobal Demand GrowthExcess CapacityExcess Capacity

00

11

22

33

44

55

66

20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012

Million Metric Tons Million Metric Tons

Operating RateOperating Rate

6262

6666

7070

7474

7878

8282

8686

9090Operating Rate, PercentOperating Rate, Percent


Asia PET DemandAsia PET Demand

00112233445566778899

1010

20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012JapanJapan ChinaChina Southeast AsiaSoutheast AsiaTaiwanTaiwan KoreaKorea Indian Sub Cont.Indian Sub Cont.Net ExportsNet Exports

5050

5555

6060

6565

7070

7575

8080

8585


Op Rate After TradeOp Rate After Trade CapacityCapacity

Million Metric TonsMillion Metric Tons


Europe, Middle East & Africa PET DemandEurope, Middle East & Africa PET Demand

--44

--22

00

22

44

66

88

1010

20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 201220120010102020

404050506060707080809090100100

Operating Rates, PercentOperating Rates, Percent

West EuropeWest Europe Middle EastMiddle East Central EuropeCentral EuropeAfricaAfrica FSUFSU


Net ExportsNet Exports

3030

CapacityCapacity Op Rate After TradeOp Rate After Trade


Americas PET DemandAmericas PET Demand

--22--11

1122334455667788

20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 2012201250505555

6565707075758080858590909595100100

Operating Rate, PercentOperating Rate, Percent

U.S.U.S. South AmericaSouth America MexicoMexicoCanadaCanada Net ExportsNet Exports CapacityCapacityOp Rate After TradeOp Rate After Trade


00 6060


North America PET DemandNorth America PET Demand

--11

00

11

22

33

44

55

66

77

20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 201220126060

6565

7070

7575

8080

8585

9090

9595

100100

U.S.U.S. MexicoMexico CanadaCanadaNet ExportsNet Exports CapacityCapacity Op. RateOp. Rate

Million Metric TonsMillion Metric Tons Operating Rate, PercentOperating Rate, Percent


North American Capacity By ProducerNorth American Capacity By Producer

--11

00

11

22

33

44

55

66

77

20012001 20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011

Million Metric Tons Million Metric Tons

M&GM&G InvistaInvista EastmanEastmanStarPETStarPET WellmanWellman DAKDAKNan YaNan Ya Hypothetical Hypothetical Domestic DemandDomestic Demand

Approx. 2 MMT!Approx. 2 MMT!


Use All You Want! WeUse All You Want! We’’ll Make More!ll Make More!

M&GM&G InvistaInvistaEastmanEastman StarPETStarPETWellmanWellman DAKDAKNan YaNan Ya

Forecasted RationalizationsForecasted RationalizationsForecasted IncreasesForecasted Increases

--0.40.4

--0.20.2

0.00.0

0.20.2

0.40.4

0.60.6

0.80.8

1.01.0

20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 201120116060

6565

7070

7575

8080

8585

9090

9595Operating Rate, PercentOperating Rate, PercentMillion Metric TonsMillion Metric Tons

Domestic Demand GrowthDomestic Demand GrowthExcess Regional CapacityExcess Regional CapacityOperating RateOperating Rate


So if itSo if it’’s a buyers s a buyers market why is my market why is my

price so high?price so high?


Petrochemicals have to buy away feedstocks from gasoline and heating fuels…

Petrochemicals have to buy away feedstocks from gasoline and heating fuels…

NaturalGas

GasSeparation

Unit

RefineryCrude

OilReformer

Reformate BTXExtraction

SteamCracker

ButaneHydrogen

Propylene/PP

BTX

Ethylene

ETHYLENE GLYCOL

POLYETHYLENES

ETHYLBENZENE/STYRENE

ETHYLENE DICHLORIDE/PVC

NaphthaGas Oil

EthanePropaneButane

TOLUENE

m-XYLENE

p-XYLENE

BENZENE

o-XYLENE

XYLENES

PTA/DMT PETPET

PIA

Methane

Octane

Heating Fuel

105+ Octane /

Low RVP!


Raw Material Utilization Per Unit of PET

Raw Material UtilizationRaw Material Utilization Per Unit of PETPer Unit of PET

Paraxylene (PX)

0.58O2

Terephthalic Acid (PTA)

+0.86

+Ethylene Glycol

(MEG or EG)0.36

Ethylene0.22

O2+ + H2 O

EthyleneOxide (EO)

Polyethylene Terephthalate

(PET)+H2 O

Acetic Acid

Isophthalic Acid

0.01-0.03


2007 Supply Limiting Events2007 Supply Limiting Events2007 Supply Limiting Events•• May to Oct? May to Oct? -- Metaxylene & Isophthalic Acid Metaxylene & Isophthalic Acid force force

majeuresmajeures–– Isophthalic Acid (PIA): made from metaxylene, critical Isophthalic Acid (PIA): made from metaxylene, critical

modifier for PET to control crystallinity and increase gas modifier for PET to control crystallinity and increase gas barrierbarrier

•• June to August? June to August? –– Acetic Acid & Terephthalic Acid Acetic Acid & Terephthalic Acid force majeuresforce majeures–– Acetic Acid is the solution in which Terephthalic Acid is Acetic Acid is the solution in which Terephthalic Acid is

reacted and is partially consumed in the processreacted and is partially consumed in the process•• Results Results

–– Total impact of new PET capacity somewhat diminished due Total impact of new PET capacity somewhat diminished due to limits on raw materials butto limits on raw materials but……

–– Production levels in N. America still sufficient enough to Production levels in N. America still sufficient enough to drive out imports, increase exports and meet domestic drive out imports, increase exports and meet domestic demand.demand.

–– Therefore, consumers felt no significant impact and PET Therefore, consumers felt no significant impact and PET margins remained flat.margins remained flat.


Recent Supply Limiting EventsRecent Supply Limiting EventsRecent Supply Limiting Events• PTA – Canadian supplier declares force majeure from

mid-August to early September – limited impact. • MEG –

– Significant Saudi assets representing 13% of global capacity running at 70% due to disruptive oxygen supply.

– Resolution may take as much as 6 months.– Spot MEG prices move from the $990s to $1250.– N. American supply not heavily impacted (less than 5%) but

prices will escalate and likely remain that way through the end of the year.

– Higher MEG prices potentially more than offset fall in PX and PET costs rise through end of year contrary to normal.

•• PTA PTA –– Canadian supplier declares Canadian supplier declares force force majeuremajeure from from midmid--August to early September August to early September –– limited impact.limited impact.

•• MEG MEG –––– Significant Saudi assets representing 13% of global capacity Significant Saudi assets representing 13% of global capacity

running at 70% due to disruptive oxygen supply.running at 70% due to disruptive oxygen supply.–– Resolution may take as much as 6 months.Resolution may take as much as 6 months.–– Spot MEG prices move from the $990s to $1250.Spot MEG prices move from the $990s to $1250.–– N. American supply not heavily impacted (less than 5%) but N. American supply not heavily impacted (less than 5%) but

prices will escalate and likely remain that way through the end prices will escalate and likely remain that way through the end of of the year.the year.

–– Higher MEG prices potentially more than offset fall in PX and Higher MEG prices potentially more than offset fall in PX and PET costs rise through end of year contrary to normal.PET costs rise through end of year contrary to normal.


Global Polyester Raw MaterialsGlobal Polyester Raw MaterialsGlobal Polyester Raw Materials

Polyester Melt Demand GrowthPolyester Melt Demand GrowthPTA Growth in Polyester EquivPTA Growth in Polyester Equiv

PTA Operating RatePTA Operating Rate

PX Growth in Polyester EquivPX Growth in Polyester EquivMEG Growth in Polyester EquivMEG Growth in Polyester Equiv

MEG Operating RateMEG Operating Rate

--22

00

22

44

66

88

1010

1212

20012001 20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011


6565

7070

7575

8080

8585

9090

9595


PX Operating RatePX Operating Rate


U.S. Gasoline U.S. Gasoline –– Monthly BasisMonthly Basis

00252550507575

100100125125150150175175200200225225250250275275

0606 AprApr JulJul OctOct

Cents Per GallonCents Per Gallon

WTIWTI PremiumPremium RegularRegular

00551010151520202525303035354040454550505555606065657070

Delta (Cents Per Gallon)Delta (Cents Per Gallon)

Prem to Reg SpreadPrem to Reg Spread PXPX

Gasoline 2006Gasoline 2006Gasoline 2006•• MTBE PhaseMTBE Phase--outout•• Ethanol In Ethanol In

–– Short supplyShort supply–– High Octane but High RVPHigh Octane but High RVP

•• Refining limping from 2005 Refining limping from 2005 hurricaneshurricanes

•• Aromatics (PX) pulled back Aromatics (PX) pulled back into gasoline to offset MTBE into gasoline to offset MTBE and Ethanol impactsand Ethanol impacts



00252550507575

100100125125150150175175200200225225250250275275

0606 AprApr JulJul OctOct


WTIWTI

00551010151520202525303035354040454550505555606065657070


Prem to Reg SpreadPrem to Reg Spread PXPX

Gasoline 2007Gasoline 2007Gasoline 2007•• Ethanol supply growsEthanol supply grows

–– Makes high octane longMakes high octane long–– Still problems with RVP but Still problems with RVP but

blenders find other more blenders find other more cost effective answers cost effective answers

•• Refining operating rates Refining operating rates improvedimproved

•• Aromatics (PX) feel less Aromatics (PX) feel less of a pull from gasolineof a pull from gasoline



00252550507575

100100125125150150175175200200225225250250275275

0606 AprApr JulJul OctOct 0707 AprApr JulJul OctOct 0808 AprApr JulJul OctOct


00551010151520202525303035354040454550505555606065657070

WTIWTI PremiumPremium RegularRegular Prem to Reg SpreadPrem to Reg Spread PXPX



Delivered CostsDelivered CostsDelivered Costs

00

200200

400400

600600

800800

10001000

12001200

14001400

16001600

GSPGSP ChinaChina U.S.U.S. GSPGSP ChinaChina U.S.U.S.PXPX MEGMEG PTAPTA Var ConvVar ConvOcean FrtOcean Frt DutyDuty Dom FrtDom Frt

East CoastEast Coast West CoastWest Coast


PET Imports From Asia By RegionPET Imports From Asia By Region

00

5050

100100

150150

200200

250250

300300

350350

400400

450450

Total 2006Total 2006 2007 Ann2007 Ann

Thousand Metric Tons Thousand Metric Tons

West CoastWest Coast East CoastEast Coast

2007 YTD Through June2007 YTD Through June


PET Imports From Asia By RegionPET Imports From Asia By Region2007 YTD Through June2007 YTD Through June

00

2020

4040

6060

8080

100100

120120

140140

160160

East CoastEast Coast West CoastWest Coast

Thousand Metric TonsThousand Metric Tons

GSPGSP ChinaChina Other AsiaOther Asia


U.S. PET Resin Imports from AsiaU.S. PET Resin Imports from AsiaThrough June 2007Through June 2007

00

55

1010

1515

2020

2525

3030

3535

4040

4545

5050

JanJan--0606 AprApr--0606 JulJul--0606 OctOct--0606 JanJan--0707 AprApr--0707

ThailandThailand South KoreaSouth KoreaIndonesiaIndonesia IndiaIndiaTaiwanTaiwan ChinaChinaOther AsiaOther Asia



U.S. PET Resin Net TradeU.S. PET Resin Net TradeThrough June 2007 Through June 2007 -- AnnualizedAnnualized

0606 MarMar MayMay JulJul SepSep NovNov 0707 MarMar MayMayMexicoMexico CanadaCanada AsiaAsiaEuropeEurope South AmericaSouth America Middle East & AfricaMiddle East & AfricaNet ExportsNet Exports

--8080--7070--6060--5050--4040--3030--2020--1010

00101020203030Thousand Metric TonsThousand Metric Tons

Net ImportsNet Imports



CanadaCanada MexicoMexico AsiaAsiaEuropeEurope South AmericaSouth America Middle East & AfricaMiddle East & AfricaNet TradeNet Trade

Through May 2007 Through May 2007 -- AnnualizedAnnualized

--700700--600600--500500--400400--300300--200200--100100

00100100200200300300

20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012


Net ImportsNet Imports


U.S. PET Resin Net TradeU.S. PET Resin Net Trade


--20020000

200200400400600600800800

1000100012001200140014001600160018001800

20022002 20032003 20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012PTA CompPTA CompPX CompPX Comp MEG CompMEG Comp

Conv Costs & Oth RawConv Costs & Oth Raw Contract PriceContract PriceAsian Dlvd CostAsian Dlvd Cost

United States PET EconomicsDiscount Applied

Dollars Per Metric TonDollars Per Metric Ton

MarginMargin


PX CompPX Comp PTA CompPTA Comp MEG CompMEG CompConvConv Costs & Costs & OthOth RawRaw Fixed CostFixed Cost FreightFreightContract PriceContract Price MarginMargin

United States PET EconomicsUnited States PET EconomicsDiscount AppliedDiscount Applied

--20020000

200200400400600600800800

1000100012001200140014001600160018001800

JanJan--0707 AprApr--0707 JulJul--0707 OctOct--0707 JanJan--0808 AprApr--0808 JulJul--0808 OctOct--0808

Dollars Per Metric TonDollars Per Metric Ton


ConclusionsConclusionsConclusions•• Strong global PET consumption Strong global PET consumption

growth will continue to be growth will continue to be masked by extreme global and masked by extreme global and regional overcapacityregional overcapacity

•• Asian cash costs will set the Asian cash costs will set the tone for pricing worldwide.tone for pricing worldwide.

•• AsiaAsia’’s export opportunities will s export opportunities will fall as other regions increase fall as other regions increase capacity and improve in capacity and improve in competitiveness. competitiveness.

•• Raw material prices will be Raw material prices will be strong through 2008 before strong through 2008 before falling due to increasing capacity falling due to increasing capacity in China and the Middle East in in China and the Middle East in 20092009

•• Pricing will continue to follow Pricing will continue to follow global raw material movements global raw material movements with limited margin growth.with limited margin growth.

Documents

Global Plastics Industry Update Conference 9... · 2019-08-26 · Global Plastics Industry Update Howard Rappaport Global Practice Leader - - Plastics. ... Japan China Southeast Asia