" The Evolution of Benzene " by Churairat PTTAR

PTT Aromatics and RefiningPublic Company Limited

Aromatics Outlook

“ The Evolution of Benzene ”

31 May 2011

By Churairat Nimha

2

Part I : Introduction of BenzenePart II : The Evolution of Benzene

Highlight

Part III : Conclusion

Benzene

3

What is Benzene ?

Where is Benzene come from ?

Who is Consume Benzene ?

Part I : Introduction of Benzene

4

What is Benzene ?Benzene is an aromatic hydrocarbon and one of the primary

chemical building blocks for the petrochemical industry. Its key characteristic is its unique six carbon ring. It is a clear colorless liquid with a sweet odor which is why it is called an “aromatic hydrocarbon”.

38%

37%

6%

1%4%

6% 5% 3%

Pyrolysis Steam Craking Catalytic Reforming

HDA TDP

Coke Oven STDP

PXE TA

Global Benzene Capacity by Process TypeBenzene Source Flow

Chart

Reformer

Aromatics Extraction

HDA

TDP

Benzene

Gasoline Blending PoolMotor

Gasoline

STDP

FCC

Heavy Olefin

Cracker

Xylenes

Refinery

Pygas

Reformate

Crude Oil

5

BZBZ

EB/SMEB/SM

53%

18%

13%

SBRSBR

ABS/SANABS/SAN

PSPS

Specialty Intermediates

for Polyurethane

Specialty Intermediates

for Polyurethane

7%

40 Million ton

Cumene/PhenolCumene/Phenol

CyclohexaneCyclohexane

CyclohexanolCyclohexanol

NitrobenzeneNitrobenzene

with ACN and BDE

with BDE

Bis-Phenol ABis-Phenol A

AnilineAniline MDIMDI

Adipic AcidAdipic Acid

CyclohexanoneCyclohexanone

PolycarbonatePolycarbonate

Epoxy ResinEpoxy Resin

Nylon 6Nylon 6

Nylon 6,6Nylon 6,6HMDA

27 Million ton

8.8 Million ton

5 Million ton

4 Million ton

2.5 Million ton

2.5 Million ton

4.0 Million tonCPLCPL

3.7 Million ton 4.2 Million ton

4.2 Million ton

2.7 Million ton

45%

16%

4%

53% of world BZ go to SM and a half of SM go to PS (Equi. 24% of BZ demand)53% of world BZ go to SM and a half of SM go to PS (Equi. 24% of BZ demand)

Propylene

Ethylene

PO

BZ Value Chains

ADNPropylene

0.30

0.80

0.48

0.93

0.65

1.34 0.76 0.60

0.66

0.53

0.74

1.06

1.05

0.88

0.75

0.91

0.35

0.55

1.00

6

Who will consume Benzene ? Global Benzene 2000

32%

31%

29%

3%

3% 3%

NE Aisa N. America West Europe SE Asia

37%

23%21%

3%

7% 9%

34%

28%

24%

3%

5%6%

Global Benzene 2005 Global Benzene 2010

Total Demand 37 MTPA Total Demand 40 MTPATotal Demand 33 MTPA

7

Benzene“ The Evolution of

Benzene ”

8

Part II : The Evolution of Benzene

Evo I [ 1996-2000 ] : Prolong Low Margin Era

Evo II [ 2001-2005 ] : Every Cloud has a Silver Lining

Evo III [2006-2010 ] : From Heaven to Earth

Evo IV [ 2011-2020 ] : Come Back to Growth Mode

9

World GDP Growth World Benzene

Demand additional

Evo I : 1996-2000

Tom yum kung crisis

World Benzene Capacity additional

Crude & Benzene Price

10

Evo I : 1996-2000

Jan 1995

Feb 3

Mar 4

Apr 5

May76666

Jun87777

Jul98888

Aug109999

Sept1110101010

Oct1211111111

Nov1312121212

Dec1413131313

Jan 1996

Feb 33

Mar 44

Apr 55

May766666

Jun877777

Jul988888

Aug1099999

Sept111010101010

Oct121111111111

Nov131212121212

Dec141313131313

Jan 1997

Feb

Mar

Apr

May

Jun

Jul

Aug10999999

Sept11101010101010

Oct12111111111111

Nov13121212121212

Dec14131313131313

Jan 1998

1-Feb

Mar

Apr

May

Jun2

Jul

Aug

Sep

Oct

Nov

Dec

Jan 1999

Feb

Mar

Apr

May

Jun

Jul 3

Aug

Sept

Oct

Nov

Dec

Jan 2000

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

05

1015202530354045505560

MOBIL SELECTIVETOLUENE DISPROPORTIONATION PROCESS

MSTDP Technology by Mobil, 1995 it was pursuing its own aggressive expansion plans on paraxylene and viewed the technology as a lever to attract JV partners.

In 1997, UOP announced a process called PX-Plus, which is essentially the Mobil STDP process. UOP can offer this technology because the patent rights to ZSM-5 have expired.

1998-1999, Cyclar [Low Cost LPG is available ]The Cyclar process for producing aromatics is unique by producing C6+ aromatics from propane and/or butane (BZ 350 KMTA)

The process was employed by Ibn Rushd in Saudi Arabia with commercial start-up originally planned for 1998, but in fact did not begin real commercial operation until late 1999, Closed in 2001, restart 2002 and Conversion to Propane dehyrogenation in 2008

Jan 1995

Feb 3

Mar 4

Apr 5

May76666

Jun87777

Jul98888

Aug109999

Sept1110101010

Oct1211111111

Nov1312121212

Dec1413131313

Jan 1996

Feb 33

Mar 44

Apr 55

May766666

Jun877777

Jul988888

Aug1099999

Sept111010101010

Oct121111111111

Nov131212121212

Dec141313131313

Jan 1997

Feb

Mar

Apr

May

Jun

Jul

Aug10999999

Sept11101010101010

Oct12111111111111

Nov13121212121212

Dec14131313131313

Jan 1998

1-Feb

Mar

Apr

May

Jun2

Jul

Aug

Sep

Oct

Nov

Dec

Jan 1999

Feb

Mar

Apr

May

Jun

Jul 3

Aug

Sept

Oct

Nov

Dec

Jan 2000

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

05

1015202530354045505560

Cyclar Process

11

: Average Margin (Spread Price) around 91 $/MT

1996

Feb

33

Mar 44

Apr 55

May766666

Jun877777

Jul988888

Aug1099999

Sept111010101010

Oct121111111111

Nov131212121212

Dec141313131313

1997

Feb

Mar

Apr

May

Jun

Jul

Aug10999999

Sept11101010101010

Oct12111111111111

Nov13121212121212

Dec14131313131313

1998

1-Feb

Mar

Apr

May

Jun2

Jul

Aug

Sep

Oct

Nov

Dec

1999

Feb

Mar

Apr

May

Jun

Jul 3

Aug

Sept

Oct

Nov

Dec

2000

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

-

100

200

300

400

500

Spread BZ(Korea)-Napthah(Japan) BZ : Korea Spot Price Naphtha(Japan) Price

Historical (1995-2000)

Evo I : 1996-2000

Economic Crisis in Asiaand Technology Change

Unit : $/MT

12

“Every Cloud has a Silver Lining”

Evo II : 2001-2005

13


Demand additional

Evo II : 2001-2005

Dot-Com Bubble



14

Energy Policy Act

Phase-in of sulfur regulations begin in January 1, 2004. Sulfur reduction and MTBE phase-out. Require more reformate which contain zero sulfur, high octane number and

low RVP.

2004 2005 2006

Sulfur, ppm 120 90 30

Aromatics, Vol% +6.1% +7.2% +9.2%

Benzene, Vol% +0.32% +0.38% +0.48%

Estimate,Million Ton

+1.52 +1.84 +2.37

U.S. Gasoline : New Sulfur Content

Regulation

MTBE banned in 17 states including California, New York and Connecticut.

Require other blendstock to reduce vapor pressure - Aromatics (Toluene and Mixed Xylenes)

High cost of blending - Investment and transportation cost of Ethanol.

U.S. Gasoline : Banned MTBE / Use

Ethanol

Evo II : 2001-2005

15

2001

F eb

1-Mar

1-Apr

1-May

1-Jun

J

ul

1-Aug

1-Sep

1-Oct

1-Nov

1-Dec

2002

1-Feb

1-Mar

1-Apr

1-May

1-Jun

1- J

ul

1-Aug

1-Sep

1-Oct

1-Nov

1-Dec

2003

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

2004

Feb

Mar

Apr

May

Jun

J

ul

Aug

Sept

' Oct

Nov

Dec

2005

Feb

Mar

Apr

May

Jun

Jul

Aug

Sept

Oct

Nov

Dec

(50)

50

150

250

350

450

550

650

750

850

950

1,050

1,150

1,250


Unit : $/MT

“ Every Cloud has a Silver Lining “

Evo II : 2001-2005

16

From Heaven to Earth

Evo III : 2006-2010

17


Demand additional


Economic Crisis in Asia

(Financial Problem)

Evo III : 2006-2010


Hamburger Crisis

18

2008-2009 : The Grate Recession

Production Outages 2.35 million tons of U.S capacity off-line in 2006 due to major hurricanes hit US Gulf Cost.

Gasoline Industry Impacts MTBE phase-out still effected demand for Aromatics octane

Global Trade Continues To Expand Relentlessly

Evo III : 2006-2010

Economic recession directly effected Benzene derivatives demand in automobile and construction industry

Demand loss more than 3 MTPA suffered from severe economic downturn

Massive of new capacity mostly in China more than 2 MTPA coming on stream

Benzene spread collapsed free fall, once in a life time that benzene trades below naphtha

2006-2007:Why did Price Remain High?

Economics expanded at all region Especially China economics growth at alarming rate over 12 % after joining WTO.

19

China’s retail sales recovery

Evo III : 2006-2010

China’s Automobiles Sales volume

Typical Aromatics Plant

Naphtha Cracker

Cut Run ()

Light Naphtha ()

Pygas ()

PX Supply () BZ Supply ()

BZ Margin ()PX Margin ()

Heavy Naphtha ()

Short Supply

Ethylene /PropyleneCDU

Cut Run ()

CCR Cut Run ()

Reformate ()

FPU ()

Sulfolane () Xylene Frac. ()

Heavy Reformate Light Reformate

Crude cut

Weak refining margin

Weak Naphtha cracking margin pressured by new Ethane Crackers from ME

2009-2010 : Why Benzene bounced back swiftly?

20

2006

Feb 2

Mar 2

Apr

May 2

Jun 2

Jul 2

Aug 2

Sept 2

Oct

Nov 2

Dec 2

2007

Feb 2

Mar 2

Apr 2

May 2

Jun

Jul

Aug

Sept 2

Oct

Nov 2

Dec 3

2008

Feb 2

Mar 2

Apr 2

May 2

Jun 2

Jul 2

Aug 2

Sept

Oct

Nov

Dec 2

2009

Feb

Mar

Apr

May

Jun 2

Jul

Aug

Sept 2

Oct

Nov

Dec 2

2010

Feb 2

Mar 2

Apr 2

May 2

Jun 2

Jul

Aug 2

Sept 2

Oct

Nov 2

Dec

(100)

-

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400


Unit : $/MT

Evo III : 2006-2010

21

Come Back to Growth Mode

Evo IV : 2011-2020

22

World Economy : Recovery - Growth

Strong Growth in 2010 Growth By Derivative

The market is once again back to 40 million tons. Beyond 2011, we believe that benzene demand will resume growth rates similar to the previous growth period.

Evo IV : 2011-2016

23

Benzene Production Per Ton of Ethylene

Supply : Limited

Olefins units around the world continue to favor

light feedstocks which yields less and less benzene.

Refineries continue to struggle as petroleum

gasoline demand in large markets like North America and Europe has been lackluster.

The most significant drop is seen in benzene

production from pygas. Since 2005, benzene production from pygas has declined by almost half resulting in over a million tons of lost production.

Why the loss? The shift to lighter feedstocks

for ethylene Producers!.

N. America Benzene Production Suffers

Evo IV : 2011-2016

Benzene Production from Europe go down

24

Forecasted Price 2011-2020

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 -

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

Spread BZ(Korea)-Napthah(J) BZ : Korea Spot PriceNaphtha(J) Price Spread BZ(Korea)-Napthah(Japan)

Unit : $/MT

25

Part III : Conclusion

26

2005 2006 2007 2008 2009 2010

Spread BZ(Korea)-Napthah(J) BZ : Korea Spot Price Naphtha(J) Price Spread BZ(Korea)-Napthah(Japan) Spread BZ(Korea)-Napthah(Japan)

Benzene Spread Journey through time Unit : $/MT

27

Evo I : 1996-2000

2005 2006 2007 2008 2009 2010


New Technology

Asia Economic Crisis

Benzene Spread Journey through time

Unit : $/MT

28

Evo II : 2001-2006

2005 2006 2007 2008 2009 2010


New Gasoline Regulation in US

Environmental Disasters


AsiaDemand Growth

Unit : $/MT

29

Evo III : 2005 -2010

2005 2006 2007 2008 2009 2010

Spread BZ(Korea)-Napthah(J) BZ : Korea Spot Price Naphtha(J) Price

Massive New Benzene Supply

(CHINA & MIDDLE EAST)Refinery Produce More BTX

The Grate Economic Recession


Shale Gas, and Refineries

mothball

Stimulus Packages and demand from

emerging economies

Unit : $/MT

30

New Evolution of Significance impact to Benzene . . . .

New Applications. . .?

New Market …?

New Technology….. ?

New Round of Economics Crisis….. ?

31

Dynamic Forecasted Price 2011-2020

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 -

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

1,500

Spread BZ(Korea)-Napthah(J) BZ : Korea Spot PriceNaphtha(J) Price Spread BZ(Korea)-Napthah(Japan)

Massive New Benzene Supply

From Middle East

The New Round of Economic Recession

Technology Breakthrough

New Environmental Rule

and RegulationsNatural Disaster

Unit : $/MT

32Thank

you

Education

" The Evolution of Benzene " by Churairat PTTAR