Acrylonitrile – World Market Overview

Acrylonitrile – World Market Overview

(Michelle) Yang Qin

Synthetic Fibres Raw Materials Committee Meeting at APIC 2015

Seoul, 8 May 2015

• Trends in Global Acrylonitrile Production

• Downstream Sector Analysis

• Supply and Demand Balances

• Lessons from Other Markets

• Market Prospects

• Conclusions

APIC 2015

AGENDA

Source: Tecnon OrbiChem

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

1990 1995 2000 2005 2010 2015 2020

Thousand Metric Tons

North America

South America

West Europe

East Europe

ME & Africa

S & SE Asia

Northeast Asia

China

Source: Tecnon OrbiChem

APIC 2015

WORLD ACRYLONITRILE CAPACITY

• Rapid growth in capacity

APIC 2015

WORLD ACRYLONITRILE PRODUCTION TRENDS

Source: Tecnon OrbiChem

New Capacity ktpa Year

Anqing Petrochemical, China 130 2013

Tong Suh Petrochemical, S Korea 245 2013

Shandong Keluer, China 130 2014

Shanghai Secco, China 260 2015

Jiangsu Sailboat, China 260 2015

SABIC/Asahi Kasei, Saudi Arabia 240 2017

Ineos Tianjin, China 260 2017

Capacity Shut Down

Asahi Kasei, Japan (250) 2014

• Increasing availability of propylene and ammonia feedstock

• Propane dehydrogenation units in North America and Asia

• Ammonia plants in North America and the Middle East

• Low profitability

APIC 2015

WORLD ACRYLONITRILE PRODUCTION TRENDS

Source: Tecnon OrbiChem

5,200

5,400

5,600

5,800

6,000

6,200

6,400

6,600

6,800

7,000

7,200

500

1,000

1,500

2,000

Capacity

Acrylonitrile Margin

Margin = Acrylonitrile – 1.1 x Propylene $/ton

Source: Tecnon OrbiChem

APIC 2015

WORLD ACRYLONITRILE PRODUCTION TRENDS

Capacity (ktpa)

• Acrylic fibre losing dominance in acrylonitrile downstream

• Slow growth in most sectors, except polyacrylamide

• Strongest growth in low-volume consuming industries

APIC 2015

DOWNSTREAM SECTOR ANALYSIS

Source: Tecnon OrbiChem

0

1000

2000

3000

4000

5000

6000

2000 2005 2010 2015 2020

Thousand Metric Tons (of acrylonitrile)

Source: Tecnon OrbiChem

APIC 2015

ACRYLONITRILE CONSUMPTION BY END USE

Acrylic Fibre

Adiponitrile

ABS/SAN

Acrylamide

Nitrile Rubber

Other

Source: Tecnon OrbiChem

• Global acrylic fibre production has declined by an average 2% per year during the last five years (Montefibre, Radici)

• Production in 2014 was 1.735 million tons registering a decline of 9% from 2013

• Acrylic fibre costs continue to suffer from propylene prices and high acrylonitrile conversion costs

• Despite a sharp fall in production over the past 10 years, Tecnon OrbiChem expects modest (0.4%) production growth in the next 10 years, due to weak supplies of wool and cotton and continuing technical advantages for acrylic fibre in certain markets

APIC 2015

WORLD ACRYLIC FIBRE PRODUCTION TRENDS

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1990 1995 2000 2005 2010 2015 2020

Million Metric Tons

North America

South America

West Europe

East Europe

ME & Africa

S & SE Asia

Northeast Asia

China

Source: Tecnon OrbiChem

APIC 2015

WORLD ACRYLIC FIBRE CAPACITY

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1990 1995 2000 2005 2010 2015 2020

Million Metric Tons

North America

South America

West Europe

East Europe

ME & Africa

S & SE Asia

Northeast Asia

China

Source: Tecnon OrbiChem

APIC 2015

WORLD ACRYLIC FIBRE PRODUCTION

• Steady growth, in line with economic growth in most regions

• Chronic overcapacity diminishes profitability

• Styrene prices guide ABS competitiveness

• Free-trade agreements encourage Korean exports

• Exchange rate fluctuations disrupt trade flows

APIC 2015

ABS MARKET TRENDS

Source: Tecnon OrbiChem

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

1990 1995 2000 2005 2010 2015 2020

Million Metric Tons

North America

South America

West Europe

East Europe

ME & Africa

S & SE Asia

Northeast Asia

China

Source: Tecnon OrbiChem

APIC 2015

WORLD ABS CAPACITY

• North American shale gas boom fuels consumption growth

• Water treatment remains biggest end-use, but growth is slow

• Pulp and paper markets are also mature

APIC 2015

ACRYLAMIDE MARKET TRENDS

Source: Tecnon OrbiChem

• Nitrile rubber market growth is slow but steady

• New adiponitrile plant to come on stream this year in Shandong

• Spectacular growth in carbon fibre demand, but volumes are low

APIC 2015

OTHER DOWNSTREAM MARKETS

Source: Tecnon OrbiChem

2,500

3,500

4,500

5,500

6,500

7,500

1990 1995 2000 2005 2010 2015 2020

Source: Tecnon OrbiChem

APIC 2015

ACRYLONITRILE SUPPLY AND DEMAND

Consumption

Capacity to Produce

Thousand Metric Tons

• Consistent overcapacity

• Large producers manage operating rates globally

• Relatively stable trade flows among regions

• Japanese exports reduced after 2014 closures

• New capacities in China may reduce imports from the Americas

• Margins are likely to remain depressed

APIC 2015

ACRYLONITRILE SUPPLY AND DEMAND

Source: Tecnon OrbiChem

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

0

100

200

300

Capacity

PTA Margin

Margin = PTA – 0.67x PX ($/ton)

Source: Tecnon OrbiChem

APIC 2015

LESSONS FROM OTHER MARKETS – POLYESTER

Capacity (ktpa)

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

500

1,000

1,500

2,000

Capacity

Adipic AcidMargin

Margin = Adipic Acid – 0.7x Benzene ($/ton)

Source: Tecnon OrbiChem

APIC 2015

LESSONS FROM OTHER MARKETS – ADIPIC ACID

Capacity (ktpa)

5,200

5,400

5,600

5,800

6,000

6,200

6,400

6,600

6,800

7,000

7,200

500

1,000

1,500

2,000

Capacity

Acrylonitrile Margin

Margin = Acrylonitrile – 1.1 x Propylene $/ton

Source: Tecnon OrbiChem

APIC 2015

ACRYLONITRILE PROFITABILITY

Capacity (ktpa)

• Ineos/Sinopec intellectual property dispute

• Possible Montefibre Hispania acrylic fibre restart

• Continued conversion of acrylic fibre capacity to carbon fibre; output volumes are often reduced

• New demand for ABS resins in 3D printing

APIC 2015

ACRYLONITRILE MARKET PROSPECTS

Source: Tecnon OrbiChem

• Acrylonitrile profitability will remain low because capacity is expanding faster than demand is growing

• Increasing self-sufficiency in China will reduce inter-regional trade; exports from the Americas to Asia are likely to decline, despite seasonal cost advantages

• Slow growth to continue in acrylic fibre markets

• Low oil prices will reduce demand for polyacrylamide in fracking operations

• Carbon fibre production is growing rapidly, but very little acrylonitrile is consumed

APIC 2015

CONCLUSIONS

Source: Tecnon OrbiChem

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