16th September 2014

Amanda Zhao

Outlook of China Aromatics

Recent Trend in China Aromatics 1

2 Influence Factors of Aromatics

3

4

Conclude and Final Marks

Recent Trend in China Aromatics

1

4

Price Features of BTX

Fundamental of BZ and Arbitrage

Fundamental of TL & MX and Arbitrage

2014 China BTX Spot Price Trend

1,150

1,250

1,350

1,450

1,550

1,650

5,800

6,800

7,800

8,800

9,800

10,800

Feb-13 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14

East China TL

East China BZ

East China ISO-MX

East China PTA

PX CFR China

China Aromatics Spot Price, 2013-2014 RMB/mt USD/mt

Source：JYD

Import of BZ Declined 14% in H1 2014

BZ(kt) 2011 2012 2013 Jan-June 2014

Output of BZ 6,660 6,510 7,140 3,654

Import of BZ 186 444 887 331

Export of BZ 110 49 31 36

Output of Hydrogenation of BZ 2710 3,160 3,920 2,100

Consumption 9,446 10,065 11,916 6,049

Import Growth Rate -3.13% 138.71% 99.77% -14.03%

Source：JYD

Arbitrage Window of BZ was Closed since 2014

-1,500

-1,200

-900

-600

-300

0

300

7,500

8,500

9,500

10,500

11,500

12,500

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14

Spread East China BZ BZ Import Cost

Asia-China BZ Arbitrage, 2013-2014 RMB/mt

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

1,100

1,150

1,200

1,250

1,300

1,350

1,400

1,450

1,500

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14

BZ Monthly Import Monthly Average Price

China BZ Import, 2013-2014 USD/mt mt

Source：JYD Source：JYD

Import of TL Increased by 85% in H1 2014

TL(KT) 2011 2012 2013 Jan-June 2014

Outputs 5,276 5,273 5,624 2,806

Imports 655 660 812 690

Exports 8 7 3 1

Consumption 5,871 5,918 6,334 3,495

Export Change -20.99% 0.70% 23.10% 85.48%

Source：JYD

Asia-China TL Arbitrage was Opened Sometimes since 2014

2012年芳烃产业整体走势

-900

-600

-300

0

300

7,000

7,500

8,000

8,500

9,000

9,500

10,000

10,500

11,000

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14

Spread East China TL TL Import Cost

Asia-China TL Arbitrage

RMB/mt

1,000

1,100

1,200

1,300

1,400

1,500

1,600

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14

TL Monthly Import Monthly Average Price

USD/mt mt China TL Import

Source：JYD Source：JYD

Asia-China ISO-MX Arbitrage was Opened in H1 2014

-1,200

-900

-600

-300

0

300

600

900

1,200

7,000

7,500

8,000

8,500

9,000

9,500

10,000

10,500

11,000

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14

Spread East China ISO-MX ISO-MX Import Cost

Asia-China ISO-MX Arbitrage

RMB/mt

1,000

1,100

1,200

1,300

1,400

1,500

0

20,000

40,000

60,000

80,000

100,000

120,000

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14

ISO-MX Monthly Import Monthly Average Price

China ISO-MX Import

Unit: mt

Source：JYD Source：JYD

2 Influence Factors of Aromatics Market

3

4

Macro-economic Background

Policy in Petrochemical Industry

Revolution of New Coal Chemical

Supply & Demand Analysis

Trading Activity

Macro-Economic Background：Opportunity for Foreign Investment

China Capital

Foreign Capital

The Sinopec mixed ownership reform could attract a new round of

investment.

Policy in Petrochemical：Oil Market Shuffle

China oil reform caused changes in the demand for aromatic

Gasoline Upgrade VAT QR Code New Policy

Revolution of New Coal Chemical

Crude Oil

Naphtha

Olefin

Aromatics

Gasoline

Coal Methanol

Technology Implementation & Cost Feasibility

Technique

Project

Capacity

Process

Start Time

Location

Methanol to Mixed

Aromatic

Inner Mongolia Qinghua

100,000mt/year

Shanxi Coal

Chemical Institute -

One Step

2012

Inner

Mongolia

Xinjiang Xinye

100,000mt/year

2013

Xingjiang

Tangshan Jingjie

200,000mt/year

Sep 2014

Hebei

Methylation of TL &

methanol to PX

Yangzi Petrochemical

200,000mt/year

Sinopec Technique

2012

Jiangsu

Methanol to Mixed

Aromatic

Ninxia Qinghua

150,000mt/year

Shanxi Coal

Chemical Institute -

One Step

H2 2014

Ningxia

Source：JYD

Technology Implementation & Cost Feasibility

Project

Partner

Capacity

Products

Location

Notes

Methanol & TL to

PX

CAS Dalian Institute &

CNOOC Huizhou refinery

200,000mt/year PX

1mt of Methanol to

1mt of PX

Guangdong

Test running of

CTA pilot plants

was done in 2013

FMTA

Tsinghua University and

China Huadian Corporation

3.07mt of Methanol

to 1mt of Aromatic

Shaanxi

Test running was

done in 2013

Source：JYD

Oil Reform & Expanded Capacity will Bring Changes in Supply &

Demand

Supply in China

China oil reform may boost the domestic demand for TL & ISO-MX and reduce the public sale

of TL & MX

The expanded capacity of PX-BZ in Q4 2014 and 2015 is

limited in China

Supply in Northeast Asia

The import volume of PX and BZ to China in 2015 is still

unknown.

The Asian PX profits and the operation rate changes will

affect the supply of TL & MX.

BZ New Consumption will be 3.688 million tons from Aug 2014 to 2015

Plants Name Capacity of Styrene (KT) Start Time Location Dongming Petrochemical 80 Sep 2014 Shandong

CNOOC 100 Sep 2014 Hainan

Abel chemical 500 End of 2014 Jiangsu

Shandong Yuhuang 200 End of 2014 Shandong

Ningbo Keyuan 100 End of 2014 Zhejiang

CNOOC Daxie 250 2015 Zhejiang

Total 1,230

Company Name New Capacity of CPL(KT) Start Time Location

Shijiazhuang Refining 150 Sep 2014 Hebei

Jvhua Group 100 Sep 2014 Zhejiang

Shandong Fangming 100 End of 2014 Shandong

Shandong Luxi 100 H2 2014 Shandong

Lanhua Technology 200 H2 2014 Shanxi

Inner Mongolia Qinghua 200 H2 2014 Inner Mongolia

Sinopec 600 2015 Guangdong

China National Chemical Engineering Group 200 2015

Total 1,650

Source：JYD

BZ New Consumption will be 3.688 million tons from Aug 2014 to 2015

Company Name New Capacity of Phenol(KT) New Capacity of Acetone Start Time Location

Sinopec Mitsui 250 150 Q4 2014 Shanghai

FCFC 300 180 Q4 2014 Zhejiang

CEPSA 250 150 Q4 2014 Shanghai

Total 800

Company Name New Capacity of Aniline(KT) Start Time Location

Ningbo Wanhua 180 Oct 2014 Zhejiang

Yantai Wanhua 360 Oct 2014 Shandong

Total 540

Company Name New Capacity of CYC(KT) Start Time Location

Huafeng Group 100 Oct 2014 Chongqing

Huafeng Group 100 Oct-Nov 2014 Liaoning

Total 200

Source：JYD

BZ Downstream Suffer Losses, Expanded Plants may Delay

2012年芳烃产业整体走势

Styrene Phenol Aniline CYC

Average Operation Rate 2013 80% 85% 62% 81%

Average Operation Rate H1 2014 65% 86% 70% 80%

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 Apr-14 Jun-14 Aug-14

SM Phenol Aniline Cyclohexanone

Product Margin of BZ Derivative RMB/mt

Source：JYD

The Increase Demand of Gasoline Blending for TL is Unknown

The implementation of new policy and the consumption of oil products will be deciding factors for the demand growth of TL

Gasoline Blending

The demand of fine chemicals for TL is relatively stable

Fine Chemical Industry

-10%

-5%

0%

5%

10%

15%

8,000

8,500

9,000

9,500

10,000

10,500

11,000

11,500

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14

China Gasoline Inventories Change on Month

China Gasoline Inventories kt

Source：JYD

MX Demand：The Demand of PX Remained as Question

• The promotion of environmental friendly waterborne will decrease the demand for solvent-MX.

Solvent-MX

• The demand of oil blending is supposed to grow in theory, but the actual growth is less than expected.

Gasoline Blending

• The demand of PX for MX depends on the price spread of ISO-MX and PX.

PX

China Adopted more Naphtha & Condensate, the Demand of MX is not

that Optimistic

The two pictures show us the PX profit with ISO-MX and naphtha as feedstock respectively. Apparently,

the adoption of naphtha is more cost-efficient.

-200

0

200

400

1,000

1,200

1,400

1,600

1,800

2,000

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14

PX Product Margin PX CFR China

PX Production Margin (NAP Feedstock) USD/mt

-200

-100

0

100

200

300

400

1,000

1,200

1,400

1,600

1,800

2,000

Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14

PX Product Margin ISO-MX FOB Korean PX CFR China

USD/mt PX Product Margin (ISO-MX Feedstock)

Source：JYD Source：JYD

Trading Activity：Changes in TL & MX Trading

未来

Changes in Trading

RMB：Trading activity was less in spot market, but more in Future market.

USD：CFR market activity was less，more market hedge and turnover in FOB market.

3

4

Conclude & Final Marks

Outlook: Aromatics Will Form W-shape in 2014

7,000

7,500

8,000

8,500

9,000

9,500

10,000

Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14

East China TL East China BZ East China ISO-MX

China Aromatics Price Trend, 2014

Forecast

Unit：CNY/mt

Source: JYD

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