Polyamide & Intermediates Markets Synthetic Fibres Raw Materials Committee Meeting at APIC 2013 Taipei, 10 May 2013 (Grace) Shen Hong
AGENDA Polyamide 6 Intermediates World Caprolactam Supply and Demand Polyamide 6 Demand Economic Analysis Conclusion Polyamide 66 Intermediates World Adipic Acid Supply and Demand World Adiponitrile Supply and Demand Polyamide 66 Demand Conclusion
WORLD CAPROLACTAM CAPABILITY vs DEMAND 1,000 Metric Tons Including uncertain plants 7,500 7,000 6,500 6,000 5,500 Effect of unscheduled plant downtime 2010-2011 Including highly probable new plants Oversupply 5,000 4,500 4,000 Capability to produce Forecast Growth 3.0% p.a. 3,500 Growth 2.7% p.a. 3,000 Growth 3.4% p.a. Growth 3.0% p.a. Caprolactam Consumption 2,500 1984 1988 1992 1996 2000 2004 2008 2016 2020
CAPROLACTAM CAPACITY 2011 2016 Uncertain New Projects In China 1,000 Metric Tons 1,200 China 1,000 Guangdong 800 China Fujian 600 China Baling 400 Hengyi 200 0-200 Additions Uncertain Closure 2014 Additions 2015-2016 Additions 2014 Additions 2013 Additions 2011 Fujian Liheng Fujian Tianchen BASF DSM Ube Honeywell CPDC Capro Corp Lanxess Sumitomo Domo C.I.S Poland India Others Sinopec Bohui Shandong Hongye Zhejiang Juhua Shandong Luxi Hubei Sanning
WORLD CAPROLACTAM CAPABILITY vs DEMAND 1,000 Metric Tons 7,500 7,000 6,500 Including uncertain plants Including highly probable new plants 6,000 5,500 5,000 Capability to produce World Growth 2013-2020 3.0% p.a. 4,500 4,000 3,500 World Growth 2.7% p.a. China Consumption Growth 2013-2020 8.4% p.a. 3,000 2,500 Rest of the World Caprolactam Consumption 2000 2002 2004 2006 2008 2010 2014 2016 2018 2020
WORLD CAPROLACTAM REGIONAL NET TRADE 1,000 Metric Tons 400 300 200 100 0-100 -200-300 -400-500 -600-700 -800 N America S America W Europe E Europe ME & Africa 2004 S & SE Asia Japan Taiwan & S Korea China 2004 2006 2007 2008 2009 2010 2011
WORLD CAPROLACTAM REGIONAL NET TRADE TRENDS TO 2020 1,000 Metric Tons 400 300 200 100 0-100 -200-300 -400 N America S America W Europe E Europe ME & Africa S & SE Asia Japan Taiwan & S Korea China -500-600 Forecast Trend to 2020-700 -800
WORLD POLYAMIDE 6 CONSUMPTION BY END-USE 1,000 Metric Tons 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Growth - 2020 4.1% 1.8% -2.5% 3.1% 2000 2002 2004 2006 2008 2010 2014 2016 2018 2020 PA6 Resin Staple High Ten Yarn Bulked Carpet Textile Fibre
WORLD POLYAMIDE 6 DEMAND BY REGION 1,000 Metric Tons 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 S&SE Asia China 0 North America South America West Europe East Europe ME & Africa Northeast Asia PA6 Resin BCF & Staple High Ten Yarn Textile Filament
CAPROLACTAM PRODUCTION COST vs OIL PRICE $/ton Caprolactam 3,500 Fixed costs of supplying plants Cost of Production in Asia 3,000 Cats & Chemicals Energy related costs (steam, ammonia, etc.) Delivery Fixed costs of caprolactam plant 2,500 2,000 1,500 Packing, loading Energy dependant costs 1,000 Cyclohexane 500 0 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 Brent Crude oil price $/bbl
CAPROLACTAM PRODUCTION COST vs OIL PRICE $/ton Caprolactam 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Cats & Chemicals Packing, loading shipping 12 2 Fixed costs of supplying plants Delivery 3 4 1 Energy related costs (steam, ammonia, etc.) 3 4 9 10 8 5 1 2 6 7 2 3 5 6 10 1112 11 1 2 3 4 1 5 8 4 8 9 12 10 5 2 7 8 1 3 4 11 6 9 8 9 9 12 12 7 7 10 11 5 6 10 11 Profit zone 6 7 Cyclohexane Cost of Production in Asia Fixed costs of caprolactam plant Energy dependant costs 500 0 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 Crude Oil Price $/bbl 2008 2009 2010 2011 2013
CAPROLACTAM PRODUCTION COST vs OIL PRICE $/ton Caprolactam 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Cats & Chemicals Packing, loading shipping 12 2 Fixed costs of supplying plants Delivery 3 4 1 Energy related costs (steam, ammonia, etc.) 3 4 9 10 8 5 1 2 6 7 2 3 5 6 10 1112 11 1 2 3 4 1 5 8 4 3 8 9 12 10 5 2 7 8 1 3 4 11 6 9 8 9 1 2 9 12 12 7 7 10 11 5 6 10 11 Profit zone 6 7 Cyclohexane Cost of Production in Asia Fixed costs of caprolactam plant Energy dependant costs 500 0 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 Crude Oil Price $/bbl 2008 2009 2010 2011 2013
CAPROLACTAM PRODUCTION COST vs OIL PRICE $/ton Caprolactam 3,500 Fixed costs of supplying plants Cost of Production in Asia 3,000 Cats & Chemicals Energy related costs (steam, ammonia, etc.) Delivery Fixed costs of caprolactam plant 2,500 2,000 1,500 Packing, loading Energy dependant costs 1,000 Cyclohexane 500 0 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 Brent Crude oil price $/bbl
CAPROLACTAM INDUSTRY CASH COST CURVE October US Dollars per Ton 3500 Each Column Represents an Existing Caprolactam Plant 3000 2500 Fixed Cost Variable Cost 2000 1500 1000 500 0 0 1000 2000 3000 4000 5000 6000 Cumulative Capacity ktpa
TIGHTNESS INDEX World Capacity Utilisation Rate 96.0% World Markets Very Tight Tightness Index 1.4 93.7% Tight 1.2 90.0% 84.0% Balanced Loose 1 0.8 75.0% Over-Supplied (Sloppy) 0.6
TIGHTNESS INDEX For a given year: World Tightness Index = log 10 Capability Capability - Consumption Capability = Annual Nameplate Capacity less Capacity off line* * Due to unscheduled stoppages, not scheduled maintenance turnarounds
APIC 2103 WORLD CAPROLACTAM CAPABILITY vs DEMAND 1,000 Metric Tons 7,500 7,000 6,500 Including highly probable new plants Including uncertain plants 6,000 5,500 5,000 4,500 Tightness Index for 2014 = Log 10 C B Capability to produce B 4,000 3,500 3,000 2,500 Growth 3.4% p.a. Growth 3.0% p.a. Growth 2.7% p.a. Caprolactam Consumption 1984 1988 1992 1996 2000 2004 2008 2016 2020 C
CAPROLACTAM PRICE HISTORY - ASIA Tightness Index 1.6 1.5 H2 2009 VERY TIGHT TIGHT 1.4 1.3 1.2 1.1 H1 2010 H2 2010 H1 2011 BALANCED LOOSE OVER- SUPPLIED (SLOPPY) 1.0 0.9 0.8 0.7 0.6 0.5 0.4 $3400 $3200 $3000 $2800 $2600 $2400 $2200 H2 2011 H1 H2 H1 2013 0.3 0.2 60 70 80 90 100 110 120 130 140 Brent Crude Oil Price $/bbl $2000
CAPROLACTAM PRICE ASIA 2010 by month Tightness Index VERY TIGHT TIGHT BALANCED LOOSE OVER- SUPPLIED (SLOPPY) 1.6 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 $3400 $3200 $3000 $2800 $2600 $2400 $2200 H1 2010 H2 2010 2010 0.2 60 70 80 90 100 110 120 130 140 Brent Crude Oil Price $/bbl $2000
CAPROLACTAM PRICE ASIA 2011 by month VERY TIGHT TIGHT BALANCED LOOSE OVER- SUPPLIED (SLOPPY) Tightness Index 1.6 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 2011 $3400 $3200 $3000 $2800 $2600 $2400 $2200 H1 2011 H2 2011 0.2 60 70 80 90 100 110 120 130 140 Brent Crude Oil Price $/bbl $2000
CAPROLACTAM PRICE ASIA H1 by month Tightness Index 1.6 1.5 VERY TIGHT TIGHT BALANCED LOOSE OVER- SUPPLIED (SLOPPY) 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 $3400 $3200 $3000 $2800 $2600 $2400 $2200 H1 H1 0.2 60 70 80 90 100 110 120 130 140 $2000 Brent Crude Oil Price $/bbl
CAPROLACTAM PRICE ASIA by month Tightness Index 1.6 VERY TIGHT TIGHT BALANCED LOOSE OVER- SUPPLIED (SLOPPY) 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 0.7 0.6 0.5 0.4 0.3 $3400 $3200 $3000 $2800 $2600 $2400 $2200 H2 H2 0.2 60 70 80 90 100 110 120 130 140 $2000 Brent Crude Oil Price $/bbl
CAPROLACTAM 2013 PRICE FORECAST ASIA (Dec Forecast) Tightness Index 1.6 1.5 2013 VERY TIGHT 1.4 1.3 TIGHT 1.2 1.1 BALANCED 1.0 $3400 0.9 $3200 LOOSE 0.8 $3000 0.7 $2800 OVER- SUPPLIED (SLOPPY) 0.6 0.5 0.4 Forecast by the US Energy Information Administration $2600 $2400 $2200 0.3 0.2 60 70 80 90 100 110 120 130 140 Brent Crude Oil Price $/bbl $2000
CAPROLACTAM 2014 PRICE FORECAST - ASIA Tightness Index 1.6 2014 VERY TIGHT TIGHT BALANCED LOOSE 1.5 1.4 1.3 1.2 1.1 1.0 0.9 0.8 $3400 $3200 $3000 OVER- SUPPLIED (SLOPPY) 0.7 0.6 0.5 0.4 0.3 0.2 Forecast by the US Energy Information Administration April 2013 60 70 80 90 100 110 120 130 140 Brent Crude Oil Price $/bbl $2800 $2600 $2400 $2200 $2000
CONCLUSIONS - POLYAMIDE 6 INDUSTRY World caprolactam consumption showed little growth in 2011, then returned to growth in -- but only in China Caprolactam consumption has grown about 18% in in China, a bounce-back after stagnation in 2011, boosted by both textile applications and engineering plastics applications Outside China, caprolactam growth has been zero or negative in Six new 100 ktpa caprolactam units have been brought on stream in China in, by Haili (2), Hengyi (2), Hongye (1) and Sinopec (1), doubling China s capacity within 12 months These additions have moved the world caprolactam balance into over-supply, yet more capacity of 400 ktpa will come on stream in H2 2013 and various other projects are under construction or planned in China World caprolactam over-supply is thus inevitable over the next few years, possibly mitigated by closure of some old plants This has dire consequences for caprolactam industry profitability over the next few years Caprolactam producers need to develop and promote PA6 engineering plastics applications in order to boost consumption
WORLD ADIPIC ACID CAPABILITY vs DEMAND 1,000 Metric Tons 4,500 4,000 3,500 Forecast Growth 2.7% Capability to Produce 3,000 2,500 2,000 Growth 4.0% Invista closes 450 ktpa at Wilton & Maitland, rebuilds Orange Adipic Acid Consumption 1,500 1995 1999 2003 2007 2011 2015 2019
WORLD ADIPIC ACID PRODUCERS 1,000 Metric Tons Invista Rhodia Ascend BASF Asahi Kasei Radici Lanxess Ukraine Liaoyang Petrochemical China Shenma Shandong Hongye Shandong Haili Dushanzi Tianli Hualu Hengsheng Chongqing Fuxiang Yangmei Fengxi Kailuan Energy Zhejiang Shuyang 800 China Singapore 600 400 200 0 2011 2013 closure Additions Additions 2013
WORLD ADIPIC ACID CONSUMPTION BY END-USE 1,000 Metric Tons 4,000 3,500 3,000 2,500 2,000 1,500 1,000 Growth - 2020 2.2% 2.9% 3.1% 2.4% Others Polyurethane Plasticisers Polyamide 66 500 0 2000 2002 2004 2006 2008 2010 2014 2016 2018 2020
WORLD ADIPONITRILE CAPABILITY vs DEMAND 1,000 Metric Tons Assumed new 300 kpta plant 1,800 1,700 1,600 1,500 Capability to Produce BASF closes 116 ktpa at Wilton, UK 1,400 1,300 1,200 Forecast Growth 2.8% 1,100 1,000 900 Growth 3.1% Invista s 254 ktpa unit at Orange, USA out of action Adiponitrile Consumption 800 1995 2000 2010 2015 2020 Capability = 0.95 x Nameplate Capacity
WORLD POLYAMIDE 66 CONSUMPTION BY END-USE 1,000 Metric Tons 3,500 3,000 2,500 2,000 1,500 1,000 500 Growth - 2020 3.9% 2.4% 1.9% PA66 Resin Staple High Ten Yarn Bulked Carpet Textile Fibre 1.7% 0 2000 2002 2004 2006 2008 2010 2014 2016 2018 2020
WORLD POLYAMIDE 66 DEMAND BY REGION 1,000 Metric Tons 1,400 1,200 1,000 PA66 Resin PA66 Fibre 800 600 400 200 North America South America West Europe East Europe ME & Africa S&SE Asia Northeast Asia China 0
CONCLUSIONS - POLYAMIDE 66 INDUSTRY The world adipic acid market is seriously oversupplied. China has the biggest adipic acid capacity of any country, but the average utilisation rate in China is now as low as 50%. Adipic acid demand for both polyurethane and polyamide applications will grow steadily, with major increases taking place in China However, fierce competition will lead to low profit, even for top quality adipic acid producers. A reshaping of the adipic acid industry is possible if the global economy stays volatile in 2013 and beyond If adiponitrile capacity is not increased in the near future, adiponitrile will be extremely tight from 2016, possibly earlier PA66 producers have to grapple with high and volatile costs which are likely to persist and may damage long term PA66 growth Polyamide 66 resin demand in engineering plastics applications shows more dynamism than polyamide 66 fibre PA66 faces substitutional pressure from PA6, due to the widening pricing difference
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