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Ms. Prema Viswanathan
Head of Middle East/ South Asia MarketsICISSingapore
Reporting on the Asian and Middle East chemical industry and marketsfrom Singapore for over 14 years, Ms. Prema Viswanathan wasManaging Editor-Asia and Middle East at ICIS, prior to taking on thisrole.
She holds a Master’s degree in English literature from BangaloreUniversity and has worked as a journalist for leading Indian newspapersbefore joining ICIS.
She has given presentations on the petrochemical industry and marketsin Asia and the Middle East at several conferences and has also beeninvited to speak and chair at key industry forums.
Petrochemical Conclave 2013
18 March, Gurgaon
Petrochemical Market Trends and
Opportunities for South Asia
Prema Viswanathan
Head of Middle East, South Asia Markets
www.icis.com
Petchems on a roller-coaster ride
• Petchem prices recover on high crude, snug supply
• China demand growth not up to expectations
• Margins squeezed down the chain
• Middle East players still lead on cash costs
• But new US supply could be a game changer
• India - the new demand driver, after China?
www.icis.com
China demand growth slows - PE
Source: ICIS, China Customs
M tonnes
www.icis.com
China demand growth slows - PP
Source: ICIS, China Customs
M tonnes
www.icis.com
China polyester demand to grow by 7-8%
China’s polyester demand to keep a slower growth rate of 7-8% in the coming three years because of an oversupply in both polyester and textile industries
Source: ICIS pricing
+19%+12% +7%
+7%+7%
+8%
91%
87%
76%76%
77%
80%
0
10
20
30
40
50
60
2010 2011 2012E 2013E 2014E 2015E
Unit: million
tonnes/year
65%
70%
75%
80%
85%
90%
95%
Operating rate
China's polyester production China's polyester demand
China's polyester O/R
www.icis.com
Naphtha Cracking Margins To Bottom Out in 1H ‘13
Source: ICIS Consulting / Updated : Jan 4, 2013
www.icis.com
Low PE Margins Environment in „12 & „13
Source: ICIS Consulting / Updated : Jan 4, 2013
www.icis.com
Improving PP Margins Environment in „13
Source: ICIS Consulting / Updated : Jan 4, 2013
www.icis.com
Global PE, PP supply to outstrip demand in 2015
Source: ICIS Consulting
www.icis.com
Middle East PE capacity to hit 28m t/yr by 2015
Source: ICIS, Industry
www.icis.com
Middle East a key exporter, but faces hurdles
•Middle East moving up the cost
curve
•Propylene/PP economics not as
good as ethylene/PE
•Gas shortage in GCC, only Iran.
Qatar have surplus supply
•Sanctions impact Iran
investments, slow imports,
exports
•Labour shortages, logistics
woes, supply constraints
• Shifting govt priorities in GCC
www.icis.com
US ethylene capacity to expand by 38%
• New crackers: 8.6m tonnes* (7)
• Restarts: 380,000 tonnes (1)
• Expansions/debottlenecks: 1.2m tonnes (7)
• Total: 10.2m tonnes = 38% of US capacity
• US has 42 crackers with 26.6m tonnes/year
*Assumption of world-scale cracker at 1.25m tonnes/year Source: ICIS
www.icis.com
0
1000
2000
3000
4000
5000
6000
2012 2013 2014 2015 2016 2017 2018 2019Ad
dit
ion
al C
apac
ity,
‘00
0s
ton
ne
s/ye
arTiming of US ethylene expansions
Source: ICIS
www.icis.com
India - the new demand driver, after China?
• Polyolefins demand grew steadily in
2012, overriding a sluggish
economy.
• April to Nov 2012 Market
Estimate: PP demand increased by
16%, LLDPE by 15%, HDPE by 11%
and LDPE by 21%.
www.icis.com
India PE, PP demand (2013)
• Consumption in India is likely to see
steady growth in Q1 2013 on
domestic demand
• However, in early Feb 2013, India
projected weaker GDP growth in the
current fiscal
• Logistics challenges caused by weak
infrastructure
• Significance: Sluggish growth may
dampen polyolefins buying sentiment
Source: Plasopedia
www.icis.com
India PE, PP supply (2013)
• India lifted anti-dumping duty imposed
on Saudi-origin PP in Dec 2011,
supporting imports for most parts of
2012 and early 2013
• Haldia Petrochemical in financial
difficulties - running PE and PP plants
at reduced rates
www.icis.com
No PE addition in India (2012-2013);
Gradual PP addition (2012-2015)
[Pata] GAIL HDPE/LLDPE 500
HDPE/LLDPE 450 (Dec 2013-Jan 2014)[Panipat] Indian Oil
HDPE/LLDPE 650;
PP 600
[Jamnagar, Dahej,
Nagothane, Vadodara]
Reliance PE 1.2m t/yr;
PP 2.7m t/yr
LDPE 400; HDPE/LLDPE
500-600 (2015)
[Haldia] Haldia
HDPE/LLDPE 700;
PP 340
[Bathinda] HPCL-
Mittal Energy Ltd (HMEL)
PP 440 (Dec 2012)
[Assam] BCPL
HDPE/LLDPE 220;
PP 60 (Feb 2014)
[Mangalore] MRPL
PP 440 (Q3 2013)
[Dahej] OPaL
HDPE/LLDPE 2 x 360;
HDPE 340; PP 340
(End 2014)
Source: ICIS;
Note: Data in blue indicate additions;
All capacities are in kt/year
www.icis.com
South Asia PE, PP price outlook (Q1 2013)
Margins
• High feedstock naphtha and crude costs in Q1 2013
Supply
• PP plant capacity expansion in India is gradual in 2013; so, new material not expected to flood market immediately
Demand
• Continued strong demand in downstream markets
• HM film demand hit by plastic bag ban/restrictions across different states (New Delhi - blanket ban on sale, storage and use of plastic bags)
www.icis.com
India polyester capacity expands at high speed
Inflation running at 6-8% for over a year in 2012 and has hurt demand for polyester products
However, polyester capacity is to expand at double digit growth rate
Source: ICIS
India's Polyester Capacity Expansion
5.45.9
7.1
8.18.8 9.0
0
3
6
9
2010 2011 2012E 2013E 2014E 2015E
Unit: million
tonnes/year19%
15%
10%
www.icis.com
India’s polyester demand to grow at 8+%
Source: ICISNote: India‟s domestic polyester demand is assumed to grow at a similar rate as its local production because it exports only a small quantity of polyester.
+8%+8%+7%
+7%+19%
+8%
73%
69%70%
75%
79%
81%
0
3
6
9
2010 2011 2012E 2013E 2014E 2015E
Unit: million
tonnes/year
65%
70%
75%
80%
85%
Operating rate
India's polyester capacity India's polyester production
India's polyester O/R
www.icis.com
India’s edge over China
• Low per capita consumption
• High potential for demand growth
• Growing population
• Rising income levels
• Young consumer base
• Low labour costs compared with China
Challenges
• Unstable political system• Flip-flops in economic policy• Weak infrastructure
www.icis.com
Corporate Structure
www.icis.com
ICIS Global Presence
www.icis.com
What information does ICIS produce?
Chemicals Energy Fertilizers
“Trusted market intelligence for the global petrochemical, fertilizer and energy industries”
Contributions
Chow Bee Lin (Asia polyolefins)
Tel. +65 6780 4398
Muhamad Fadhil (Middle East and South Asia polyolefins)
Tel: +65 6780 4334
Peh Soo Hwee (Asia olefins)
Tel. +65 6780 4347
Becky Zhang (Asia Fibre Intermediates/Fibres)
Joseph Chang (ICIS Chemical Business)
Malini Hariharan (ICIS training)