International Conference Report///t

The 3rd ICIS Asian Surfactants Conference

returned Singapore!(2) 14th - 15th November 2013, Pan Pacific, Singapore

The 3rd ICIS Asian Surfactants Conference had returned to Singapore! Its third year, the meeting

was once again built on the core elements of an ICIS Conference – an up-to-date, informative and

business critical agenda, high-level speakers addressed the key topics facing the industry and

extensive opportunities for networking with influential players from across the surfactants value

chain. 2013 conference was attended by over 80 participants drawn from 14 countries around the

world. The followings are a short summary of 1st day pm and 2nd day each session:

Day 1 Day 1 Day 1 Day 1 ---- Thursday 14 November 2013 Thursday 14 November 2013 Thursday 14 November 2013 Thursday 14 November 2013

14:0014:0014:0014:00 ExampExampExampExamples of sustainable solutions les of sustainable solutions les of sustainable solutions les of sustainable solutions for for for for the the the the

home and personal care marketshome and personal care marketshome and personal care marketshome and personal care markets

Dr Galder Cristobal, Asia Dr Galder Cristobal, Asia Dr Galder Cristobal, Asia Dr Galder Cristobal, Asia

Pacific R&DPacific R&DPacific R&DPacific R&D Manager, Manager, Manager, Manager,

NOVECARENOVECARENOVECARENOVECARE

Permission has not been given

to share his presentation.

14:3014:3014:3014:30 Ingredients sourcing strategies andIngredients sourcing strategies andIngredients sourcing strategies andIngredients sourcing strategies and

challengeschallengeschallengeschallenges

Samrat Sehgal, Samrat Sehgal, Samrat Sehgal, Samrat Sehgal, Head of Head of Head of Head of

Supply Chain,Supply Chain,Supply Chain,Supply Chain, RECKITT RECKITT RECKITT RECKITT

BENCKISERBENCKISERBENCKISERBENCKISER

Topics were raw material cost

management, Considerations

when selecting raw materials,

Volume forecast required in raw materials.

But, permission has not been given to share his

presentation

15:4515:4515:4515:45 The role of sulphoThe role of sulphoThe role of sulphoThe role of sulphonation in today'snation in today'snation in today'snation in today's detergent detergent detergent detergent

industry industry industry industry ---- worldwide and in worldwide and in worldwide and in worldwide and in AsiaAsiaAsiaAsia

Icilio Adami, R&D Technology Director,Icilio Adami, R&D Technology Director,Icilio Adami, R&D Technology Director,Icilio Adami, R&D Technology Director, DESMET DESMET DESMET DESMET

BALLESTRABALLESTRABALLESTRABALLESTRA

Icilio Adami was born in Monza

(Italy) in 1951 and graduated in

Chemistry at the University of

Milan in 1976. Icilio joined Desmet

Ballestra in 1977 and was

responsible for the laboratory and

pilot plant. Since then, he has been regularly

involved in the development of processes and

technologies for the production of formulated

detergents and surfactants. He is the author and

co-author of several publications and patents

concerning the production technology of detergents

and anionic surfactants. Presently he covers the

position of Director of Research & Technology

Development of Desmet Ballestra in Italy.

●●●●Content:Content:Content:Content:

•••• SulphonationSulphonationSulphonationSulphonation basisbasisbasisbasis and and and and eeeevolutionvolutionvolutionvolution

•••• SulphonatesSulphonatesSulphonatesSulphonates worldworldworldworld marketmarketmarketmarket overwiewoverwiewoverwiewoverwiew

Anionic surfactants can be produced by SO3.

•••• SulphonationSulphonationSulphonationSulphonation processprocessprocessprocess economicseconomicseconomicseconomics

The worldwide installed Sulphonation capacity has

been continuously changing from sulphonators for

captive use to surfactant producers serving the

market.

•••• PerspectivePerspectivePerspectivePerspective developmentsdevelopmentsdevelopmentsdevelopments

●Ongoing sulphonation are developed as under:

• Reduction of overall process energy demand

• Reduction of losses, by-products and effluents

• Improvement in operation flexibility

• Improvement of obtainable product range and

quality

• Diversification of commercial product physical

form

●Sulphonates in Asia will continue to be the

backbone of the detergent industry due to :

• Increasing detergent demand by the consumers

• Increasing availabilityof the main «detergent

feedstocks» thanks to local increased production

capacity

• Outstanding evolution of detergent recipes based

on the «combination» of various surfactants

16:1516:1516:1516:15 The feedstock story (minus palm oil) inThe feedstock story (minus palm oil) inThe feedstock story (minus palm oil) inThe feedstock story (minus palm oil) in the the the the

emerging SE Asian economiesemerging SE Asian economiesemerging SE Asian economiesemerging SE Asian economies

AndreaAndreaAndreaAndrea Fitzgerald, Senior Consultant, Fitzgerald, Senior Consultant, Fitzgerald, Senior Consultant, Fitzgerald, Senior Consultant, Energy & Energy & Energy & Energy &

Chemicals Consulting, Asia,Chemicals Consulting, Asia,Chemicals Consulting, Asia,Chemicals Consulting, Asia, NEXANTNEXANTNEXANTNEXANT

This presentation was cancelled.

Day 2 Day 2 Day 2 Day 2 ---- Friday 15 November 2013 Friday 15 November 2013 Friday 15 November 2013 Friday 15 November 2013

9:159:159:159:15 LAB, LAS, Fatty Alcohols & Acids LAB, LAS, Fatty Alcohols & Acids LAB, LAS, Fatty Alcohols & Acids LAB, LAS, Fatty Alcohols & Acids –––– Outlook, Outlook, Outlook, Outlook,

trends and market drivers intrends and market drivers intrends and market drivers intrends and market drivers in AsiaAsiaAsiaAsia

Neil A Burns, Managing PartnNeil A Burns, Managing PartnNeil A Burns, Managing PartnNeil A Burns, Managing Partner, er, er, er,

NEILNEILNEILNEIL A BURNS LLCA BURNS LLCA BURNS LLCA BURNS LLC

●LAB and LASLAB and LASLAB and LASLAB and LAS

Linear Alkyl Benzene Sulfonate

(LAS) is World�s largest

Surfactant - ~ 4 Million MT, 27%

of Global Surfactant Market. LAB

is only used to make LAS. And LAB Production

Capacity is 3 Million MT/yr

LAB in Asia, Middle EastLAB in Asia, Middle EastLAB in Asia, Middle EastLAB in Asia, Middle East .. Out of a 3 Million MT/yr .. Out of a 3 Million MT/yr .. Out of a 3 Million MT/yr .. Out of a 3 Million MT/yr

GLOBAL MarketGLOBAL MarketGLOBAL MarketGLOBAL Market

Half the market’s in Asia and Capacity is LONG

(~20%). Demand for LAB in Asia 1.40m t/y vs

capacity of 1.68m t/y. MENA has small market and

450 KMT/yr LONG capacity. MENA region has a

capacity of 700 KMT vs demand of 250 KMT.

Projected demand growth in both regions: 3-5%/y in

2013. Main producing countries in Asia: India,

China, South Korea, Taiwan,Indonesia. Main

producing countries in MENA region: Saudi Arabia,

Qatar, Iran,Egypt.

Where does all the LAB go…?Where does all the LAB go…?Where does all the LAB go…?Where does all the LAB go…?

Middle East cargoes are exported to Africa, Asia,

Europe and South America, small volumes also to

Turkey. Cargoes from Egypt head towards Turkey,

South Africa. Egypt is a favoured exporter to Turkey,

as it is exempted from import duty by Turkey.

Turkey has a demand of 100 KMT/yr and no local

production. After Turkey-South Korea Free Trade

Agreement in May 2013, South Korean cargoes are

also seen in Turkey. Chinese cargoes are also being

exported increasingly to South Korea, Southeast

Asia and India.

New LAB ProNew LAB ProNew LAB ProNew LAB Projects in the Regionjects in the Regionjects in the Regionjects in the Region

Thai Oil expected to start up 100KMT LAB plant at

its refinery at Sri Racha in Chonburi province by

2015.

Farabi Petrochemicals evaluating a world-scale

LAB plant in Jazan, KSA. Study to be completed in

Q1 2014. Farabi already operates a 150KMT LAB

and n-paraffin facility at Al Jubail. Base oils

producer Riyadh Oil Factory looking to set up a new

120KMT LAB and 90 KMT n-paraffin facility in

Riyadh in 2017 and 40 KMT LAS the year after.

Iraq’s Arab Co for Detergent Chemicals (Aradet) is

evaluating doubling capacity of its 50,000 t/year

plant in 2015-2016. Indian Oil to increase capacity

of its LAB plant at Vadodara in Gujarat by 42 KMT

in 2016-2017, to 162 KMT.

Fatty Acids and AlcoholsFatty Acids and AlcoholsFatty Acids and AlcoholsFatty Acids and Alcohols

• Palm Oil is Key to Asia and also provides PKO

• PKO (Palm Kernel Oil) is the Key -> Fatty

Alcohols

• 2.5 Million MT Fatty Alcohol Market

• w over 3 Million MT Capacity

• Asia has 40% of Demand and 55% of Capacity

With a lot more to come – tilting the balance further

toward Asia

ConclusionConclusionConclusionConclusion

• Asia is the Centre of Gravity for Production and

Consumption of Workhorse Surfactants

• Converting LAB to LAS is Hard work for little $

• The Alcohol Boom is underway – watch out if you

are not integrated

• Shale boom is here .. and coming to Asia

• It�s all about the Supply Chain

9:459:459:459:45 Surfactants and enzymes Surfactants and enzymes Surfactants and enzymes Surfactants and enzymes –––– friends or friends or friends or friends or foes?foes?foes?foes?

Julie Malbaek, Regional Marketing Julie Malbaek, Regional Marketing Julie Malbaek, Regional Marketing Julie Malbaek, Regional Marketing

Manager, NOVOZYMESManager, NOVOZYMESManager, NOVOZYMESManager, NOVOZYMES

Enzymes mode of action in general

• Enzymes are biological catalysts

in the form of proteins

• Enzymes are present in all living cells, where

they play a vital role for the metabolism

• Enzymes are fully biodegradable

• Enzymes have high substrate specificity

• Enzymes speed up reactions by lowering the

energy barrier

Detergent enzymes functionality

Stain-removing enzymes help surfactants lift of the

stains.

Enzymes and surfactants

- Together for a cleaner, greener future.

Sustainable, healthy and efficient approach to

household care products.

• Contribute towards creating greener and more

biodegradable detergent products.

• Improve social sustainability by promoting better

hygiene & health via deep cleaning.

• Formulate products that are optimized for

efficient resource usage.

Let’s strengthen the friendship between enzymes

and surfactants.

• Find the most compatible fit between enzymes

and surfactants.

• Seek synergies and formulation routes that will

increase the performance level.

• Provide consumers and manufacturers with

superior formulas and give them value for money!

11:0011:0011:0011:00 Skin care market and trends inSkin care market and trends inSkin care market and trends inSkin care market and trends in IndonesiaIndonesiaIndonesiaIndonesia

Hefriyan Handra, Head Hefriyan Handra, Head Hefriyan Handra, Head Hefriyan Handra, Head of of of of

Research &Research &Research &Research & Development, Development, Development, Development,

MARTHA TILAARMARTHA TILAARMARTHA TILAARMARTHA TILAAR GROUPGROUPGROUPGROUP

●●●●MARKETMARKETMARKETMARKET TREND TREND TREND TREND

Brand landscape is becoming more dynamic;

cautiously optimistic outlook on Indonesia cosmetic

market.

Leading brands focusing more and more on

improving customer experience.

Social media is becoming an important marketing

tool for cosmetics companies.

Green cosmetics products are becoming more

popular compare to the past.

Cosmetics brands are keen to explore e-commerce

opportunities.

Increase in products in smaller packaging formats.

●SKIN CARE MARKET IN INDONESIASKIN CARE MARKET IN INDONESIASKIN CARE MARKET IN INDONESIASKIN CARE MARKET IN INDONESIA

Skin care current value sales increase by 24% in

2012 to reach Rp11.3 trillion.

Demand for whitening skin care products continues

to increase. Anti-agers leads growth in 2012, with

current value sales increasing by 29%. Skin care

records a higher price increase in 2012 than in 2011

due to rising production costs. Skin care has a

projected forecast period constant value CAGR of

15%.Acne treatments recorded double-digit growth

of 15% in 2012, with demand being fuelled by

increasing concern amongst women about the

smoothness of their facial skin.Rising demand for

skin whitening facial care products fuelled facial

skin care sales in 2012, with sales being driven by

the desire of most Indonesian women to have fairer

skin. Some 53% and 33% of facial moisturizers and

facial cleansers respectively contain whitening

agents.

Concentrated serum and eye cream still accounted

for only a niche percentage of value sales within

anti-agers. The majority of anti-agers sales are still

accounted for by facial day and night moisturisers

SPASPASPASPA

SPA Industries grow significantly from year to year.

Every year, the growth of SPA Industries is

7%.Lead to increase the SPA Products. SPA Product

characteristics : Exploring the biodiversity of

culture and nature. Indonesia is an archipelago

more than 17.000 islands, with about 400 volcanoes,

30.000 plants, 300 ethnicities

●KEY TREND & DEVELOPMENTKEY TREND & DEVELOPMENTKEY TREND & DEVELOPMENTKEY TREND & DEVELOPMENT

MACRO ECONOMYMACRO ECONOMYMACRO ECONOMYMACRO ECONOMY

•Economic growth in Indonesia improve in 2012,

with GDP increasing at the fastest rate since 1996.

GDP increased by 6.46% in 2011 and by 6.54% in

2012.

•The unemployment rate declined to 6.32% in the

first quarter of 2012 compared to the same period in

2011.

•The Rupiah depreciated strongly against the US

dollar, falling from an average of Rp8,776.90 per US

dollar in 2011 to Rp9,174.15 per US dollar in 2012,

and now Rp 11,500 in mid 2013

CONSUMERSCONSUMERSCONSUMERSCONSUMERS

•Rising demand for halal cosmetics

•Celebrity endorsers play major role in marketing

campaigns of leading companies.

•Consumer confidence remains high.

• Rising level of sophistication, new needs &

expectations to be satisfied.

•Female dominant market; men’s products catching

up.

•Leading players increase social media marketing

activities.

REGULATORY ENVIRONMENTREGULATORY ENVIRONMENTREGULATORY ENVIRONMENTREGULATORY ENVIRONMENT

•Notification mechanism

•More stringent quality standard and process for

imported products

•Several new regulations are being developed that

can create problems for cosmetic business in the

future

•Until August 2013, imported products has growth

faster than local products (60 % imported sku

compared to 40% local)

11:3011:3011:3011:30 The Philippines: The oleoThe Philippines: The oleoThe Philippines: The oleoThe Philippines: The oleo----economy,economy,economy,economy, companies companies companies companies

and downstream potentialand downstream potentialand downstream potentialand downstream potential for investment in for investment in for investment in for investment in

chemical derivachemical derivachemical derivachemical derivativestivestivestives

Dean Lao Jr, Managing Director,Dean Lao Jr, Managing Director,Dean Lao Jr, Managing Director,Dean Lao Jr, Managing Director, CHEMREZ CHEMREZ CHEMREZ CHEMREZ

TECHNOLOGIESTECHNOLOGIESTECHNOLOGIESTECHNOLOGIES

Dean (Jun Lao to his friends) oversees Chemrez

Technologies as its Managing Director. As a listed

family business, he is actively

involved in marketing, R&D and

manufacturing of resins,

oleochemicals and colorants to

serve a wide range of industries.

In his capacity as Chairman of the

United Coconut Associations of the Philippines

(UCAP) and as President of the Philippine

Oleochemical Manufacturing Association (POMA),

he seeks to unify the various sub-sectors of the

coconut industry into a progressive and sustainable

industry - a role that involves many business

sectors and government departments. As President

of the Philippine Biodiesel Association (TPBA), his

advocacy for the use of biofuels has been

instrumental in the successful mandate of biofuel

blends in the Philippines’ energy mix.

Jun is a father of four and one who enjoys the

occasional round of golf and outdoor activities

involving nature and water.

• Coconut oil supply chain and current production

figures

• The Philippine coc-biodiesel mandate and the

market dynamics involved

• The Philippine oleochemical

industry overview

• Market positioning for cocooleochemicals

• Investments in the oleo-economy

Philippine Oleochemicals (2013)

・No active fatty acid production

・Shift from maker to taker of fatty acid & alcohol

・Capitalizing on sustainability of CNO

・B2 to B5 mandate – CNO is only feedstock

・Favors forward integration

What’s in favor of the PhilippinesWhat’s in favor of the PhilippinesWhat’s in favor of the PhilippinesWhat’s in favor of the Philippines？？？？

FEEDSTOCK

・Sustainable: coconut at your doorstep

・Food vs fuel debate is misplaced

MARKET

・Captured market: 100m consumers

・Fastest growing: GDP +7.6% in 1H-2013

・MNCs regionalized elsewhere – opportunity to

integrate forward

LOGISTICS

・Heart of SE Asia

・Cheap outbound freight

・Quality workforce & low labor costs

Quick Facts for Investors

・Investment grade: Fitch, Moody’s, S&P

・Incentives for EcoZone locators

・Minimum wage: $12/day

・Skilled & supervisory wages: $900-1200/mo

・Niche for Coco Fatty Acid producer

Where others see risks, those who see the

opportunity can be very successful

・Increasing CNO production to meet demand

・Competitiveness from value integration

・Oleochem co’s – should play to its strength as fatty

acid/alcohol taker, & integrate forward

・Coco Methylester is oleochem backbone

・The right environment for investment

・Typhoon damage can be overcome