Supply Chain | Alasdair Carmichael

21 Pages·2016·0.62 MB·English

5/5/2016
IFAI – Outlook 2016
Oil and Natural Gas: Impact on
Synthetic Fibers
Alasdair Carmichael, April 2016
[email protected]
Trusted commercial intelligence
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Agenda
1. Introduction
2. Oil & Gas
3. Impact on Fibers
4. Total FibersMarket
5. Industrial Filament & Markets
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5/5/2016
PCI Update
Verisk Analytics, Inc., Acquires The PCI Group-Nov 20 2015
Acquisition of PCI will create an industry-leading chemicals business at
Verisk’s Wood Mackenzie.
Verisk Analytics, is a New Jersey based company providing risk assessment
and data analytics services to a variety of industries. 2014 revenues of $1.75
billion and over 6,000 full time people.
In Q1 2015 Verisk bought Wood Mackenzie, an Edinburgh, Scotland company
est. in 1844. Wood Mackenzie developed an oil and energy business in 1973
and have built on that to become a global leader in commercial intelligence
for the energy, metals and mining industries.
The PCI Group and its associates are now a part of Wood Mackenzie in an
additive and complimentary function bringing downstream expertise through
the supply chain across petrochemicals, xylenes and polyesters, resins,
nylons and fibres, and films.
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Product Coverage
PCI Research Wood Mackenzie Future Research
Oil Refinery / Gas Field Petrochemical Complex Downstream Products
Feedstocks Basic Intermediate
Methane Petrochemicals Petrochemicals EndProducts
Natural Gas Reforming Processing Methanol Fertilisers
NParotucreasl sGinags Ethane Syngas g AUmrema onia ERxepslionssives
LPG Polyethylenes Plastics and Films
Olefins Ethylene EDC/VCM/PVC EOD’s/Detergents
Ethylene Antifreeze
Plant Oxide Polyester Fibers
Naphtha Propylene Ethylene Glycol Plastics
Gas Oil Polypropylene Acrylic Fibers
Crude Oil Olefa Acrylonitrile Plastic Coatings
Petroleum Crude C4s Oxo-alcohols
nt Synth Rubbers
Refining Reformate Butadiene Tyres/Nylon66
Benzene Plastics& Foams
Aromatics Styrene
Separation Ar Cyclohexane NNyylloonnss, PC Resins
Cumene/Phenol/
o-Xylene
Oma Acetone Plasticizers/Resins
Polyester Fibers &
Phthalic Anhydride
Resins
p-Xylene tics DMT/PTA Urethane Foams
Gasoline Jet Lube Asphalt TDI
Fuel Oils Toluene Benzene / MDI
Kerosene Diesel Fuel Oil
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Oil Prices $/barrel
140
120
100
80
60
40
20
WTI Brent
Oil Prices are Global. Brent & WTI expected to remain close.
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Daily WTI Oil Prices –April 2016, $/barrel
48
46
Highest
44
since Nov
42 2015
40
38
36
OPEC Doha -no
34 agreement on
production limits
32
30
Apr 5 6 7 8 11 12 13 14 15 18 19 20 21 22 25 26 27 28 29
1-
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Unlikely to see significant price appreciation until market sentiment finds
a positive price catalyst
Brent price outlook (US$/bbl)
140
Forecast
120
100
80
60
40
20
0
2013 2014 2015 2016 2017
Source: History -Argus; Forecast -Wood Mackenzie
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Need about 5 million b/d of new supply by 2020 to meet demand
Prices of at least $60-$70/bblneeded to support necessary supply
Potential 2020 supply by breakeven
2020 supply gap (mb/d)
tranche & asset type (mb/d)
100
9
* Planned Pre-FID projects +
98 8
New US L48 Drilling
7
96
6
94 5 Oil Sands
92 4 Tight Oil
Ultra-Deepwater
3
90 Deepwater
2 Shallow Water
88 1 Onshore
0
86
2015Demand DemandGrowth OnstreamDecline UnderDevelopment Other Supply Gap SupplyGap <$40* $40-$60* $60-$70* $70-$80* >$80* Technicalsand YTF
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Natural Gas Prices –USA $/mm bthus
14
12
10
8
6
4
2
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Jan
Natural Gas prices are Regional. US to keep significant advantage.
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Natural Gas Prices $/mm Btus
18
16 Japan
14 Germany
12 UK
10 US
8
6
4 22001155 UUSS
avg.
2 $2.67
0
6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4
9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1
9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
Source: BP
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Energy Overview
 Crude markets are poised for a rebound. Capital expenditures
have fallen, keeping the production outlook constrained.
Breakeven economics for those plays that are still viable will likely
require crude above the $60-$70 range.
 Gas markets will continue to be range-bound near $3-$4 per
MMBTU in North America for the next several years. Significant
expansions in consumption still cannot overtake the huge,
cheaply available inventory of gas reserves.
 What does this mean for fibers? When there are no supply
demand constraints in petrochemicals then oil is going to be the
leading price driver –but not on a one for one basis.
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Oil to US Raw Materials –Indexed to Jan 2005
300
250
200
150
100
50
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Oil PTA/MEG Capro Propylene
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Oil to US Raw Materials –$/ton
3000
2500
2000
1500
1000
500
0
2014 2015 2016
Oil PTA/MEG Capro Propylene
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Ethylene - The Gas & Coal Based Chemical Renaissance
The “rollercoaster” of volatility of regional energy valuations drives
investment decisions across the chemical industry
Key Global Energy Benchmarks
18 144 357
16 128 318
14 112 278
$
$per million btu110268 Lotos NtA Cosroitamh/M pAiemdtdietlirevic eEana essts CGInoEadamNslu--oebsbrrtaatgrshsyeee nAAddcmd Ce v&e haor eCnifc mthtaahii gnec ea a l 46898406 per barrel (crude o 111215939988$per ton (coal)
4 32 il) 79
2 16 40
0 0 0
2000 2002 2004 2006 2008 2010 2012 2014 2016
US Henry Hub Natural Gas Brent North Sea Crude Oil
China Qinhuangdao Coal Saudi Arabia Natural Gas
Source: ArgusMedia, NYMEX, SXCoal
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Ethylene - The Gas & Coal Based Chemical Renaissance
As a result of low natural gas prices (and ethane) relative to high crude oil prices
(and naphtha), N. America adding most of the new ethylenecapacity in the world
Global Ethylene Capacity Additions
million tons
12
Emergence of the North America
North America Gas-based & China Coal-based Chemical
Lost Competitiveness Industry Advantage
to Asia/Middle East
8
4
0
-4
2005 2010 2015 2020
Americas Europe + Japan Russia and The Caspian Middle East + Africa China + India Rest of World
Source: Wood Mackenzie Long-Term Ethylene Service
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Outputs from Different Routes to Ethylene
IImmppaacctt ooff ffeeeeddssllaatteessoonn ppyyggaassvvoolluummeess iiss vveerryy ssiiggnniiffiiccaanntt
Ethylene = 1,000 ktons
Propylene = 570 ktons
C4s (Butadiene) = 365 ktons
Lt. Naphtha = 2,980 k tons Pygas (Benzene) = 525 ktons
Other = 520 ktons
Typical Naphtha Steam Cracker
Ethylene = 1,000 ktons
Propylene = 25 ktons
C4s (+Butadiene) = 30 ktons
Ethane = 1260 k tons Pygas(Benzene) = 35 ktons
Other = 170 ktons
Typical Ethane Steam Cracker
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Polyester -US Competitiveness Change?
A new scenario is developing in the US, partly as a result of lower cost
petrochemicals, which is moving the US into a potential overcapacity
which will rely on exports to keep plants operational. (Just like China!)
Polyester raw materials are PTA and MEG (0.86 + 0.35 approximately).
PTA production in US has been in hands of BP and DAK. BP has sold 1
of its 2 US plants to Indorama and the Italian company M&G is building
a 1.2 million ton PTA plant to partially feed its new PET resin plant.
Indorama has also bought the only PTA plant in Canada.
MEG: Because of US cheap Natural Gas, the US becomes the world’s
low cost producer of MEG and from 2018 to 2020 has 3 million tons of
new capacity projects. US demand forecast to increase 500,000 tons.
The US has to become a major exporter, and therefore has to price
below Asian levels to compete.
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Polypropylene -US Competitiveness Change?
The scenario that helps Polyester (MEG) become more competitive
hurts Propylene.
MEG comes from ethane production and Natural Gas is the most cost
efficient route in the US, whereas Propylene is generally a by product
from Naphtha (oil). Due to low cost Natural Gas in the US (regional
pricing) there is a major expansion into natural gas cracking and this is
producing much less propylene.
This is leading to investments in on purpose propylene
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5/5/2016
Textile Mill Consumption (million tonnes)
120
Polypropylene
Cellulosics
100
Polyester
Nylon
80 Acrylic
Cotton
60 Wool
40
20
0
1 4 7 0 3 6 9 2 5 8 1 4 7 0
9 9 9 0 0 0 0 1 1 1 2 2 2 3
9 9 9 0 0 0 0 0 0 0 0 0 0 0
1 1 1 2 2 2 2 2 2 2 2 2 2 2
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Nylon fibres in context 2015 (ktes)
48,030
24,055
Polyester
Cotton 5,325
Nylon
Cellulosics
4,098
PP
3,532
Acrylic
An Astronomers View 1,705
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