Apic2015 Zhao Na

Maleic Anhydride Chain - World Market Overview Chemicals Committee Meeting at APIC 2015 Seoul, 8 May 2015

(Anna) Zhao Na

APIC 2015

AGENDA • Feedstock Butane & Benzene Price Trends vs. Crude Oil • Butane and Benzene – Based Production Economics • Overview of World Supply & Demand Conditions • UPR and Other Applications • Conclusions

Source: Tecnon OrbiChem

APIC 2015

WTI & BRENT CRUDE OIL PRICES 2005-2016 (US EIA Short Term Forecast) $/bbl 140

Brent

120

100

WTI

80

60

40

20

0 2005

2006

2007

Source: US EIA

2008

2009

2010

2011

2012

2013

2014

2015

2016

APIC 2015

US N-BUTANES & CRUDE OIL PRICES $/ton 1,200

US n-Butanes 1,000

Brent Crude

800

600

WTI Crude

400

200

0 2005

2006

2007

2008

Source: Tecnon OrbiChem

2009

2010

2011

2012

2013

2014

2015

APIC 2015

US N-BUTANES vs WTI CRUDE OIL PRICES N-Butanes ($/ton) 1,100 1,000 900 800 700 600 500 400 300 30

40

50

60

70

80

90

100

110

120

130

140

WTI ($/bbl) Source: Tecnon OrbiChem

APIC 2015

WE MIXED BUTANES, BENZENE & BRENT CRUDE OIL PRICES $/ton 1,600

WE Benzene

1,400 1,200

WE Mixed Butanes

1,000 800

Brent Crude

600 400 200 2006

2007

2008

Source: Tecnon OrbiChem

2009

2010

2011

2012

2013

2014

2015

APIC 2015

CHINA BENZENE, ASIA BUTANE & BRENT CRUDE OIL PRICES $/ton

1,800

Petroleum Benzene

1,600 1,400

Coal Benzene

1,200 1,000

Asia Butane

800

Brent Crude

600 400 200 0 2006

2007

2008

2009

Source: Tecnon OrbiChem

2010

2011

2012

2013

2014

2015

APIC 2015

UNITED STATES MALEIC ANHYDRIDE MARGIN OVER 1.10 x BUTANE $/ton 2,000

US Maleic Anhydride 1,500

1.10 x US Butane Margin over 1.10 x Butane

1,000

500

0 2006

2007

2008

2009

Source: Tecnon OrbiChem

2010

2011

2012

2013

2014

2015

APIC 2015

CHINA MALEIC ANHYDRIDE MARGIN OVER 1.15 x BENZENE $/ton 2,000

China Maleic Anhydride

1,700 1,400

1.15 x China Coal Benzene

1,100

Margin over 1.15 x China Coal Benzene

800 500 200 -100 2006

2007

2008

2009

Source: Tecnon OrbiChem

2010

2011

2012

2013

2014

2015

APIC 2015

CHINA MALEIC ANHYDRIDE MARGIN OVER 1.14 x BUTANE $/ton 2,000

1,600

China Maleic Anhydride

1,200

1.14 x Asia Butane Margin over 1.14 x Butane

800

400

0 2006

2007

2008

2009

Source: Tecnon OrbiChem

2010

2011

2012

2013

2014

2015

APIC 2015

WORLD MALEIC ANHYDRIDE SUPPLY & DEMAND BY REGION 1,000 Metric Tons 3,000

World Capacity North America

2,500

Production | Consumption 2,000

Northeast Asia S & SE Asia ME & Africa

1,500

East Europe 1,000

West Europe South America

500

China 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Tecnon OrbiChem

APIC 2015

WORLD MALEIC ANHYDRIDE CAPACITY BY REGION 1,000 Metric Tons North America 3,000

Northeast Asia S & SE Asia ME & Africa

2,000

East Europe West Europe South America

1,000

China 0 2010

2011

2012

2013

Source: Tecnon OrbiChem

2014

2015

2016

2017

2018

2019

2020

APIC 2015

NORTH AMERICA MALEIC ANHYDRIDE SUPPLY & DEMAND 1,000 Metric Tons 500

Capacity Consumption

400

Production 300

200

100

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Tecnon OrbiChem

APIC 2015

WEST EUROPE MALEIC ANHYDRIDE SUPPLY & DEMAND 1,000 Metric Tons 400

Capacity Consumption 300

Production 200

100

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Tecnon OrbiChem

APIC 2015

CHINA MALEIC ANHYDRIDE SUPPLY & DEMAND 1,000 Metric Tons Capacity

2,000

Consumption 1,500

Production

1,000

500

0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Source: Tecnon OrbiChem

APIC 2015

CHINA BUTANE BASED MALEIC ANHYDRIDE CAPACITY GROWTH & NEW PLANTS 7%

Capacity (ktpa)

Start-Up Date

30

Apr 2013

100

Nov 2013

Ningbo Jiangning

80

End 2013

Puyang Shengyuan

50

Aug 2014

1,000 Metric Tons

Shandong Huifeng

50

Dec 2014

2,000

Dongying Qifa

30

Mar 2014

1,500

Dongyin Kede

30

Aug 2014

Shandong Yongshunda

30

Nov 2014

Yizheng Chemical Fibre

100

Mid 2015

Shandong Chenxi

50

H2 2015

Jiangsu Yabang

60

H1 2016

Panjin Union (UPC)

80

End 2015

43%

Producer Zhuhai Unicizers (UPC)

93%

57% 2010

Zibo Qixiang Tengda 2016

Butane

Feedstock

Benzene

1,000 500 0

2010

2012

2014

2016

Source: Tecnon OrbiChem

2018

2020

APIC 2015

TOP 10 MALEIC ANHYDRIDE PRODUCERS 2015 Company

Location

Huntsman Corporation Jiangsu Yabang Group Bohai Chemicals Sasol/Huntsman Polynt Shanxi Tayiuan Qiaoyou Chemicals Zibo Qixiang Tengda Chemical Co.

United States China China Germany Italy China China

154 150 140 105 101 100 100

5.5 5.4 5.0 3.8 3.6 3.6 3.6

Ningbo Jiangning Chemical China Shandong Hongxin Chemical Industry Co. China Lanxess United States Total Capacity of Top 10 Total Capacity World

80 76 73 1,079 2,800

2.9 2.7 2.6 38.5

Source: Tecnon OrbiChem

Capacity (ktpa)

% of Total

APIC 2015

WORLD MALEIC ANHYDRIDE NET TRADE 2010 - 2014 1,000 Metric Tons 100 80

2010

60

2011

Source: Tecnon OrbiChem

2014 China

-80

2013

NE Asia

-60

2012

S & SE Asia

-40

E Europe

-20

N America

0

ME & Africa

20

W Europe

S America

40

APIC 2015

WORLD PURE MALEIC ANHYDRIDE APPLICATION BY REGION 2010 & 2014 1,000 Metric Tons 800

UPR 600

BDO Others

400

North South West America America Europe

Source: Tecnon OrbiChem

East Europe

ME & Africa

S & SE Asia

NE Asia

2014

2010

2014

2010

2014

2010

2014

2010

2014

2010

2014

2010

2014

2010

2014

0

2010

200

China

APIC 2015

UPR MARKET • UPR squeezed by feedstocks with very volatile pricing o Styrene is the biggest component (at more than 35%) of UPR and more volatile than maleic • Demand should be stimulated by lower prices and a pick-up in downstream applications including: o Pipe (construction), Marine o Wind Energy, Automotive • UPR still faces challenges: o In Europe & US due to environmental concerns – over styrene in particular. o In Asia from oversupply - Chinese UPR capacity ran at 50% in 2014 but demand growth slows down further • Bio-based UPR is a long way off but opportunities exist in styrene-free UPR and other initiatives.

Source: Tecnon OrbiChem

APIC 2015

EUROPEAN ORTHOPHTHALIC RESIN COST OF RAW MATERIAL 2004-2015 €/ton 1,500

1,200

900

600

300

0 2004

2005

2006

2007

2008

2009

2010

Product Location Composite West Europe Styrene West Europe Monopropylene Glycol West Europe Phthalic Anhydride West Europe Maleic Anhydride West Europe

Source: Tecnon OrbiChem

2011

2012

2013

2014

Definition

Factor

Contract Barges ARA FOB Industrial Grade Contract DDP Domestic Molten DDP Molten Contract Price DDP

0.34 0.27 0.25 0.14

2015

APIC 2015

UPR MARKET SEGMENTATION Tanks & Pipes 18%

Building 21%

Electrical 8%

Industrial 10%

Marine 3%

Marine 9%

Others 8% Gelcoats 7%

Infrastructure 39%

Artificial Marble 15%

Europe

Transport 14%

Others 11% Architecture & Structure 32%

Transport 5%

China

Source: Cefic European UP/VE Resin Association; Chinese Society for Composite Materials

APIC 2015

CONCLUSIONS • The impact of low benzene prices on the global maleic market will be felt in terms of demand improvement ,while butane is likely to maintain its cost advantage over benzene as a maleic feedstock in the long run. • The global maleic market has been showing modest improvement in the past few years in US and Europe, strong growth in the Middle East and Southeast Asia and slowing growth in China • High transportation costs, for heating etc. mean that maleic remains a largely regional market. However, new trading opportunities have emerged amid lengthening supply in China and Northeast Asia and steady demand in Middle East and Southeast Asia. • Butane based maleic has continued to grow in China due to its cost advantage over benzene and easier availability of feedstock butane - both of which could lead to increasing maleic exports from China. • UPR has maintained its dominant share of maleic consumption, but growth has slowed in China. Source: Tecnon OrbiChem

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