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woodmac.com Trusted Intelligence
Su Jie, Senior Analyst – Chemicals 21 August 2018
Outlook for Asia Benzene & Styrene
Where will value come from?
4
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4
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Modelled on the Paraxylene Service
Evolution of our legacy WM long term supply/demand service
Introducing more commercially focused products
» Monthly Business Report
» Weekly market updates
» Online access to the PCI portal
Fully integrated with our paraxylene coverage – our models feed into each other
offering a truly complete view of these co-produced chemicals
Global Benzene and Styrene Monthly Report
Focused on short-term market issues, the report provides you with detailed analysis of key market sectors. Regular and featured charts provide detailed insight into current market trends.
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Agenda
Outlook for Asia Benzene and Styrene
1 Future of Benzene Supply and Demand
2 Outlook on Benzene Trade and Prices
3 Styrene Market Overview
4 Patterns of Styrene Trade
5 Conclusions
Future of Benzene Supply and Demand
7
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Benzene value chain is complicated
Outlook for Asia Benzene and Styrene
Benzene
Ethylbenzen
e
Cumene
Cyclohexan
e
Nitrobenzen
e/Aniline
Linear Alkyl
Benzene
Maleic
Anhydride
Pygas
Gasoline
Coke Oven
Light Oil
Polyester
LPG
Light
Naphtha
Supply Demand
Styrene
Gasoline
Polystyrene/EP
S
ABS
SBR/SBL
UPR
Phenol
Gasoline
BPA
Phenolic resin
Cyclohexanone
Caprolacta
m
Adipic Acid
MDI Polyurethane
Nylon-6
Nylon-6,6
LAS Surfactants
UPR
1,4 BDO Spandex/P
U
Ethylen
e
Polyethylen
e
PVC
Transport
Steel Constructio
n
Automotive
Engineering
Fibre
Bottle
Acrylic
Nylon
Cotton
HDPE
Glass
Petche
m
Electricity
Heating
Transport
PDH
Fuels
Petchem
Source: Wood Mackenzie Chemicals
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Benzene supply/demand methodology …… Which comes first? Supply or demand?
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
Olefins Production Pygas (37%)
Reformate (33%)
C7-C9 Conversions (20%)
Others (10%)
Ethylbenzene/Styrene (49%)
Cumene/Phenol (19%)
Cyclohexane (12%)
Nitrobenzene (11%)
Others (9%)
Global Benzene Supply, 2017 Global Benzene Demand, 2017
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Global benzene recovery – pygas and reformate still dominate, but capacity growth comes from paraxylene
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
0
20
40
60
2010 2015 2020 2025
Extraction - Pygas Extraction - Reformate C7-C9 Conversions Coke Oven Others
Mill
ion T
onnes P
er
Year
Global Benzene Production by Feedstock
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Global benzene demand continues to grow, but only at a slow sub-GDP pace
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
(1.0)
-
1.0
2.0
3.0
4.0
5.0
6.0
2010 2015 2020 2025
Millio
n T
on
ne
s P
er
Ye
ar
0
20
40
60
2010 2015 2020 2025
Ethylbenzene (Styrene) Cumene (Phenol)
Cyclohexane Nitrobenzene (Aniline)
Others
Millio
n T
on
ne
s P
er
Ye
ar
Global Benzene Demand Growth Global Benzene Consumption by Derivative
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China is the only region that sees any significant growth on both benzene production and consumption
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
0
5
10
15
20
25
2010 2015 2020 2025
Extraction - Pygas Extraction - Reformate
C7-C9 Conversions Coke Oven
Others
Millio
n T
on
ne
s P
er
Ye
ar
0
5
10
15
20
25
2010 2015 2020 2025
Ethylbenzene (Styrene) Cumene (Phenol)
Cyclohexane Nitrobenzene (Aniline)
Others
Millio
n T
on
ne
s P
er
Ye
ar
China Benzene Production by Feedstock China Benzene Consumption by Derivative
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India: Opportunities in derivatives or leader in trade?
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
0
1
2
3
2010 2015 2020 2025
Extraction - Pygas Extraction - Reformate
C7-C9 Conversions Coke Oven
Others
Millio
n T
on
ne
s P
er
Ye
ar
-2
-1
0
1
2
2010 2015 2020 2025
Benzene
Phenol at Benzene Equivalent
Styrene at Benzene Equivalent
Millio
n T
on
ne
s P
er
Ye
ar
Net Export
Net Import
India Benzene Production by Feedstock India Benzene and Derivative Net Trade
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Supply growth/creep will be led by Southeast Asia and South Korea
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
20%
40%
60%
80%
0
20
40
60
2010 2015 2020 2025
Capacity Production Total Operating Rate
Na
me
pla
te O
pe
ratin
g R
ate
Millio
n T
on
ne
s P
er
Ye
ar
0
20
40
60
2010 2015 2020 2025
Ethylbenzene (Styrene) Cumene (Phenol)
Cyclohexane Nitrobenzene (Aniline)
Others
Millio
n T
on
ne
s P
er
Ye
ar
Asia Benzene Production Forecast Asia Benzene Consumption by Derivative
Outlook on Benzene Trade and Prices
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A growing deficit in China has begun tightening international benzene market – where will volumes come from?
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
Changes in Regional Benzene Deficits
-4
-2
0
2010 2015 2020 2025
North America Europe China
Mill
ion T
onnes P
er
Year
Net Import
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Deep-sea trade becomes the key mechanism for rebalancing the benzene market, but does it work?
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
Global Benzene Net Trade
-8
-4
0
4
8
2010 2015 2020 2025
Asia Ex-China Middle East China Americas Europe ROW
Mill
ion T
onnes P
er
Year
Net Export
Net Import
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Global Benzene Price Forecast Floor Boundary
» Benzene prices need to
maintain certain spreads above
energy to justify investment
longer-term
Ceiling Boundary
» Benzene prices must stay
competitive enough to retain
market share in large demand
segments like polystyrene
Outlook Review
» Near-term price outlook closely
tied to naphtha costs
» Long-term trends will force
benzene within a tight window of
boundary conditions
Benzene price drivers - forecast
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
500
1000
1500
2000
2010 2015 2020 2025
US Gulf Coast EuropeAsia Floor BoundaryCeiling Boundary
Nom
ina
l (2
01
8)
Dolla
rs P
er
To
nn
e
Forecast
Styrene Market Overview
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While near term global balances show steady growth, new capacity additions are limiting overall operating rates
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
Global Styrene Supply/Demand Balance
50%
65%
80%
95%
0
15
30
45
2010 2015 2020 2025
Capacity Production Total Operating Rate
Mill
ion T
onnes P
er
Year
Nam
epla
te O
pera
ting R
ate
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Styrenic polymers demand growth evolution (s-curve)
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
China
India /
Vietnam /
Indonesia
Europe United States
GDP Per Capita
Dem
an
d P
er
Cap
ita
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Styrene Consumption – 2015, 2020, 2025
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
Growth in Styrene consumption lines up with production growth, with a significant
concentration in China
China
0
15
0
15
Asia Ex-China
Russia & the Caspian
0
15
Europe
0
15
Middle East
0
15
North America
0
15
Latin America & the Caribbean
0
15
Polystyrene (PS)
Expandable Polystyrene (EPS)
ABS
Others
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Asia Ex-China Styrene Net Trade Background:
» China’s increasing self-sufficiency
» Interregional and intraregional trade
flow changes
» New homes for styrenic scraps
Demand in the rest of Asia is
forecast to shift from export-
oriented growth to domestic
consumption
Varied opportunities to grow for the individual industries in the rest of Asia
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
-5
0
5
2010 2015 2020 2025
Export Import Net Export
Millio
n T
on
ne
s P
er
Ye
ar
Net Export
Net
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Asia continues to add new styrene capacity, but struggles with utilization rates
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
Asia Styrene Production Forecast Asia Styrene Consumption by Sector
50%
60%
70%
80%
90%
100%
0
5
10
15
20
25
2010 2015 2020 2025
Capacity Production Operating Rate
Millio
n T
on
ne
s P
er
Ye
ar
Nam
ep
late
Op
era
ting R
ate
0
5
10
15
20
25
2010 2015 2020 2025
Others
Acrylonitrile Butadiene Styrene
Millio
n T
on
ne
s P
er
Ye
ar
Patterns of Styrene Trade
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Increased self-sufficiency in China reduces global export volumes
Outlook for Asia Benzene and Styrene
Source: Wood Mackenzie Chemicals
Global Styrene Trade Flows Global Styrene Net Trade
US
Europe
Middle
East
China
Asia (ex-
China)
2016
2019
(6)
-
6
2015 2017 2019 2021 2023 2025
Millio
n T
on
ne
s P
er
Ye
ar
Net Export
Net Import
Conclusions
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Conclusions
Outlook for Asia Benzene and Styrene
Benzene supply expansion continues to be constrained by feedstock availability
and is increasingly becoming a co-product of paraxylene
International trade will become increasingly critical in balancing the global
benzene market
Limited slack in the global styrene system means that margins remain strong in
Asia until the new world-scale capacities shift the delicate balance of recent years
Styrene operating rates post-2020 will dip globally, but in different degrees
between regions
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Client Helpdesk
Contacts
Daphne Ho (Singapore) Benzene, Asia
T +65 6249 0720
Wood Mackenzie Chemicals, Asia
Jie Su (Singapore) Styrene / Phenol, Asia
T +65 6249 0745
Darryl Xu (Singapore) Paraxylene
T +65 6249 0729
Truong Mellor (London) Benzene / Styrene, Europe
T +44 7966 480514
Wood Mackenzie Chemicals, Europe
Gordon Haire (Guildford) Paraxylene
T +44 1483 302267
Shruthi Vangipuram (Houston) Energy
T +1 713 468 1941
Wood Mackenzie Chemicals, Americas
Ryan Macaluso (Houston) Benzene / Styrene, Americas
T +1 713 470 1889
29
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Disclaimer
Strictly Private & Confidential
Outlook for Asia Benzene and Styrene
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