Southeast Asia SE Asia Polymer Demand Outlook, 2017-2027 Note: Equivalent olefin consumption volumes

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  • SOUTHEAST ASIA

    PETROCHEMICALS

    A Rapid Evolution in Progress

    CHOMMANAD

    THAMMANAYAKATIP MANAGING CONSULTANT

    NEXANT

  • A Rapid Evolution in Progress

    Southeast Asia

    Petrochemicals

    August 2018

  • 3APIC 2018 August 2018

    The petrochemical industry in Southeast Asia is entering a new phase of further development

    Petrochemical Industry in Southeast Asia

    Demand-side Characteristics

    Supply-side Characteristics

    ▪Market is generally demand driven, due to absence of ample low-cost

    feedstock supply

    ▪Urbanisation wave and growth of consuming class offer significant

    demand growth potential, also considering relatively low consumption per

    capita levels

    ▪Each country’s petrochemical industry is generally dominated by 1-2 key

    players

    ▪Project implementation may involve longer timelines compared to other

    locations with more developed industries

    ▪ Feedstock supply may depend on refinery development or imports

    New Phase of Further Development

    ▪ Largest single construction project in Malaysia

    ▪Vietnam’s first steam cracker complex and Brunei’s first aromatics facility

  • 4APIC 2018 August 2018

    Southeast Asia has continued to enjoy significant economic and social progress in recent years

    Strong GDP Growth

    Continued Urbanisation

    Developments in Manufacturing

    Increased Consumer Wealth

    0%

    2%

    4%

    6%

    2013 2014 2015 2016 2017

    R ea

    l G D

    P G

    ro w

    th

    ASEAN World

    0%

    2%

    4%

    6%

    8%

    2013 2014 2015 2016 2017

    M an

    uf ac

    tu rin

    g V

    al ue

    A

    dd ed

    G ro

    w th

    ASEAN World

    0%

    1%

    2%

    3%

    2013 2014 2015 2016 2017

    G ro

    w th

    in A

    S E

    A N

    Urban Population Total Population

    0%

    2%

    4%

    6%

    2012 2013 2014 2015 2016

    R ea

    l I nc

    om e

    pe r

    C ap

    ita G

    ro w

    th

    ASEAN World

    Source: IMF Source: World Bank

    Source: World Bank Source: World Bank

  • 5APIC 2018 August 2018

    This continues to support petrochemical and polymer demand growth in Southeast Asia

    SE Asia Polymer Demand & GDP Growth

    SE Asia

    China

    India

    Japan, Korea & Taiwan0%

    2%

    4%

    6%

    8%

    10%

    0 50 100 150

    D em

    an d

    C A

    G R

    in 2

    01 7-

    20 27

    Consumption per Capita in 2017 (kg)

    Asia Polymer Demand Growth

    0%

    2%

    4%

    6%

    8%

    2011 2012 2013 2014 2015 2016 2017

    G ro

    w th

    SE Asia Polymer Demand SE Asia GDP

    Bubble size indicates

    demand volume in 2017

    Polymer demand includes HDPE,

    LLDPE, LDPE, PP, PET, PVC, PS, EPS,

    ABS, SBR, BR and PC

    ?????

     As a whole, currently third-largest economy in Asia

     Expanding labour force and shift from agriculture

    to manufacturing

    SE Asia Economy ?????

     As a whole, currently similar market size as India

     Key end-use sectors include manufacturing,

    construction, transportation and agriculture

    SE Asia Polymer Market

  • 6APIC 2018 August 2018

    Emerging markets offer strong potential for growth, while polyolefins and polyesters represent the key growth drivers in polymers

    SE Asia Polymer Demand Growth

    Singapore

    Indonesia Malaysia

    Vietnam

    Thailand

    Philippines

    0%

    2%

    4%

    6%

    8%

    10%

    0 50 100 150

    D em

    an d

    C A

    G R

    in 2

    01 7-

    20 27

    Consumption per Capita in 2017 (kg)

    Higher growth potential

    PE

    PP PVC

    ABS

    PS & EPS

    SBR & BR PET

    PC

    0%

    2%

    4%

    6%

    0 100 200 300 400 500

    D em

    an d

    C A

    G R

    in 2

    01 7-

    20 27

    Average Annual Demand Growth in 2017-2027 (kt)

    Note: Polymer demand represents total demand for HDPE, LLDPE, LDPE, PP, PET, PVC, PS, EPS, ABS, SBR, BR and PC. Bubble size indicates demand volume in 2017.

    Key growth drivers

    High polymer demand growth rates are supported by GDP growth, urbanisation, increased consumer

    wealth, growth in finished good exports, as well as substitution of traditional materials

    SE Asia Polymer Demand Growth

  • 7APIC 2018 August 2018

    Polymer demand growth in Southeast Asia is expected to allow for significant domestic market opportunities

    SE Asia Polymer Market – Present Capacity & Future Demand

    0

    2

    4

    6

    8

    10

    12

    Vietnam Indonesia Malaysia Philippines Thailand Singapore

    M ill

    io n

    To ns

    Capacity in 2017 Demand in 2027

    Note: Polymer capacity and demand includes HDPE, LLDPE, LDPE, PP, PET melt phase, PVC, PS, EPS, ABS, SBR, BR and PC.

    In some Southeast Asian countries, the additional domestic capacity requirement to meet

    projected demand growth is quite significant

  • 8APIC 2018 August 2018

    Projected polymer demand growth volumes equate to considerable volumes of olefin requirements

    SE Asia Polymer Demand Outlook, 2017-2027

    Note: Equivalent olefin consumption volumes are shown

    for illustrative purposes only. Actual polymer demand

    growth may also be met by additional polymer imports.

    Over the next decade, ethylene requirements from PE and PVC demand growth in Southeast Asia are

    expected to be equivalent to ethylene production from 3-4 worldscale steam crackers

    0 2 4 6 8 10

    PP

    PVC

    LDPE

    LLDPE

    HDPE

    Million tons

    2017 2027

    4.7% 1.8

    5.5% 1.5

    3.2% 0.4

    5.0% 1.4

    4.8% 3.1

    CAGR Volume Growth

    (million tons)

    Equivalent Olefin Consumption

    (million tons of olefin)

    ~ 4 (ethylene)

    ~ 3 (propylene)

  • 9APIC 2018 August 2018

    The olefins and aromatics industries are still in a relatively early development stage in several countries

    Overview of Olefins and Aromatics Capacity in SE Asia, 2017

    ?????

     10.1 mtpa total capacity

     Mainly based on naphtha

    Singapore – Most Developed

    ?????

     3.8 mtpa total capacity

     Based on naphtha and

    NGLs

    Malaysia

    ?????

     11.8 mtpa total capacity

     Based on naphtha and

    NGLs

    Thailand – Most Developed

    ?????

     3.3 mtpa total capacity

     Based on naphtha and

    refinery FCC

    Indonesia

    ?????

     150 ktpa total capacity

     Based on refinery FCC

    Vietnam

    ?????

     Less than 1 mtpa total

    capacity

     Based on naphtha and

    refinery FCC

    Philippines

    Olefins 64%

    Aromatics 36%

    Olefins 77%

    Aromatics 23%

    Olefins 66%

    Aromatics 34%

    Olefins 60%

    Aromatics 40%

    Olefins 100%

    Aromatics 0%

    Olefins 98%

    Aromatics 2%

    Note: Olefins include ethylene and propylene. Aromatics include benzene and PX.

    * Including TPPI

  • 10APIC 2018 August 2018

    Major new olefins investments are taking place in Malaysia, Vietnam and Thailand

    Olefins Net Capacity Additions in SE Asia

    (1)

    0

    1

    2

    3

    4

    5

    6

    2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

    M ill

    io n

    To ns

    Ethylene Propylene

    Thailand 38%

    Singapore 32%

    Malaysia 15%

    Indonesia 10%

    Philippines 4%

    Vietnam 1%

    Olefins Capacity in SE Asia, 2017

    Malaysia 46%

    Vietnam 34%

    Thailand 15%

    Philippines 4%

    Indonesia 1%

    Olefins Net Capacity Additions in

    SE Asia, 2017-2023

    ?????

     ExxonMobil in

    Singapore

     JG Summit in

    Philippines

     CAPC expansion in

    Indonesia

     Shell restart in

    Singapore

    Major Additions ?????

     PCG in Malaysia

     PTTGC in Thailand

     NSRP and LSP in

    Vietnam

    Major Additions

    Note: Net capacity additions in forecast only reflect firm projects.

  • 11APIC 2018 August 2018

    These new olefins projects in the region are based on a range of different feedstocks

    SE Asia Ethylene Feedstock Slate

    ?????

     Limited volumes of ethane cracked in Malaysia

    and Thailand

     Other NGLs (e.g. propane and LPG) also used

    across SE Asia

     However, naphtha consumed as major feedstock

    Current Trends

    SE Asia Propylene Capacity by Process

    ?????

     PCG – naphtha and LPG from new refinery

     PTTGC – naphtha and LPG from existing refinery

     LSP – domestic ethane and imported propane and

    naphtha