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Global C4 Chain Dynamics
9th International Olefins Annual Conference
Suzhou, October 29-30 2014
by Matias Kerkhofs, Sales Manager Europe
1. C4’s are cracker co-products
2. C4 chain: supply & demand overview, future
outlook and trade flows
3. C4U Trade: a company fit for market changes
4. C4 chain: closer look to the 4 regions
5. Conclusions
Table of Contents
IOAC 2014 2 Suzhou, October 29-30
1. C4’s are the tail of the squirrel
3
Crude Oil
C4’s
Petchem’s
IOAC 2014 Suzhou, October 29-30
1. Petchem vs Crude Oil
4
Over 90% of global C4 olefins originate from crude C4 from steam crackers
2013 Global Demand (mio mT)
Petchem Building blocks Ammonia 172
Methanol 60
Ethylene 140
Propylene 85
Butadiene 11
Butenes 15
Benzene 45
Toluene 25
Xylene 50
Total Petchem's 603
Crude Oil 3800
IOAC 2014 Suzhou, October 29-30
C4’s are co-products of ethylene crackers
11
Global demand
Butadiene Butenes Toluene Benzene Xylene
Methanol Propylene Ethylene Ammonia Crude oil
1. C4’s are cracker co-products
2. C4 chain: supply & demand overview, future
outlook and trade flows
3. C4U Trade: a company fit for market changes
4. C4 chain: closer look to the 4 regions
5. Conclusions
Table of Contents
IOAC 2014 5 Suzhou, October 29-30
2. CC4 applications
6 IOAC 2014 Suzhou, October 29-30
• CC4 from steam crackers is used for:
• BD extraction + Raf-1 & Raf-2
• Partial Hydrogenation to Raf-1 or Metathesis (C4 + C2 -> 2 C3)
• Full Hydrogenation for co-cracking
• BD is the most important driver
• Raf-1: iso-Butylene for lubricants, tire inner lining and fuel-ether gasoline
additives (MTBE/ETBE)
• Raf-2: Butene-1 as co-monomer for PE & Butene-2 for plasticizers
Remark: i-B is also made from other technologies:
•TBA dehydration ex PO/TBA technology
•Refinery FCC Butylenes stream
2. BD applications
7
BR28%
eSBR23%sSBR
6%
ABS12%
SB-Latex9%
ADN5%
Others17%
BR eSBR sSBR ABS SB-Latex ADN Others
• SR is biggest BD derivative, around 60%
• Almost 50% of all BD goes into tyres
• SR and Tyre markets are the drivers of BD demand and production
• More then 97% of global BD is produced by extraction from CC4
• Car Park, Car Sales and GDP growth define future BD demand
IOAC 2014 Suzhou, October 29-30
8
2.On-Purpose BD in China
• On-purpose BD only running in China at this moment (480 kT capacity
and 1.3 mio mT planned)
• ODH: not competitive at today’s pricing (Houdry/Oxo-D)
• China: high gasoline values and feedstock shortage undermine ODH
economics and keep operating rates low
• China: MTO could bring cheap butenes, but no immediate prospect
• US: expensive investment, even cheap butane keeps this technology
uncompetitive
IOAC 2014 Suzhou, October 29-30
2. BD applications
9
BR28%
eSBR23%sSBR
6%
ABS12%
SB-Latex9%
ADN5%
Others17%
BR eSBR sSBR ABS SB-Latex ADN Others
• SR is biggest BD derivative, around 60%
• Almost 50% of all BD goes into tyres
• SR and Tyre markets are the drivers of BD demand and production
• More then 97% of global BD is produced by extraction from CC4
• Car Park, Car Sales and GDP growth define future BD demand
IOAC 2014 Suzhou, October 29-30
2. Our world in a nutshell
10
(source IMF & Wikipedia)
Brazil Russia India China ME EU27 USA World
Area (1000 km²) 8,515 17,098 3,287 9,640 4,694 4,325 9,629 148,940
Population (MM) 203 144 1,237 1,367 163 506 314 7,171
GDP (TRI $) 2.5 2.1 2.0 9.5 2.5 17.5 16.8 74.2
GDP/cap ($) 12,300 14,600 1,600 6,900 15,200 34,600 53,500 10,300
Annual Growth Rate 2.3% 1.3% 4.7% 7.5% 3.3% 0.1% 3.4% 3.6%
IOAC 2014 Suzhou, October 29-30
2. BD: Global Demand (forecast)
11
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
2010 2015 2020
BUTADIENE 2010 - 2020 (KT)
South East Asia
West Europe
Middle East
North America
North East Asia
2010: 10 mio mT /// 2015: 12 mio mT /// 2020: 14 mio mT • Corresponds to an average 3.6% world GDP growth rate:
11 mio mT (2013) to 14 mio mT (2020)
• Growth in regions reflects AGR’s:
Flat in EUROPE /// Steep in NEA & SEA /// Modest in US
• China will consume almost 50% of Global BD demand
Europe: flat growth and expensive feedstocks and yet 500 kT BD capacity is added in 2014-15
(annually in ‘000 mT, IHS)
IOAC 2014 Suzhou, October 29-30
12
2. BD & derivatives: Global Capacity
• Overcapacity of 30% for derivatives and 20% for BD
• Enough extraction capacity to produce the forecasted demand for 2020
• Will there be enough CC4 ?
co-product of ethylene production
BD
Capacity BD
Demand
Derivatives
Capacity Derivatives
Demand
BD contained
BR 100%
SBR 70%
Latex 41%
ADN 61%
ABS 21%
-
5,000
10,000
15,000
20,000
25,000
30,000
29,000
20,000
13,500
11,000
20
13
(kT
)
IOAC 2014 Suzhou, October 29-30
13
2. C2: Global Production (forecast)
0
10.000
20.000
30.000
40.000
50.000
2010 2015 2020
ETHYLENE 2010 - 2020 (KT)
South East Asia
West Europe
Middle East
North America
North East Asia
(annually in ‘000 mT, IHS)
• C2 and B/E ratio’s are key to understand the CC4 balance
• 2010: 122 mio mT /// 2015: 145 mio mT /// 2020: 175 mio mT
• Everywhere strong growth except in Europe, closures
• Not all C2 production generates the same CC4 (volume & quality)
IOAC 2014 Suzhou, October 29-30
2. CC4: typical composition & yields
14
• Naphtha cracker allows for captive BD extraction
• LPG + N cracking lowers BD yield and operating rates
• Ethane cracker has not enough BD for an extraction unit
Naphtha LPG + N Ethane
BD 40-45% 30-40% 70-80%
i-B 25-35% 15-25% 0-5%
B-1/B-2 15-25% 10-15% 10-20%
Butane 5-10% 15-30% 5-10%
B/E 12-17% 8-10% 2%
1 MM C2 -> BD 150 kT 100 kT 20 kT
IOAC 2014 Suzhou, October 29-30
2.CC4: Global Production (forecast)
15
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
2010 2015 2020
Crude C4 as Butadiene 2010-2020 (KT)
South East Asia
West Europe
Middle East
North America
North East Asia
• 2010: 12 mio mT /// 2015: 13 mio mT /// 2020: 16 mio
• On a global basis, enough CC4 feedstock to produce all the BD
the world needs
• Changing landscape, C4’s balances and C4’s being not very
liquid are key to understand dynamics
(annually in ‘000 mT, IHS)
IOAC 2014 Suzhou, October 29-30
2. BD: Regional balances &
operating rates
16
2013 (kT) BD extraction cap. BD producion Domestic Demand Balance
USA 2,387 1,544 1,791 -247
Europe 2,684 2,195 1,993 202
Middle East 382 283 70 213
North East Asia 6,189 4,955 5,221 -266
South East Asia 570 436 379 57
(source IHS)
IOAC 2014 Suzhou, October 29-30
17
2. C4’s: Traditional trade flows
A
M
E
R
I
C
A
S
E
U
R
O
P
E
A
S
I
A
MDE 400 kT CC4
150-175 kT BD
50-80 kT BD
25-50 kT BD
200 kT BD
300 kT CC4
140 kT CC4
IOAC 2014 Suzhou, October 29-30
18
A
M
E
R
I
C
A
S
E
U
R
O
P
E
A
S
I
A
MDE
2. C4’s: New trade flows
Less CC4 availability
More BD, less CC4
Bra
zil
continues to e
xport
SE
A c
aptive u
se,
low
ers
export
• Changing trade flows
• Regions become more self-sufficient
• Optimised logistics remain key
Compensation for
EU CC4
Competition US & Asia
IOAC 2014 Suzhou, October 29-30
1. C4’s are cracker co-products
2. C4 chain: supply & demand overview, future
outlook and trade flows
3. C4U Trade: a company fit for market changes
4. C4 chain: closer look to the 4 regions
5. Conclusions
Table of Contents
IOAC 2014 19 Suzhou, October 29-30
3. C4U Trade: A Global platform
for liquefied gas
20 IOAC 2014 Suzhou, October 29-30
21
• C4U Trade is a global logistic service provider and trader for C4 Olefins and other liquefied gases.
• We operate a logistics infrastructure and focus on creating recurrent, long-term value.
• Facilitating between producers and consumers.
C4U
TRADE
IOAC 2014 Suzhou, October 29-30
3. C4U Trade: A Global platform
for liquefied gas
22
3. C4U Trade company structure
C4U TRADE INTERNATIONAL, AG
ZUG, SWITZERLAND (2013)
C4U TRADE USA
HOUSTON, TEXAS (2011)
C4U TRADE EUROPE
LEUVEN, BELGIUM (2010)
C4 MIDDLE EAST
UAE (2014)
C4U TRADE ASIA
SINGAPORE (2015)
• Agreement in the Middle East with Al Hassan Energy (May 15, 2014)
• Incorporation of C4 Middle East in Dubai (Sept 3, 2014)
• Agreement for Asian markets with ALBA Corporation (Sept 9, 2014)
IOAC 2014 Suzhou, October 29-30
1. C4’s are cracker co-products
2. C4 chain: supply & demand overview, future
outlook and trade flows
3. C4U Trade: a company fit for market changes
4. C4 chain: closer look to the 4 regions
5. Conclusions
Table of Contents
IOAC 2014 23 Suzhou, October 29-30
24
4. Europe: tough times...
• Was traditionally cracking Naphtha
• Lighter cracking: Ethane & LPG
LPG used to be seasonal, now: +/- 30% all year
• +/- 500 kT extra BD extraction capacity by end 2015 (LBI, BASF, Evonik,
OMV, MOL)
• Much of this extra BD is relocated capacity
• Net extra molecules 200-250 kT by stopping hydrogenation
• Extra capacities for BD consumption are compensated by closures
• Crackers facing lower operating rates & closures
• EU will be shorter in Crude C4: less export to US
• EU will be even longer in BD IOAC 2014 Suzhou, October 29-30
25
4.USA: shale effect
• Shift to light cracking happened already in 2005-2010
• Shale effect: 10 million tonnes of extra Ethylene capacity announced by 2018 (30 -> 40 MMT)
• Despite Ethane cracking and low B/E, non-negligible 200 KT extra BD.
• Better utilisation of existing BD extraction and close to self-sufficiency... but may be offset by less Crude C4 available from Europe.
• Healthy market and new tyre plants announced
• Strong competition from imported rubber (EU & Asia)
• On-purpose BD: not competitive at the moment
IOAC 2014 Suzhou, October 29-30
26
4.Asia: driven by GDP growth
• Cracking Naphtha with some projects for lighter cracking
• Very high GDP growth rates compared to rest of world
• Series of elastomer projects (NBR, PBR, ABS, SBR, EPDM, Butyl Rubber)
• Continued need for C4 imports, despite Ethylene expansions
• US/ MDE will use feedstock cost advantage to compete for Asian markets
• Natural rubber effect: BD price may stay low for coming years
• Alternative technologies CTO/ MTO can change the landscape
• On-purpose BD: not competitive at the moment
IOAC 2014 Suzhou, October 29-30
27
4.Middle East: exciting times
• Mainly ethane cracking till now
• New projects on NGL’s and Naphtha, hence B/E ratio’s improving from 2 to 5%
• Ethylene capacity annouced to grow from 20 -> 35 MMT.
• BD derivative projects planned (ABS, PBR, EPDM, Butyl Rubber)
• C4 logistic constraints for stand alone crackers, but high potential for complexes like Al Jubail
• Heavier olefins/ Elastomers/ product diversification/ job creation/ automotive industry high on the strategic agendas
IOAC 2014 Suzhou, October 29-30
28
5.Conclusions
• C4’s are Steam Cracker Co-Products
• On purpose BD is not competitive at the moment
• Massive petchem investments based on competitive
feedstock in the US & ME, steady growth in Asia, Europe
under pressure
• C4’s on the agenda in the MDE
• Shift in C4 trade flows
• No global C4 shortage at today’s operating rates and
projected growth: prices may stay low for a long time
IOAC 2014 Suzhou, October 29-30
THANK YOU!
谢谢大家!