D Mr. Steve Jenkins PCI

8/10/2019 D Mr. Steve Jenkins PCI

1/22

Overcapacity in the Xylenes Chain

Steve JenkinsPCI Xylenes & Polyesters Asia Sdn Bhd

INDIAN POLYESTER 2014AUGUST 2014, MUMBAI


2/22

INDIAN POLYESTER 2014AUGUST 2014 , MUMBAI

Polyester Chain Vital Statistics

Since 2000, 669 million tonnes of polyester have been produced

Polyester consumption growth averaged 6.3% globally, 9.3% in Indiaand 14.7% in China from 2000-2014

In 2000, China accounted for 18.3% of global polyester production and6.4% of consumption. India had 5.7% of global production.

In 2020, China is forecast to account for 53.9% of global polyesterproduction and 32.3% of consumption. India is forecast to produce 11%of global polyester by this time.

Estimated investment in the PX-PTA-Polyester chain since 2000 is

$77.4 bn, over $5bn per year on average.


3/22


World Polyester Production Growth by Region

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

000

Tonnes

Staple Filament PET Film Others


4/22


PTA Production Growth by Region

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

000

Tonnes

North America South America Europe Middle East/Africa

China Indian Subcontinent North East Asia South East Asia


5/22


Paraxylene Production Growth by Region

-2,000

-1,000

0

1,000

2,000

3,000

4,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

000

Tonnes




6/22


Polyester Capacity Growth by Region

-2,000

0

2,000

4,000

6,000

8,000

10,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

000

Tonnes




7/22


PTA Capacity Growth by Region

-4,000

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

000

Tonnes




8/22


Paraxylene Capacity Growth by Region

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

000

Tonnes




9/22


Polyester/PTA/PX Capacity Growth 2010-2020

-4,000-2,000

02,0004,0006,0008,000

10,00012,000

2010 2012 2014 2016 2018 2020

000

TonnesPTA

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,0007,000

2010 2012 2014 2016 2018 2020

000

TonnesPX

-2,000

0

2,000

4,000

6,000

8,000

10,000

2010 2012 2014 2016 2018 2020

000

TonnesPolyester




10/22


Global Polyester Industry Utilisation

70%

75%

80%

85%

90%

95%

NameplateUtilisation

PX PTA Polyester Polymer


11/22


-

500

1,000

1,500

2,000

2,500

2000 2003 2006 2009 2012

USD/Tonne

Crude Oil Naphtha PX PTA PSF 1.5 den

Value Chain for Polyester & Intermediates

1.5 den Polyester Staple Fibre 150 den Polyester Filament Fibre

PET Packaging Resin

-

500

1,000

1,500

2,000

2,500

2000 2003 2006 2009 2012

USD/Tonne

Crude Oil Naphtha PX PTA POY 150 den

(500)

-

500

1,000

1,500

2,000

2,500

2000 2003 2006 2009 2012

USD/Ton

ne

Crude Oil Naphtha PX PTA PET


12/22


-

100

200

300

400

500

2000 2003 2006 2009 2012

USD/Tonne

PSF 1.5 den

Polyester Fibre & Packaging Spreads

1.5 den Polyester Staple Fibre 150 den Polyester Filament Fibre

PET Packaging Resin

-

100

200

300

400

500

600

2000 2003 2006 2009 2012

USD/Tonne

POY 150 den

(200)

(100)

-

100

200

300

400

2000 2003 2006 2009 2012

USD/Tonne

PET


13/22


-

100

200

300

400

500600

700

2000 2003 2006 2009 2012

USD/Tonne

PX

Naphtha, Paraxylene & PTA Spreads

ParaxyleneNaphtha Spread

PTA-Paraxylene Spread

Naphtha-Crude Spread

-

100

200

300

400

500

600

2000 2003 2006 2009 2012

USD/T

onne

PTA

-

20

40

60

80

100

120140

160

2000 2003 2006 2009 2012

USD/Tonne

Naphtha


14/22


65%

70%

75%

80%

85%90%

95%

100%

105%

110%

115%

0

2,000

4,000

6,000

8,000

10,000

12,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

PolymerUtilisation

K

T

Staple Filament PET Resin

Film Polymer Capacity Polymer Utilisation Rate

India Polyester Market Outlook


15/22


Outlook for Polyester

Margin cycle may have bottomed out for polyester, with prospect

of increasingly competitive PX prices and ongoing marginsqueeze for PTA giving some positive outlook.

Inventory release from Chinas cotton stockpile may negatively

impact PSF.

Investment in new assets continues, although at reduced rate.Scale investment continues to drive the business cycle.

Many polyester assets sit idle in China, Korea, and Taiwan butindustry wide capacity rationalisation is not progressing. Idled

plants are likely to be scrapped as M&A options are limited.

Options for cost reduction through investment focused on scaleof build, with less room to drive conversion efficiencies. Smallold plants scrapped in favour of building large, new assets.


16/22


India PTA Market Outlook

70%

75%

80%

85%

90%

95%

100%

-2,000

0

2,000

4,000

6,000

8,000

10,000

12,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

UtilisationRate

KT

Production Consumption Capacity Net Trade Utilisation Rate

PTA investments (RIL, JBF) well-balanced with current demand

outlook. Self-sufficiency in PTA

2015-2019


17/22


Outlook for Polyester & Intermediates

Asia margins may stabilise if Chinas cartel are successful in holdinglower production levels, but gross oversupply persists in N Asia

Rate of investment is slowing, but capacity will continue to be added into2015, driving down overall industry utilization

Plant closures have been carried out and more are planned, but are toosmall and too few to have any meaningful impact on utilisation andmargin in the next 12-18 months

Asset renewal is one of the few options for survival, but this can lead tofurther unwanted capacity, keeping margins persistently low and

extending to current downcycle for several more years to come.,


18/22


PTA Breakeven Cash Cost Curve

950

1000

1050

1100

1150

1200

1250

700

3935

6605

9345

19195

21505

24280

26870

29055

32505

35855

42891

44681

47281

50431

53281

56081

57731

59681

61651

63246

64746

66836

68121

70071

71406

USDPer

Tonne

Cumulative Capacity

Based on PX@$1400/tonne

Demand estimate 57.5 million tonnes annualised rate

$120/te gap between

leader and laggard


19/22


India PX Market Outlook

70%

75%

80%

85%

90%

95%

100%

105%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Utilisatio

nRate

KT

Production Total Consumption Capacity Net Trade Utilisation Rate

PX investments (RIL, OMPL) push India

slightly long on PX 2015-2020. PX costslikely to remain highly competitive for

downstream.


20/22


Outlook for Paraxylene

Margins set to fall as competition between integrated refiners andcondensate-based operations intensifies.

Role of gasoline and middle distillate fuel spreads may play largerrole in determining PX production levels the next 2-3 years thanpreviously seen

Investments in PX will peak by 2017/2018 based on current projectassessments

Restructuring has already taken place, with non-integrated assetsclosed or under severe financial pressure

Technology allows more PX to be made from limited supplies offeedstock naphtha, integrates refinery-based assets further andallowing for more energy efficient operations, driving downproduction costs/improving PX margins


21/22


PX Breakeven Cash Cost Curve

$300/te gap between

leaders and laggards


22/22

INDIAN POLYESTER 2014AUGUST 2014 MUMBAI

Thank You For Your Kind Attention

Any Questions ?

Documents

D Mr. Steve Jenkins PCI