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Nylon & ABS Market OverviewNylon & ABS Market Overview
Paul BlanchardPaul BlanchardDirector Director –– Engineering ResinsEngineering Resins
North AmericaNorth America
SingaporeSingapore ShanghaiShanghai HoustonHouston New YorkNew York LondonLondon DüsseldorfDüsseldorf DubaiDubai
Motor Vehicle Metal & Resins ConferenceMotor Vehicle Metal & Resins ConferenceTroy, MI Troy, MI
May 12, 2011May 12, 2011has
acquired
CMAI CMAI -- A Global Organization Of Over A Global Organization Of Over 180 180 Full Full --Time Associates…Time Associates…
CMAI CMAI -- A Global Organization Of Over A Global Organization Of Over 180 180 Full Full --Time Associates…Time Associates…
HOUSTONHOUSTONLONDONLONDON
DubaiDubai
New YorkNew York
ShanghaiShanghai
DusseldorfDusseldorf
SINGAPORESINGAPORE
DubaiDubai ShanghaiShanghai
Bangkok (2011)Bangkok (2011)
IHS IHS –– Who We AreWho We Are
We are 5,500 people, in 30 countries, speaking 50 languages – all working each day to:
• Serve businesses and all levels of governments worldwide
• Ranging from 80% of Global Fortune 500 to small
businesses
• Customers in 180 countries• Customers in 180 countries
• Provide comprehensive content, software and expert analysis
and forecasts
Customers around the world use our products and services to make
faster and more confident decisions.
Advancing Decisions that Advance the World
CMAI is the premier provider of consulting services to the CMAI is the premier provider of consulting services to the petrochemical and related downstream industries.petrochemical and related downstream industries.
Market Advisory Services
Market Advisory Services
Business Advisory Services
Business Advisory Services
Planning Advisory Services
Planning Advisory Services
•• Continuous industry analysis Continuous industry analysis on a multion a multi--client basisclient basis
•• Access to leading industry Access to leading industry expertsexperts
•• Daily, weekly, monthly and Daily, weekly, monthly and annual industry reportsannual industry reports
•• SingleSingle--client, tailored analysesclient, tailored analyses•• Assist clients with strategic Assist clients with strategic
and commercial decisionsand commercial decisions•• Support major capital Support major capital
investments and transactionsinvestments and transactions•• Customized market and Customized market and
competitive analysescompetitive analyses•• Assist clients with legal issuesAssist clients with legal issues
ServicesServices ServicesServices ServicesServices
•• Enhanced cost analysis and Enhanced cost analysis and price forecastingprice forecasting
•• Capacity, trade and S/D analysis Capacity, trade and S/D analysis and forecastand forecast
•• Competitive cost studiesCompetitive cost studies•• TrainingTraining•• Economy/scenario forecastingEconomy/scenario forecasting•• Company analysisCompany analysis
Nylon Chain OverviewNylon Chain Overview
•• Nylon 6 and 6,6Nylon 6 and 6,6
–– Feedstock impactFeedstock impact
–– Supply / demand Supply / demand
effectseffectseffectseffects
–– Price and margin Price and margin
outlookoutlook
In the beginning……In the beginning……
•• Nylon’s first Nylon’s first application was in application was in fibersfibersfibersfibers
•• Fibers continue Fibers continue to be nylon’s to be nylon’s largest marketlargest market
Staple FiberStaple Fiber2%2%
BCFBCF9%9%
Textile Filament Textile Filament YarnYarn
Engineering Engineering Resin (ETP)Resin (ETP)
41%41%
2010 Global Nylon Demand2010 Global Nylon Demand
2010 Demand = 5.8 Million Metric Tons
YarnYarn33%33%
Industrial Industrial Filament YarnFilament Yarn
15%15%
ETP
PA 6 1.4 M Tons
PA 6,6 1.0 M Tons
Total Fiber
PA 6 2.8 M Tons
PA 6,6 0.6 M Tons
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Net Exports
Million Metric TonsMillion Metric Tons
Global Nylon Resin TradeGlobal Nylon Resin Trade
-1.0
-0.8
-0.6
-0.4
2005 2006 2007 2008 2009 2010
N. America S. America W. Europe C. Europe
CIS & Baltics Africa Middle East Indian Subc.
NE Asia SE Asia
Net Imports
Global Nylon ETP DemandGlobal Nylon ETP Demand
Automotive and Automotive and TruckTruck35%35%
Wire and CableWire and Cable
ConsumerConsumer10%10%
IndustrialIndustrial//MachineryMachinery
13%13%
OtherOther6%6%
Electrical and Electrical and ElectronicElectronic
11%11%AppliancesAppliances8%8%
Film and CoatingFilm and Coating16%16%
Wire and CableWire and Cable1%1%
2010 Demand = 2.4 Million Metric Tons
Nylon 6 Nylon 6
Nylon 6 Chain Overview
Benzene Cyclohexane Caprolactam Nylon 6
Benzene
Cyclo-
HoneywellBASF, DSM,
UBE, CPDC,
Baling PC,
Mitsubishi
Nylon 6 Producers:
Cumene PhenolCyclo-
hexanone
Propylene
00
2020
4040
6060
8080
100100Cents Per PoundCents Per Pound
ForecastForecast
Caprolactam Economics
North America
--4040
--2020
JanJan--0909 JulJul--0909 JanJan--1010 JulJul--1010 JanJan--1111 JulJul--1111 JanJan--1212 JulJul--1212
Cyclohexane ContributionCyclohexane ContributionHydrogen ContributionHydrogen ContributionAmmonia ContributionAmmonia ContributionAmmonium Sulfate CreditAmmonium Sulfate CreditSulfuric Acid ContributionSulfuric Acid ContributionNet of Ammonia,Sulfur and Ammonium SulfateNet of Ammonia,Sulfur and Ammonium SulfateCaprolactam Total Cash CostCaprolactam Total Cash Cost
8080
100100
120120
140140
160160
180180
Cents Per PoundCents Per Pound
North America Nylon 6 Resin Cash Cost North America Nylon 6 Resin Cash Cost aand ETP Market nd ETP Market PricePrice
North America Nylon 6 Resin Cash Cost North America Nylon 6 Resin Cash Cost aand ETP Market nd ETP Market PricePrice
ForecastForecast
--2020
00
2020
4040
6060
JanJan--0808 JulJul--0808 JanJan--0909 JulJul--0909 JanJan--1010 JulJul--1010 JanJan--1111 JulJul--1111 JanJan--1212 JulJul--1212
Nylon 6 Cash CostNylon 6 Cash Cost Nylon 6 PreNylon 6 Pre--tax Margintax Margin N6 Market PriceN6 Market Price~~
40%40%
50%50%
60%60%
70%70%
80%80%
90%90%
100%100%
2.02.0
3.03.0
4.04.0
5.05.0
6.06.0
MillionMillion Metric TonsMetric TonsMillionMillion Metric TonsMetric Tons Operating RateOperating Rate
ForecastForecast
WorldWorldWorldWorldNylon 6 Resin Supply & DemandNylon 6 Resin Supply & Demand
0%0%
10%10%
20%20%
30%30%
40%40%
0.00.0
1.01.0
2.02.0
20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012 20132013 20142014 20152015
Engineering Plastic Demand Fiber Demand
Operating Rate,% Global Caprolactam Operating Rate
2,0002,000
2,5002,500
3,0003,000
3,5003,500
4,0004,000
4,5004,500Dollars Per Metric TonDollars Per Metric Ton
ForecastForecast
Nylon 6 ETP Prices ConvergingNylon 6 ETP Prices Converging
00
500500
1,0001,000
1,5001,500
2,0002,000
JanJan--0808 AugAug--0808 MarMar--0909 OctOct--0909 MayMay--1010 DecDec--1010 JulJul--1111 FebFeb--1212 SepSep--1212
NAM Market PriceNAM Market Price WEP Market PriceWEP Market Price NEA Market PriceNEA Market Price
Nylon 6 SummaryNylon 6 Summary
•• Nylon 6 growth in Asia ETP and fiber Nylon 6 growth in Asia ETP and fiber tightening supply/demand balance for tightening supply/demand balance for resin and caprolactamresin and caprolactam
–– Planned investments will provide supply Planned investments will provide supply –– Planned investments will provide supply Planned investments will provide supply
assurance but prices will move upwardassurance but prices will move upward
•• Additives impact compoundsAdditives impact compounds
Nylon 6,6 Nylon 6,6
Nylon 6,6 Chain OverviewNylon 6,6 Chain Overview
Benzene Cyclohexane Adipic Acid
Adipo-
nitrileHMDA
Nylon 6,6
Crude C4 Butadiene
Ascend
Asahi
Invista, Rhodia DuPont, ShenmaNylon 6,6 Producers:
Propylene
Ammonia
Acrylonitrile
Adiponitrile LimitsAdiponitrile LimitsButachimieButachimie
32%32%
InvistaInvista45%45%
AscendAscend18%18%
Asahi Kasei Asahi Kasei 5%5%
ADN Capacity = 1.6ADN Capacity = 1.6 Million Metric TonsMillion Metric Tons
5.05.0
5.55.5
6.06.0
BD vs Ethylene PercentBD vs Ethylene Percent
Butadiene Shortage Continues to Butadiene Shortage Continues to
Get WorseGet Worse
3.03.0
3.53.5
4.04.0
4.54.5
1010 Q2Q2 Q3Q3 Q4Q4 1111 Q2Q2 Q3Q3 Q4Q4 1212 Q2Q2 Q3Q3 Q4Q4
4040
5050
6060
7070
8080
9090
100100
11
22
22
33Operating Rate, PercentOperating Rate, PercentMillion Metric TonsMillion Metric Tons
Global Demand for Nylon 6,6 ResinGlobal Demand for Nylon 6,6 Resin
00
1010
2020
3030
4040
00
11
11
20042004 20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012 20132013 20142014 20152015
Nylon 6,6 ETP Demand Nylon 6,6 Fiber Demand
Capacity Operating Rate
100100
120120
140140
160160
180180
200200
Cents Per PoundCents Per Pound
North America Nylon 6,6 Resin Cash Cost North America Nylon 6,6 Resin Cash Cost And Market Price And Market Price
(Non-Integrated Producer)
North America Nylon 6,6 Resin Cash Cost North America Nylon 6,6 Resin Cash Cost And Market Price And Market Price
(Non-Integrated Producer)
ForecastForecast
00
2020
4040
6060
8080
100100
JanJan--0808 JulJul--0808 JanJan--0909 JulJul--0909 JanJan--1010 JulJul--1010 JanJan--1111 JulJul--1111 JanJan--1212 JulJul--1212
Nylon 6,6 Cash CostNylon 6,6 Cash Cost Nylon 6,6 MarginNylon 6,6 Margin N66 Market PriceN66 Market Price~~
2,0002,000
2,5002,500
3,0003,000
3,5003,500
4,0004,000
4,5004,500
Regional Nylon 6,6 Engineering Resin Market PricesRegional Nylon 6,6 Engineering Resin Market PricesRegional Nylon 6,6 Engineering Resin Market PricesRegional Nylon 6,6 Engineering Resin Market Prices
Dollars Per Metric TonDollars Per Metric Ton
ForecastForecast
00
500500
1,0001,000
1,5001,500
2,0002,000
JanJan--0808 AugAug--0808 MarMar--0909 OctOct--0909 MayMay--1010 DecDec--1010 JulJul--1111 FebFeb--1212 SepSep--1212
NAM Market PriceNAM Market Price WEP Market PriceWEP Market Price NEA Market PriceNEA Market Price
Nylon 6,6 SummaryNylon 6,6 Summary
•• Nylon 6,6 upstream intermediates face Nylon 6,6 upstream intermediates face constrained supply of adiponitrile that constrained supply of adiponitrile that supports price levelssupports price levels
–– New capacity in 2014 will be just in timeNew capacity in 2014 will be just in time
•• Additives impact compoundsAdditives impact compounds
ABSABS
Building & Building & Const.Const.
6%6%
TransportationTransportation12%12%
Electronics/Electronics/ElectricalElectrical
25%25%
World ABS DemandWorld ABS Demand
ApplianceAppliance41%41%AlloysAlloys
4%4%
Other Other (Medical, Toys, (Medical, Toys,
Rec.)Rec.)12%12%
2010 ABS Demand 2010 ABS Demand -- 7.3 Million Metric Tons7.3 Million Metric Tons
ABS ChainABS Chain
Benzene
Ethylene
Ethyl
BenzeneStyrene
ABS Resin
Propylene
Crude
C4
Butadiene / PBR
Acrylonitrile
Global Benzene Prices Very HighGlobal Benzene Prices Very High
800800
1,0001,000
1,2001,200
1,4001,400
1,6001,600
250
300
350
400
450
500Cents Per Gallon Dollars Per Metric TonDollars Per Metric Ton
00
200200
400400
600600
0
50
100
150
200
JanJan--0707 JanJan--0808 JanJan--0909 JanJan--1010 JanJan--1111 JanJan--1212
Delta Benzene Spot Naphtha cif
Global Styrene Improving From Low Global Styrene Improving From Low
RatesRates
80%80%
85%85%
90%90%
95%95%
100%100%
20.020.0
25.025.0
30.030.0
35.035.0
40.040.0
MillionMillion Metric TonsMetric Tons OperatingOperating RateRate
ForecastForecast
60%60%
65%65%
70%70%
75%75%
80%80%
0.00.0
5.05.0
10.010.0
15.015.0
20.020.0
20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012 20132013 20142014 20152015
DemandDemand Total CapacityTotal Capacity Operating RateOperating Rate
5.05.0
5.55.5
6.06.0
ForecastForecast
PercentPercent
Butadiene Shortage Continues to Butadiene Shortage Continues to
Get WorseGet Worse
3.03.0
3.53.5
4.04.0
4.54.5
1010 Q2Q2 Q3Q3 Q4Q4 1111 Q2Q2 Q3Q3 Q4Q4 1212 Q2Q2 Q3Q3 Q4Q4
7575
100100
125125
150150
175175
16531653
22052205
27562756
33073307
38583858Dollars Per Metric TonDollars Per Metric Ton
Butadiene Price ForecastButadiene Price ForecastS. Korea, West Europe, and the United StatesS. Korea, West Europe, and the United States
Cents Per PoundCents Per Pound
ForecastForecast
00
2525
5050
7575
00
551551
11021102
16531653
0808 MayMay SepSep 0909 MayMay SepSep 1010 MayMay SepSep 1111 MayMay SepSep 1212 MayMay SepSep
Spot Korea, FOBSpot Korea, FOB Contract WEP, CIFContract WEP, CIF Contract USA, FOBContract USA, FOB
1,5001,500
2,0002,000
2,5002,500
3,0003,000
Regional Acrylonitrile Price Regional Acrylonitrile Price DifferencesDifferences
Dollars Per Metric TonDollars Per Metric Ton
00
500500
1,0001,000
1,5001,500
JanJan--0808 OctOct--0808 JulJul--0909 AprApr--1010 JanJan--1111 OctOct--1111 JulJul--1212
North America Acrylonitrile PriceNorth America Acrylonitrile Price Northeast Asia Acrylonitrile PriceNortheast Asia Acrylonitrile Price
North AmericaNorth AmericaNortheast AsiaNortheast Asia
68%68%
Southeast AsiaSoutheast Asia6%6%
EuropeEurope10%10%
AfricaAfrica//Middle Middle EastEast
3%3%
ABS Demand Split By Region
North AmericaNorth America9%9%
South AmericaSouth America1%1%
CIS & BalticsCIS & Baltics1%1%
Indian Subc.Indian Subc.2%2%
68%68%
2010 Global Demand 2010 Global Demand -- 7.3 Million Metric Tons7.3 Million Metric Tons
World ABS ProducersWorld ABS Producers
North North AmericaAmerica
8%8%
Europe/CISEurope/CIS10%10%
Southeast Southeast AsiaAsia7%7%
SHARESHARE
OWNEROWNER % OF TOTAL% OF TOTAL
Chi MeiChi Mei 17.217.2%%
LG GroupLG Group 12.2%12.2%
Formosa GroupFormosa Group 8.0%8.0%
BASF SEBASF SE 7.8%7.8%
IneosIneos 6.8%6.8%
SamsungSamsung GroupGroup 5.0%5.0%
TorayToray 4.9%4.9%
AfricaAfrica//Middle Middle EastEast//
Indian Indian SubcontinentSubcontinent
3%3%Northeast Northeast
AsiaAsia72%72%
2010 Global ABS Capacity = 8.6 Million Metric Tons2010 Global ABS Capacity = 8.6 Million Metric Tons
TorayToray 4.9%4.9%
SABICSABIC 4.5%4.5%
DowDow 3.7%3.7%
Grand PacificGrand Pacific 3.6%3.6%
CNPCCNPC 3.4%3.4%
JSRJSR 2.6%2.6%
Kumho GroupKumho Group 2.4%2.4%
SINOPECSINOPEC 2.3%2.3%
28 Others28 Others 15.4%15.4%
--0.20.2
0.00.0
0.20.2
0.40.4
0.60.6
0.80.8
1.01.0
ForecastForecastForecastForecastNet ExportsNet Exports
MillionMillion Metric TonsMetric TonsMillionMillion Metric TonsMetric Tons
World ABS Trade ForecastWorld ABS Trade ForecastWorld ABS Trade ForecastWorld ABS Trade Forecast
--1.01.0
--0.80.8
--0.60.6
--0.40.4
20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012 20132013 20142014 20152015
North AmericaNorth America South AmericaSouth America EuropeEurope
CIS & BalticsCIS & Baltics Africa/Middle EastAfrica/Middle East Indian Subc.Indian Subc.
NE AsiaNE Asia SE AsiaSE Asia
Net ImportsNet Imports
600600
800800
1,0001,000
1,2001,200
Huge ABS Capacity Additions In 2013
Thousand Metric TonsThousand Metric Tons
00
200200
400400
20102010 20112011 20122012 20132013 20142014 20152015
Northeast AsiaNortheast Asia CIS & Baltic StatesCIS & Baltic States Middle EastMiddle East
West EuropeWest Europe Southeast AsiaSoutheast Asia
70%70%
80%80%
90%90%
100%100%
6.06.0
8.08.0
10.010.0
12.012.0
ABS Operating Rates StableABS Operating Rates StableMillion Metric TonsMillion Metric Tons Operating RateOperating Rate
40%40%
50%50%
60%60%
0.00.0
2.02.0
4.04.0
20052005 20062006 20072007 20082008 20092009 20102010 20112011 20122012 20132013 20142014 20152015
Domestic DemandDomestic Demand Total CapacityTotal Capacity Operating RateOperating Rate
15001500
20002000
25002500
30003000
35003500
6060
8080
100100
120120
140140
160160Cents Per PoundCents Per Pound
SomeSome Relief For ABS PricesRelief For ABS PricesSomeSome Relief For ABS PricesRelief For ABS Prices
ForecastForecastForecastForecast
Dollars Per Metric TonDollars Per Metric Ton
00
500500
10001000
00
2020
4040
6060
JanJan--0909 JulJul--0909 JanJan--1010 JulJul--1010 JanJan--1111 JulJul--1111
Styrene ContributionStyrene Contribution Acrylonitrile ContributionAcrylonitrile Contribution
Butadiene Butadiene Conversion Costs (Var. + Fixed)Conversion Costs (Var. + Fixed)
GP ABS Market PriceGP ABS Market Price PrePre--tax margintax margin~~
55
66
77
88
99
1010
8080
100100
120120
140140
160160
180180Imports, Thousand TonsImports, Thousand Tons
UnitedUnited States ABS Prices & Imports From AsiaStates ABS Prices & Imports From AsiaUnitedUnited States ABS Prices & Imports From AsiaStates ABS Prices & Imports From Asia
Cents Per PoundCents Per Pound
00
11
22
33
44
--2020
00
2020
4040
6060
JanJan--0606 JulJul--0606 JanJan--0707 JulJul--0707 JanJan--0808 JulJul--0808 JanJan--0909 JulJul--0909 JanJan--1010 JulJul--1010 JanJan--1111
Imports Market Price Landed Spot Price Delta (Market Minus Spot)
2,5002,500
3,0003,000
3,5003,500
4,0004,000
Regional ABS PricesRegional ABS Prices
ForecastForecastForecastForecast
Dollars Per Metric TonDollars Per Metric Ton
500500
1,0001,000
1,5001,500
2,0002,000
JanJan--0808 OctOct--0808 JulJul--0909 AprApr--1010 JanJan--1111 OctOct--1111 JulJul--1212
NAM Price ContractNAM Price Contract WEP Price ContractWEP Price Contract Asia SpotAsia Spot
ABS ABS SummarySummary
• ABS market pressure from rising raw material costs is easing in North America
• New Asian capacity being quickly • New Asian capacity being quickly absorbed but arbitrage window between Asia and US now open
• Expect increased ABS imports from Asia to limit further price increases
Thank YouThank You