Icis Chemical Business 2013

EUROPE PHENOL
Market remains stagnant

as demand drops for
derivatives. Operating
rates are at 70-80% 13
ASIA TIO
2
Prices in China are likely
to soften in the coming
months on producer
inventory pressures 38
ANALYSIS OF CHEMICAL MARKETS
25 March-7 April 2013
US OFFTAKE DEAL
DOW AND MITSUI,
IDEMITSU PARTNER
DOWNSTREAM
NEWS FOCUS P9
Chemical Business
MARKET INTELLIGENCE
CHINA PE
DEMAND
SLOWS DOWN
Volumes are lower than levels right before the
Lunar New Year. The mood remains pessimistic
CHINA PE
DEMAND
SLOWS DOWN
Lunar New Year. The mood remains pessimistic
ICB_250313_301 1 21/3/13 17:03:51
Our chemical distribution
network across Asia consists
of 64 business locations
in 15 countries. We call this
a good basis for growth.
Carol Tan, DKSH Kuala Lumpur
If you want to expand into Asia, talk to
someone who covers the entire region:
DKSH. Our 64 business locations mean that
we are at home across the whole of Asia.
With almost 150 years of experience in all
areas of chemical distribution, we are the
No. 1 provider of Market Expansion Services,
and we dont intend to stop growing.
www.dksh.com/chemicaldistribution
Scan QR code
to download
DKSH PM app for
iPhone and iPad.
ICB_250313_302 302 21/3/13 10:56:01
25 MARCH-7 APRIL 2013
|
ICIS Chemical Business
|
3 www.icis.com
Chemical Business
Independent pricing information, news and
analysis for more than 120 global commodities
Sign up for free market updates at www.icis.com/keep-in-touch
ICIS-pricing_ad_173x25_v2.indd 1 03/09/2012 13:24
The phasing-out of cathode ray tube televisions
in India is hitting polystyrene demand P19
Low phenol demand from coatings and construction in low
temperatures keeps market desolate P13 IndianOil sounds
out tyre makers as it aims to start up SBR JV in August P25
R
e
x

F
e
a
t
u
r
e
s
Periodicals Entry
EUROPE PHENOL
Market remains stagnant
as demand drops for
derivatives. Operating
rates are at 70-80% 13
ASIATIO2
Prices in China are likely
to soften in the coming
months on producer
inventory pressures 38
ANALYSIS OF CHEMICAL MARKETS
USOFFTAKE DEAL
DOWANDMITSUI,
IDEMITSUPARTNER
DOWNSTREAM
NEWSFOCUSP9
Chemical Business
MARKET INTELLIGENCE
CHINA PE
DEMAND
SLOWS DOWN
Lunar NewYear. The mood remains pessimistic
CHINA PE
DEMAND
SLOWS DOWN
Lunar NewYear. The mood remains pessimistic
A
la
m
y
COVER STORY
China polyethylene demand
is slowing to levels even
lower than just before the
Lunar New Year. The mood
remains pessimistic.
For the full story, see P10
VOLUME 283 NUMBER 11
MARKET OUTLOOK
30 Innovation Demand is growing for new
technologies in 3D printing that use
polymers such as ABS, PC and polyamide
32 Shale gas As shale gas and investment
boost US east coast refneries, what will
the impact be on propylene production?
CHEMICAL PROFILE
38 Asia TiO2 prices may have hit rock bottom
39 Outlook uncertain for Europe caprolactam
REGULARS
5 Commentary
35 Whats on
36 Conferences & Events
37 Marketplace
SPECIAL REPORTS
AFPM SUPPLEMENT
Shale gas revival Confdence shines
out as producers face challenges
13 All quiet on the Europe phenol front
14 Demand weak for PE resin in Europe.
Turkey polyolefns demand slows; import
offers grow
16 US ABS faces downward pressure
17 Europe ABS buyers resist March hikes.
Europe benzene market hits 10-month low
19 India polystyrene weakness shows no sign
of ending
20 Europe March polyols mostly steady.
US MMA prices set to increase in March
21 Europe ethanolamines steady-to-frm
22 Asia BD price slump may continue.
Williams set to go ahead with PDH plant
in Alberta
23 BASF, Dow reduce MDI output in Mar
25 Asia SBR prices fall on lower BD
26 Automotive use of nylon could grow
PLANTS & PROJECTS
29 New projects and permanent plant
shutdowns, 9-15 March 2013
NEWS
BRIEFING
6 Momentive ramps up epoxy resins
production in Spain
7 Number of US housing starts rises 0.8%
in February
8 IndianOils acetic acid JV makes progress
FOCUS
9 Dow sets downstream plans
TRENDS
MARKET INTELLIGENCE
10 China PE demand sinks to lower than
ahead of Lunar New Year
11 Cyber threat reaches crisis level
PRICES & MARKETS
12 NE Asia ethylene set to keep falling.
Battle lines drawn for US April maleic
anhydride prices
ICB_250313_003 3 21/3/13 19:11:42
Register for ICIS Base Oils training courses at: www.icis.com/BaseOilsTrainingCourses
Contact us at: training@icis.com | Tel: +65 6780 4353
Base Oils training
Understand the bigger picture with ICIS
Delivered by highly experienced industry experts, ICIS training provides you with
insight into the different base oils processing technologies, how base oils are
produced and used, as well as what lies ahead for the global market, ensuring that
you can effectively work in this challenging industry.
From ICIS Base Oils training you will gain:
A frm grasp of the drivers and fundamentals of the base oils industry
Understanding of the key concepts, to help you work effectively
Insight into the factors affecting supply, demand and price trends
Training by foremost industry experts
Cost- and time-effcient interactive learning
The following courses are available worldwide or as in-house training:
Base Oils I - An in-depth introduction
Base Oils II - Product qualities & blending options
Base Oils III - Utilisation and optimisation
Scan this code
with your smart
phone to visit
our website
ICIS-training_baseoils_ad_V3.indd 1 10/10/2012 17:25 www.icis.com 25 March-7 April 2013
|
|
4
ICB_250313_004 4 21/3/13 11:43:39
COMMENTARY
|
|
5 www.icis.com
Do you agree?
Email: joseph.chang@icis.com
or go to the commentary blog
at icis.com/blogs/
editorscommentary
A
la
m
y
The winner will be selected from the ICIS Top 40
I
t is our pleasure to introduce the ICIS Kavaler
Award, sponsored by The Chemists Club. This
new award will recognise one CEO or senior ex-
ecutive for outstanding achievement and excel-
lence each year.
The key distinguishing feature of this unique
award is that the winner is selected by his/her peers
the executives selected in the previous ICIS Top 40
Power Players listing, a global rundown of the people
making the greatest impact on the chemical industry.
We know of no other award in the chemical industry
given on the basis of a senior executive peer vote.
We will invite each of the ICIS Top 40 Power Players
for 2012 to vote for three individuals in the ballot, based
on newsworthy achievement in one or more of the fol-
lowing categories:
protability/shareholder value;
mergers and acquisitions (deals or integration);
projects/capital investment; and
innovation technology, product, business process
with an impact on industry and society.
The ballot will be strictly condential, sent not to
ICIS or The Chemists Club, but to an independent New
York law rm, which will record the votes and pass the
results along to the ICIS/Chemists Club committee
overseeing the event.
We will send out the letters and ballots in early April,
and the deadline for the ballot entry will be 1 May 2013.
We plan to present the ICIS Kavaler Award, sponsored
by The Chemists Club, to the winner at a black tie din-
ner in New York City in late October or early November,
on a date to be announced.
The award is a revival of the Kavaler Award, which
was presented by Chemical Market Reporter to leading
chemical CEOs from 1990 to 1999, including Jon Hunts-
man Sr, founder, chairman and CEO of Huntsman, and
Frank Popoff, chairman and CEO of Dow Chemical.
Arthur Kavaler, who served for 46 years as reporter,
editor and eventually publisher and editor-in-chief of
Chemical Market Reporter one of the three publica-
tions incorporated into ICIS Chemical Business passed
away at the age of 91 on 18 January 2012.
Kavaler, a probing reporter and an editor with unwa-
vering conviction, had a major impact on chemical in-
dustry journalism.
To the ICIS Top 40 Power Players, we greatly appreci-
ate your participation in the selection process for this
unique and important new award. One drawback you
cannot vote for yourself. Thank you!
The new award, sponsored by The Chemists Club, will honour one of the ICIS Top 40 Power
Players in a vote among peers. An award dinner will take place towards the end of the year
ICIS Kavaler Award
The distinguishing feature of
this award is that the winner
is selected by his/her peers
JOSEPH CHANG NEW YORK
UK shale move is good news for Europe
N
ews that the UK government is to promote
the exploration of shale gas will be wel-
comed by many in Europes beleaguered
chemical sector as a step in the right direc-
tion for a region struggling with an uncom-
petitive feedstock position.
Shale gas is transforming the US chemical industry
while in Europe the only signicant activity so far has
been in eastern Europe and that is still at an early stage.
The UK government is adopting a far more positive
attitude than many others in Europe: in France, for ex-
ample, there is still a ban on shale exploration. The UK
move is quite a brave one, coming only a couple of years
after activity was suspended following a series of minor
earthquakes in the northwest near an exploration site.
If Europe can unlock its own unconventional resourc-
es it could have a signicant impact on feedstock and
energy pricing. At present, gas prices are still tied in to oil
prices for much of the European market. Moves to intro-
duce more of an element of spot gas pricing into contracts
could be accelerated if more gas became available, and
should exert downward pressure on energy prices.
Switzerland-based INEOS is planning to ship ethane
to Europe from the US to gain a feedstock advantage. It
is easy to imagine how much the whole region could
benet from indigenous sources of the product.
WILL BEACHAM LONDON
ICIS TOP 40 POWER PLAYERS
LEADERS OF
THE PACK
Meet the champions who have led the
chemical industry through a tough year
ICB_250313_005 5 21/3/13 15:46:42
NEWS
www.icis.com 6
|
|
BRIEFING
For real-time news and analysis
from our global team of reporters, visit:
icis.com/about/news
PIC OF THE WEEK
Cyprus bailout drama builds
The nexus of the eurozone crisis has shifted to Cyprus, where legis-
lators voted down the EUs bailout package, which would take a slice
out of bank deposits. Banks will remain shut until later this week.
R
e
x

F
e
a
t
u
r
e
s
EUROPE
MOMENTIVE RAMPS UP
EPOXY RESINS IN SPAIN
Momentive Specialty Chemicals
has more than tripled its water-
borne epoxy resin production ca-
pacity with the development of
new production facilities in
Barbastro, Spain, the US-based
company said. The site will allow
it to produce its complete range
of standard and modied epoxy
resin emulsions and dispersions,
and is already producing Momen-
tives in-house surfactants.
EU CHEM EXPORTS RISE BY
8% IN 2012 EUROSTAT
EU exports of chemical products
increased by 8% year on year in
2012, EU statistics body Eurostat
said. Exports for the full-year 2012
stood at 276.2bn ($358.7bn)
while import levels increased by
4% year on year to 161.7bn. In-
creased export levels for the year
also helped to drive the regions
trade surplus for chemical prod-
ucts to 114.5bn, a 14% increase
on the 100.8bn trade surplus for
the full-year 2011.
HUNTSMAN PUTS MDI OPS
UNDER MAINTENANCE
Planned maintenance is under-
way at Huntsmans methyl di-
phenylene isocyanate (MDI) op-
erations at Rozenburg in the
Netherlands, a company source
said. The turnaround started as
planned last Friday [15 March]
and it affects both MDI units [at
the site], said the source, adding
that: It is planned and routine
and has been taken into consid-
eration. The outage is likely to
last around four weeks. MDI ca-
pacity there is estimated at
400,000 tonnes/year.
BASF CUTS GERMANY JOBS
TO FOCUS ON ASIA-PACIFIC
Jobs will be lost in Germany but
added in China, India and Turkey
in a re-shaping of BASFs leather
and textiles chemicals business,
the company said. The Germany-
headquartered chemicals major
said it would increase focus in the
business on Asia-Pacic markets
and high value-adding applica-
tions such as those for the leath-
er automotive industry and pre-
mium textile articles.
CROATIA-BASED DIOKI GOES
INTO PRE-BANKRUPTCY
Croatia-based polymers manufac-
turer Dioki has entered into a pre-
bankruptcy process, one of the
bidders for the company said,
which it added could be utilised
to save production units. Croatian
oil and gas supplier Crodux Plin is
one of the businesses interested in
acquiring Dioki, and has submit-
ted a plan for the takeover and re-
structuring of the company.
Crodux has requested that Diokis
board invite it to nancially and
operationally restructure the com-
pany in line with pre-bankruptcy
settlements, as part of a plan that
would see it take a majority stake.
VERSALIS CRACKER BACK
TO NORMAL AFTER RESTART
Versalis cracker in Dunkirk,
France is running normally follow-
ing an unplanned outage, a source
from the Italy-based producer said.
The cracker went down unexpect-
edly around 20 February because
of an undisclosed technical prob-
lem and was restarted the week
ended 15 March. The cracker has
the capacity to produce 380,000
tonnes/year of ethylene and
210,000 tonnes/year of propylene,
according to ICIS data.
RUSSIA PETCHEM OUTPUT
RISES IN 2013 TO DATE
Russias overall production of
chemical and petrochemical
products was up year on year in
January and February, Russian
statistics agency Rosstat said. In
the January-February period this
year, plastics output was 13.2%
up year on year at 978,000 tonnes
while synthetic rubber produc-
tion was 9.3% up year on year at
275,000 tonnes.
LINDE WINS CONTRACT TO
BUILD GASSCO TERMINAL
German gases and engineering
rm Linde Group has won a con-
tract from Norwegian state-
owned company Gassco to build
a natural gas terminal in Emden,
Germany, it said. The contract
deal, worth around 260m
($333m), was awarded by Gassco
on behalf of the Gassled joint ven-
ture. The new terminal, which is
set to go on stream at the end of
2015, will distribute natural gas
from Norwegian-owned gas elds
in the North Sea to Germany.
OLTCHIM NAMES CHEMICAL
ENGINEER AS NEW CEO
Oltchim shareholders said that a
new CEO, Mihail Talpasanu, has
been selected for the Romania-
based chemicals company. He
will be expected to steer the in-
solvent company towards a po-
tential future privatisation. A
chemical engineer, Talpasanu re-
places Mihai Balan, whose man-
date ended on 15 March.
AMERICAS
PROPYLENE INVENTORIES
IN US INCREASE BY 9.7%
US propylene inventories jumped
9.7% week on week to hit their
highest level in nine weeks, ac-
cording to data released by the US
Energy Information Administra-
tion (EIA). US inventories of non-
fuel renery-sourced propylene
were at 3.354m bbl for the week
ended 15 March, compared with
3.057m bbl a week earlier. This is
the highest inventories have been
in the US since the week ended 4
January, when stockpiles were at
3.475m bbl. Sources said demand
has declined on high downstream
stockpiles while renery operat-
ing rates have risen.
KATOEN NATIE TO BUILD
$150M PETCHEM STORAGE
A Belgian logistics rm plans to
build a $150m (116m) petro-
chemical storage and processing
complex in Baton Rouge, Louisi-
ana, the company said. Katoen
Naties 2m square foot facility
(190,000 square metres) near the
ExxonMobil plant there will proc-
ess and store chemical products
when completed in 2018. The
rst phase, which will include
600,000 square feet of storage
space and rail lines, is expected to
be nished by the end of the year.
ICB_250313_006-008 6 21/3/13 15:23:12
NEWS
www.icis.com 25 March-7 April 2013
|
|
7
VOICES FROM THE WEB
MOST-READ
The top ve stories for the week just gone:
1 LANXESS to temp close Belgium butyl rubber, Texas EPDM
LONDON -- LANXESS plans to temporarily shut down its butyl
rubber plant in Belgium and its EPDM production in Texas.
2 Asia naphtha market under pressure as plastics demand weakens
SINGAPORE -- Spot naphtha prices in Asia are feeling the
downward pressure from weakening plastics demand.
3 NE Asia ethylene hits three-month low, no bottom in sight
SINGAPORE -- Northeast Asian ethylene spot prices have fallen to
a three-month low and could head further south.
4 LyondellBasell plans 800m lb/year ethylene expansion
NEW YORK -- LyondellBasell plans to add 800m lb/year (363,000
tonnes/year) of ethylene capacity at Corpus Christi, Texas.
5 Europe PE, PP higher price targets fall short on slow demand
LONDON -- Polyethylene (PE) and polypropylene (PP) price hikes are
falling short of targets in Europe.
Cyber threat
reaches crisis level
THINK TANK P10
Because employees cant be trusted, we have put in place a
massive system of policies and controls to make sure no one
steps out of line. It costs hundreds of millions of shareholder
and customer dollars to manage this system, but it must be
worth it because were so certain our employees are
untrustworthy notwithstanding the fact that we hired every
one of them ourselves.
Business Week Blog on employees cant be trusted
www.businessweek.com/blogs/the-management-blog
The controversial bailout deal for Cyprus proposed by
eurozone fnance ministers has led President Nicos Anasta-
siades to promise investors who stay in the country after the
compulsory forfeit of 9.9 per cent of their deposits that they
will share in the countrys future wealth from natural gas.
Financial Times Nick Butler on gas in Cyprus
blogs.ft.com/nick-butler
US President Barack Obama nominated Dr Ernest Moniz, the
director of the Massachusetts Institute of Technologys Energy
Initiative, to replace Steven Chu at the Department of Energy
(DoE). He also nominated Gina McCarthy, the assistant
administrator in charge of air and radiation at the US
Environmental Protection Agency (EPA) to replace former
administrator Lisa Jackson.
Methanol Institute Blog on new appointments
methanol.org/blog
Are you worried about the economic outlook for your company,
for your family and for your country? Do you suspect that
current policies may be doing more harm than good?
Paul Hodges on sustaining growth
www.icis.com/blogs/chemicals-and-the-economy
R
e
x

F
e
a
t
u
r
e
s
TOYO SIGNS DEAL TO BUILD
EVOH PLANT IN HOUSTON
Japans Toyo Engineering said it
has won a turnkey contract from
Nippon Synthetic Chemical In-
dustry to build a 15,000 tonne/year
ethylene vinyl alcohol (EVOH)
plant at La Porte in Houston. Con-
struction of the new plant is sched-
uled to begin in the summer of this
year and be completed at the end
of 2014. The project will add a
third production line to two exist-
ing lines, which have a combined
EVOH capacity of 23,000 tonnes/
year, according to Toyo.
HUNTSMAN RETURNS TEXAS
CRACKER TO FULL RATES
US chemical company Hunsts-
man said it has returned its Port
Neches cracker in Texas to full op-
eration after a period of mainte-
nance. The company shut down
the 193,000 tonne/year unit in
January, but restarting it at the end
of the maintenance period took
longer than expected as a result of
issues with bringing it back online.
Adverse weather was also a factor.
NUMBER OF US HOUSING
STARTS RISES 0.8% IN FEB
US new home construction rose
by 0.8% in February from Janu-
ary, the Commerce Department
said, and last months 4.6%
growth in the number of building
permits issued suggests contin-
ued housing recovery ahead.
Housing starts last month were at
a seasonally adjusted annual rate
of 917,000 units, a 0.8% gain over
the upwardly revised January g-
ure of 910,000. The current pace
of US residential construction ac-
US housing starts on the rise
tivity is considerably ahead of
year-ago gures. The February
home building pace was nearly
28% higher than February 2012.
NEXEO GETS ARKEMA FLOOR
CARE RESINS DISTRIBUTION
Nexeo Solutions has been ap-
pointed exclusive distributor for
Arkemas acrylic and styrene
acrylic emulsion products for
oor care applications through-
out the US and Canada, the US-
based chemicals distributor said.
The deal includes distribution of
Arkemas ENCOR-brand product
line. In addition to marketing and
distribution, Nexeo will provide
dedicated technical services,
such as formulation, lab and ap-
plication assistance to Arkema.
FLINT HILLS RESOURCES
REPORTS UNIT SHUTDOWNS
US producer Flint Hills Resourc-
es has shut down of several proc-
ess units at its Port Arthur chemi-
cal facilities in Texas, according
to a public ling. The shut down
occurred on 19 March and was
caused by a leak on the demetha-
nizer feed tower feed separator in
the light olens unit, according to
the ling with the Texas Commis-
sion on Environmental Quality
(TCEQ). The company has
621,000 tonnes/year of ethylene
capacity at the cracker, which
was restarted the week ended 15
March after a week-long outage.
MAINTENANCE ENDS AT
BAYER TDI UNITS IN TEXAS
The maintenance turnaround for
Bayer MaterialSciences toluene
di-isocyanate (TDI) units in Bay-
town, Texas, is complete and both
units are operational. Bayers me-
thyl di-p-phenylene isocyanate
(MDI) production train is still un-
dergoing its planned nine-week
turnaround, the company said.
The company has been conduct-
ing inspections, and performing
maintenance and project work.
Bayer is working with its custom-
ers to plan for their needs during
the turnaround.
PHILLIPS 66 SEALS DEALS
FOR CRUDE LOGISTICS
Phillips 66 has sealed three agree-
ments with energy logistics rms
to increase supplies of lower-cost
Check out the ICIS blogs at icis.com/blog
These are the most read stories taken from ICIS news last week.
To fnd out more visit: icis.com/about/news
ICB_250313_006-008 7 21/3/13 15:23:41
NEWS
www.icis.com 8
|
|
icis.com/about/news
GOVERNMENT POLICY
UK to introduce tax relief for shale
Chancellor of the Exchequer George Osborne promised as part of the
UKs latest budget announcement to introduce tax relief for shale gas
drilling. In the speech, he called shale gas part of the future.
R
e
x

F
e
a
t
u
r
e
s
US and Canadian crudes to its US
reneries. Enbridge will provide
railcar loadings of US Bakken
shale crude to Phillips 66 rener-
ies on the west and east coasts,
and possibly in the US Gulf Coast.
Targa Resources Partners agreed to
provide rail unloading and barge
loading services in Tacoma, Wash-
ington. Magellan Midstream Part-
ners will transport cost-advan-
taged crudes on Magellans
pipelines near Phillips 66s ren-
ery in Ponca City, Oklahoma.
CANADA CHEM SALES
RISE 1.7% IN JANUARY
Canadian chemical sales rose by
1.7% to Canadian dollar (C$)
4.03bn ($3.91bn) in January from
December. Compared with January
2012, chemical sales were up 0.1%
year on year, Statistics Canada said.
Sales of plastics and rubber prod-
ucts rose 2.2% to C$1.93bn in Jan-
uary, from December. Compared
with January 2012, plastics and
rubber product sales were down
1.7% year on year. Canadian petro-
leum and coal product sales fell
1.8% to C$7.05bn in January from
December but were up 1.5% year
on year from January 2012.
ASIA
INDIANOILS ACETIC ACID
JV MAKES PROGRESS
IndianOils planned acetic acid
(AA) joint venture at Vadodara,
Gujarat, is progressing, with tech-
nology selection for the upstream
units likely to completed over the
next few months. The proposed
1m tonne/year AA plant - a joint
venture with BP Chemical - will
be based on petroleum coke gener-
ated at IndianOils renery at Koy-
ali, Vadodara. Besides the acetic
acid facility, the project also in-
cludes petroleum coke gasica-
tion and syngas production. The
project, which is expected to cost
Rs60-65bn ($1.1-1.2bn), is likely
to be completed in 2016-2017.
INDIANOIL AIMS AT 2016 FOR
POLYPROPYLENE PROJECT
IndianOil hopes to commission a
680,000 tonnes/year polypropyl-
ene (PP) project at Paradip, on the
east coast of India, in 2016. The
project will shortly go for board
approval; if we get the approval in
the next two to three months then
we can start up in 2016, said Sid-
hartha Mitra, executive director
for petrochemicals at IndianOil.
The PP project will be down-
stream of IndianOils new 15m
tonnes/year renery at Paradip,
which is scheduled to start up in
phases from September and ex-
pected to be fully operational in
March 2014, said Mitra.
INDIANOIL TO EXPAND LAB
CAPACITY IN 2015-2016
IndianOil plans to expand its lin-
ear alkyl benzene (LAB) plant at
Vadodara in Gujarat state by
42,000 tonnes/year in 2015-2016.
Demand for LAB in India is ex-
pected to grow at 6-7% annually
in the coming years, as rural con-
sumption of surfactants has in-
creased, said Sidhartha Mitra,
executive director for petrochemi-
cals. Following the expansion, In-
dianOils LAB capacity will in-
crease to 162,000 tonnes/year.
IndianOil had been looking at ex-
panding its LAB capacity for a few
years, but no rm decision or start-
up date had beeen announced.
TAIWANS FPCC MULLS
CRACKER RATE CUTS
Taiwans Formosa Petrochemical
Corp (FPCC) is considering re-
ducing run rates at its three naph-
tha crackers at Mailiao, a compa-
ny source said. The three crackers
with a combined ethylene
nameplate capacity of 2.93m
tonnes/year are currently run-
ning at 100% capacity, he said.
Ethylene margins based on naph-
tha feedstock have come under
pressure in northeast Asia partly
because of sharp falls in ethylene
and co-product prices.
SABIC SHUTS JUBAIL NO 2
STYRENE MONOMER UNIT
SABIC has unexpectedly shut its
500,000 tonne/year SADAF No 2
styrene monomer (SM) unit at Ju-
bail, Saudi Arabia, on 19 March, a
market source said. The specic
reason for the shutdown and the
exact restarting date for the unit is
unavailable. The company shut its
550,000 tonne/year SADAF No 1
styrene monomer (SM) unit at the
same site from early February for
maintenance, which is expected to
be restarted at the end of March.
RELIANCE TO RESTART LAB
UNIT BY END OF MARCH
Indias Reliance Industries plans
to restart its linear alkyl benzene
(LAB) plant at Vadodara in Gu-
jarat state by the end of March
after a maintenance shutdown, a
source close to the company said.
The plant was shut down in the
third week of February, initially
for just a month, but it got extend-
ed by a couple more weeks be-
cause of some technical issues
that cropped up, the source said.
The turnaround at the 60,000
tonne/year plant has resulted in a
tightening of supply in the Indian
LAB market, causing inventory
levels to decline to 15,000 tonnes
in March from 20,000 tonnes in
February, market sources said.
TSRC MAY CUT BR RUN RATE
IN APRIL ON WEAK DEMAND
Taiwan Synthetic Rubber Corp
(TSRC) may reduce the operating
rate of its 60,000 tonne/year buta-
diene rubber (BR) plant in Kaoh-
siung, Taiwan, to 80% of capacity
in April unless market conditions
improve, a company source said.
The plant is running at 100% of
capacity in March, the source
added. We will certainly con-
sider reducing the operating rate
by 10-20% if conditions do not
improve, the source said.
INDIAN PRODUCERS BRING
IN PRICE PROTECTION
Indias Reliance Industries Ltd
(RIL), Haldia Petrochemicals and
GAIL announced a price protec-
tion on polypropylene (PP), high
density polyethylene (HDPE) and
linear low density polyethylene
(LLDPE) in the domestic market,
industry sources said. The move
is aimed at boosting buying senti-
ment amid falling import prices
and weak downstream demand.
The price protection started on 19
March and it will remain valid
until 1 April.
AKZONOBEL TO INVEST A
FURTHER 65M IN CHINA
Dutch producer AkzoNobel will
invest a further 65m ($84m) to
boost capacity and signicantly
improve operational excellence at
AkzoNobels surface chemistry
manufacturing sites in Boxing of
Shandong and Ningbo of Zhejiang
in China. More than half the money
is being invested in the Boxing fa-
cility, the company said in a state-
ment. A new alkoxylation unit will
be built in Ningbo, Zhejiang prov-
ince, bringing the total investment
at the multi-site close to 400m.
ICB_250313_006-008 8 21/3/13 15:23:56
NEWS FOCUS
|
|
9 www.icis.com
US-based Dow Chemical has
partnered up with Japan-based
companies Idemitsu Kosan and
Mitsui on an ethylene offtake
agreement, and outlined its own
plans for downstream facilities
from its planned new 1.5bn
tonne/year cracker in Freeport,
Texas, US.
Idemitsu and Mitsui are ex-
ploring the creation of a 50:50
joint venture to build a 330,000
tonne/year linear alpha olens
(LAO) unit in the US. The com-
panies also signed an initial
agreement to offtake ethylene
from Dows US Gulf Coast facili-
ties for LAO production.
Dow said that the joint venture
would contribute signicant
capital for rights to supply LAO
to its performance plastics busi-
ness, without giving nancial de-
tails. LAO are used as comono-
mers throughout that business.
Dow would not disclose whether
it would take all the LAO output.
A nal investment decision on
the LAO unit will be made in
2014, with production starting up
in 2016, said Idemitsu and Mitsui.
LAO output of 330,000 tonnes
would require about 380,000
tonnes of ethylene. Dow said at
its investor day meeting in De-
cember 2012 that about 1.1m
tonnes/year of ethylene output
from its new cracker would be
used to make its own derivatives.
Dow is not looking for addi-
tional downstream partner op-
portunities but will evaluate and
explore opportunities if and
when they arise, said Nancy
Lamb, a Dow spokesperson.
DO-IT-YOURSELF
Dow itself will build a metal-
locene ethylene propylene diene
monomer (EPDM) plant, and fa-
cilities to produce high melt
index (HMI) elastomers for hot
melt adhesives; enhanced poly-
ethylene (PE); and specialty low
density polyethylene (LDPE).
The units will produce perform-
ance materials for the packaging,
medical, electrical, consumer, tele-
com and leisure industries. Dow is
currently scouting locations along
the Gulf Coast, with the exact spot
to be announced at a later date.
Todays announcement further
illustrates Dows commitment to
invest in high-return projects that
deliver advantaged feedstocks for
our differentiated, downstream
derivatives, while simultaneously
building strategic partnerships
that drive economies of scale and
improved capital efciency, said
Dow CEO Andrew Liveris.
As an investor in Dows Gulf
Coast project, Idemitsu and Mitsui
will receive ethylene integration
benets while improving the capi-
tal efciency of the cracker from a
Dow perspective, said executive
vice president Jim Fitterling. In
addition, Dow secures a reliable,
integrated, cost-advantaged source
of comonomers for our perform-
ance plastics franchise.
The facilities are currently in
the front end engineering and de-
sign (FEED) phase, which is ex-
pected to be completed in 2014.
These new facilities will in-
clude a wide range of technologies
that will produce differentiated,
high performance materials for the
fastest growing segments in Dows
existing markets, while providing
access to new markets and appli-
cations, said Fitterling. These
investments are also aimed at
businesses that have consistently
delivered a higher return on capi-
tal, which is clearly aligned with
our long-term strategy.
Dow said that its plans for a new
1.5m tonne/year ethane cracker at
Freeport are progressing, with de-
tailed engineering and the pur-
chase of long lead time equipment
having been approved. The crack-
er is expected to start up in 2017.
Dow is also lifting ethane crack-
ing capability at Plaquemine, Lou-
isiana. It restarted its 380,000
tonne/year cracker in St Charles,
Louisiana, in December 2012.
DERIVATIVES CAPACITY
A picture is slowly emerging of
how petrochemical producers in
North America intend to add value
to their already signicant local
ethylene cost advantage through
new derivatives capacities.
Graham vant Hoff, Shells new
executive vice president for chemi-
cals, said at a brieng on 14 March:
Its more than probable that we
will re-enter polyethylene.
Shell will not recreate a core
PE business it sold its PE inter-
ests, a stake in the Basell polyole-
ns joint venture, in 2005. But it
could add PE capacity to add
value to the ethylene it plans to
produce from a new world-scale
cracker in Monaca, Pennsylvania,
US, close to its own exploration
interests in the Marcellus shale.
We look at polyethylene very
much as a route to monetise ethyl-
ene, vant Hoff said. Shell has
also talked of building monoethyl-
ene glycol (MEG) capacity associ-
ated with the cracker investment.
The company has its own OMEGA
MEG process technology.
Vant Hoff also said that Shell
has a number of projects planned
for the US Gulf coast to help it cap-
ture more value from advantaged
natural gas liquids (NGLs) based
feedstocks but he gave no details.
We are looking to extend posi-
tions relative to our US Gulf port-
folio, he said. We are working
on a lot of things in the US Gulf.
Shell has capacities for olens and
rst line derivatives in the area.
Tom Brown and Regan Hartnell
in London also contributed to
this article
All quiet on
the Europe
phenol front
TRENDS P13
Idemitsu and Mitsui sign offtake agreement with US major to produce linear alpha olefns. Dow sets up polymers units
PROJECTS NIGEL DAVIS LONDON JOSEPH CHANG NEW YORK
Dow sets downstream plans
Be among the frst to hear
about chemical companies
plans: icis.com/news
Idemitsu and Mitsui
will receive ethylene
integration benets
while improving the
capital efciency of
the cracker
JIM FITTERLING
Executive vice president, Dow
Dows new units will produce performance materials for packaging
R
e
x

F
e
a
t
u
r
e
s
ICB_250313_009 9 21/3/13 16:43:38
MARKET INTELLIGENCE
www.icis.com 10
|
|
Do you agree or not?
We want your feedback.
Email joseph.chang@icis.com
icis.com/about/news
$/tonne, lm, import spot CFR China
LLDPE LDPE HDPE
CHINA POLYETHYLENE PRICES
1,100
1,200
1,300
1,400
1,500
Mar
2012
Mar
2013
W
hat a difference three months can
make. Back in December 2012,
polyethylene (PE) traders were re-
portedly stocking up like crazy
in anticipation of a bumper year
in the Chinese market.
The assumption was that the economic recovery of
late 2012 and January 2013, which was the result of per-
haps politically motivated stimulus spending, would
continue throughout this year.
But, as one Singapore trader describes, the outlook
has radically shifted. Chinas demand for PE is even
lower than immediately ahead of the Lunar New Year,
which took place in mid-February, he said.
For demand to be less than just before the New Year,
when most traders had already pulled out of the market
to avoid cargoes being stranded at ports during the holi-
day period, is remarkable. In the 10 years Ive been in
this business, this has never happened before, he said.
Trading has come to a virtual halt and re-exports
have increased, the trader noted. Re-exports comprise
resin shipped to China and held in bonded warehouses.
When that resin fails to nd a home in the domestic
market, it is shipped to other countries.
I got it wrong as I thought there would be a strong
recovery after the holidays, but it didnt happen because
of policy uncertainty, said the trader. Most other trad-
ers are in the same position. We all thought monetary
conditions would remain favourable.
Vincent Andrews, analyst with investment bank Mor-
gan Stanley, said that anecdotal evidence and bench-
mark integrated PE margins in Northeast Asia suggest
the anticipated demand recovery may be faltering.
Managements of companies attending Susquehanna
International Groups 2013 Chemicals Conference in
Boston, Massachusetts, on 14-15 March also noted the
disappointing near-term market conditions in China.
Chinese economic recovery has not rebounded as
fast as expected post the Lunar New Year and the man-
agements of the companies attending our conference
were somewhat surprised that the new Chinese politi-
cal leadership has not taken more aggressive steps to
stimulate the economy, said analyst Don Carson.
Restrictions on the property market, reduced liquidity
in the banking system and lower new lending in February
have reduced PE buying, said the Singapore trader.
People are worried that Beijing will have to take more
measures to cap property prices, as what has happened
so far is unlikely to work. They think that eventually in-
terest rates will have to be increased because overall ina-
tion is also rising. This is further dampening activity.
TAPPING DOWN INFLATION
But while the Peoples Bank of China (PBOC) is keen to
take a more aggressive stance on ination, government
agencies, such as the National Development and Reform
Commission, are eager to maintain the recovery, said an
11 March Reuters article.
February ination was, however, at 3.2%, up from
2.0% in January and close to the governments maxi-
mum annualised target of 3.5%.
The risk is that if the cost of living continues to rise at
this pace, the PBOC might win the battle, leading to an
increase in interest rates earlier than the fourth quarter,
the current consensus forecast.
A rise in interest rates would be a major blow to the
market, said the trader. And even if pro-growth govern-
ment agencies get their way for most of this year, the
PBOC looks set to continue its policy of reducing liquid-
ity as a tool to ght ination.
A further reason to expect less credit in the system is
that overall lending for January-February is ahead of the
central banks annualised target.
Take January and February together and new loans
are being extended at a [yuan (CNY)] 10tr [$1.6tr] rate
for the year [on an annualised basis], well above the
CNY8.5tr-9tr that Wang Jun, senior economist at the
well-connected China Centre for International Econom-
ic Exchanges, believes the PBOC is tasked with for
2013, said Reuters.
Measures to control the shadow-banking system also
seem likely. Total new credit, including loans through
the informal or shadow-banking system and ofcial
lending, hit an all-time high in 2012.
Chinas demand for PE is even
lower than immediately ahead
of the Lunar New Year
China PE demand sinks
Demand is now so weak in China that buying is less than immediately ahead of the Lunar New
Year, when markets had virtually shut down. The mood remains pessimistic
JOHN RICHARDSON PERTH
ICB_250313_010-011 10 20/3/13 16:18:03
|
|
11 www.icis.com
THINK TANK
MARKET INTELLIGENCE
R
e
x

F
e
a
t
u
r
e
s
The US says cyber attacks from China have reached an unprecedented scale
Top US intelligence and security offcials
have raised the threat of cyber attacks
and online espionage to crisis level, warn-
ing that the US will retaliate against any
major assault and naming China as the
chief perpetrator.
Tom Donilon, national security advisor
to President Barack Obama, said in a
speech that cyber attacks from China
have reached an unprecedented scale,
and he warned that the US cannot further
accept such intrusions.
While noting that US national security
issues are at stake in cyber space,
Donilon said that this is not solely a na-
tional security concern or a concern of the
US government.
Increasingly, US businesses are
speaking out about their serious con-
cerns about sophisticated, targeted theft
of confdential business information and
proprietary technologies through cyber
intrusions emanating from China on an
unprecedented scale, he said.
The international community cannot
afford to tolerate such activity from any
country, Donilon said, quoting Obama as
saying that we will take action to protect
our economy against cyber threats.
At a hearing before the House
Committee on Homeland Security, chair-
man Michael McCaul (Republican-Texas)
warned that a co-ordinated attack on US
natural gas, water and electric power sys-
tems could be devastating and result in
months of infrastructure shutdowns and
collapse of the nations economy.
This is not science fction, it is reality,
McCaul said, citing reports that China is
the source of nearly 90% of cyber attacks
against the US.
James Clapper, the top US intelligence
and counter-intelligence offcial, told a
Senate Intelligence Committee hearing
that the US could be hit by a major cyber
attack within the next two years, resulting
in long-term and wide-scale disruption of
services such as electric power.
Clapper, director of national intelligence,
said that while the chances of a catastroph-
ic cyber attack are small, US intelligence
agencies and owners and operators of criti-
cal infrastructure facilities must take action
to protect against such an assault.
In his wide-ranging testimony, he said
that such a destructive attack would re-
quire a level of technical expertise and
operational sophistication that only a few
nations or non-state actors possess. But
he said that such advanced cyber-intelli-
gence and cyber-espionage actors as
China and Russia are unlikely to launch
such a devastating attack against the US
outside of a military confict or crisis that
they believe threatens their vital interests.
The US could be hit
by a major cyber
attack within the
next two years
JOE KAMALICK WASHINGTON DC
CYBER THREAT REACHES CRISIS LEVEL
The positive news about the above inuences on in-
ation is that they are within Chinas means to control.
But another factor behind the rising cost of living
the surge in global oil prices is beyond Chinas control,
unless it raises subsidies on fuel prices.
Today, gasoline is at CNY9,630/tonne and diesel at
CNY8,810/tonne compared to June 2008s peaks of
CNY6,980/tonne and CNY6,520/tonne, said Paul
Hodges, chairman of UK-based chemicals consultancy
International e-Chem in a 13 March post on his ICIS
blog, Chemicals and the Economy.
Chinas gasoline price for 90 RON [grade] is thus
$4.60/gal [$1.20/litre] compared to current US prices of
$3.75/gal. European prices are even higher at $8.00-
$9.00/gal, he added.
The mood in Chinas PE market is very pessimistic
at the moment, said an Asia-based source with a North
America-headquartered polyolens producer.
Traders were stocking up like crazy in December
and January because they thought the recovery would
last. At one point before the Chinese New Year, some of
them had more than a months worth of inventory, com-
pared with the usual two weeks, the source said. They
have, as a result, been ofoading material to minimise
their losses, but I havent heard of any re-export trade
from China, although it seems possible.
Traditionally, the Chinese market has saved the
world, but the source added: Whilst prices are rising in
the US right now, they are falling in China.
Chinas PE spot prices across all of the grades fell by
$5-40/tonne during the week ended 15 March. This
marked the third week in a row of declining prices.
We are not only facing a period of weak demand, but
also one of increased supply, said the polyolens pro-
ducer. Middle East turnarounds are coming to an end
in April-May and new capacity is starting up.
But it is not all doom and gloom. Despite the likeli-
hood that Chinas overall growth in polyolens demand
will again be less than the increase in GDP in 2013,
some segments of the business are doing very well.
Demand growth from higher-value converters for
example, those producing high moisture-barrier PE lm
remains excellent. It is in the high single digits, said a
source with a second producer. These converters are
now very successfully taking on the Europeans because
they have become very sophisticated. They are produc-
ing excellent quality lms as a result of high degrees of
technical knowledge. And they are very cost-efcient
because of investment in automation.
Additional reporting by Joseph Chang
Managements of companies
attending Susquehanna
International Groups 2013
Chemicals Conference in
Boston also noted the
disappointing near-term
market conditions in China
ICB_250313_010-011 11 20/3/13 16:18:05
PRICE & MARKET TRENDS
For up-to-date information on more
than 120 global commodities, visit:
icis.com/about/price-reports
www.icis.com 12
|
|
Northeast Asian ethylene spot
prices have fallen to a three-
month low and could head fur-
ther south because of weak de-
rivative demand, market sources
said on 15 March.
Ethylene daily spot prices were
assessed at $1,250-1,270/tonne
(962.50-977.90) CFR (cost and
freight) northeast (NE) Asia on 14
March the lowest since 7 Decem-
ber 2012, and off a record four-
and-a-half-year high of $1,400-
1,430/tonne CFR NE Asia that was
achieved in late February this
year, according to ICIS data.
Ethylene spot prices had kicked
off 2013 on a strong note, mainly
driven by supply fundamentals.
Producers in South Korea had
limited spot availability because
of improved domestic demand
on the back of a pick-up in poly-
mer production in the months of
January-February.
EXPORTS TO US, EUROPE
Higher ethylene prices in Europe
and the US partly due to both
planned and unplanned cracker
shutdowns had also lured prod-
uct out of Asia, keeping supply in
the region snug, sources said.
The market rally in northeast
Asia started to lose steam by the
end of February as spot prices of
key derivatives ranging from pol-
yethylene (PE) to monoethylene
glycol (MEG) could not keep pace
with the hike in ethylene feed-
stock values.
As such, buying interest dwin-
dled from the leading China mar-
ket after the Lunar New Year holi-
days particularly as derivative
demand did not take off as strong-
ly as expected.
Before the Lunar New Year
holidays, ethylene buyers in
China had bought a lot of cargoes
but downstream demand did not
improve after the New Year and
stocks became too high, said a
Taiwan-based olens trader,
speaking in Mandarin.
Derivative PE and MEG spot
prices also weakened in recent
weeks partly in line with falls in
upstream naphtha and crude fu-
tures and amid macro-economic
concerns from the European debt
crisis to recent cooling measures on
the property market in China.
The ethylene market plunge had
caught some market players by
surprise as they had expected the
uptrend to last longer partly be-
cause of limited spot supply from
the region and the Middle East.
Both planned and unplanned
cracker turnarounds in Abu
Dhabi and Saudi Arabia in Janu-
ary-February had capped a lid on
exports from these two countries,
which led to a rmer market in
southeast Asia compared with
the northeast as the former tradi-
tionally receives ethylene from
the Middle East.
Ethylene spot prices in south-
east Asia were assessed at
$1,370-1,410/tonne CFR SE Asia
on 14 March.
EARLY PEAK
We had expected an extremely
good rst half and the market to
peak around mid-May but the
market has now peaked earlier
than expected, said a Japanese
olens trader.
The sharp pace of the decline
has also raised concerns among
ethylene buyers, most of whom
retreated to the sidelines by the
end of the week.
The market is very unstable
and we do not want to take risks,
said a vinyls producer based in
South Korea.
OLEFINS PEH SOO HWEE SINGAPORE
NE Asia ethylene set to keep falling
Downstream demand after the Lunar New Year holidays has been poor in Asia, as it is in Europe
$/tonne, spot CFR NE Asia
ASIA ETHYLENE PRICES
900
1,000
1,100
1,200
1,300
1,400
1,500
Mar
2013
Mar
2012
A drop in feedstock costs could
lead to a reduction in the April
contract price for US maleic an-
hydride (MA), sources said.
Contract prices rolled over in
March from February, and market
players agreed in early March that
supply and demand were in rela-
tive balance.
MA was assessed by ICIS at
93.20-99.20 cents/lb ($2,055-
2187/tonne, 1,582-1,684/tonne)
as of 12 March.
But the price of primary feed-
stock normal butane, also called
n-butane, led some market play-
ers to speculate that buyers would
begin lobbying for a price de-
crease in April.
With butane continuing to
drop, the buyers said, it was time
for producers to offer a reduction
in MA pricing.
SUPPLY SNUGNESS
But battle lines are being
drawn, the buyer said, as pro-
ducers are citing a snugness in
supply, brought on by some pro-
duction issues.
Major producer LANXESS was
just coming out of a planned turn-
around, and another producer
was said to be having production
issues. However, the latter was
not conrmed.
A producer said that with the
price of butane continuing to fall,
it would not be surprising that
there would soon be discussions
about a price decrease. As yet,
there have been no denitive dis-
cussions along those lines, the
producer said.
I think there will be some re-
duction the question is how
much that reduction will be, the
producer said.
INTERMEDIATES KEN FOUNTAIN NEW YORK
Battle lines drawn for US
April maleic anhydride
Cents/lb, molten, contract FOB US Gulf
US MALEIC ANHYDRIDE PRICES
90
92
94
96
98
Mar
2013
Mar
2012
ICB_250313_012-013 12 20/3/13 16:14:46
|
|
13 www.icis.com
India polystyrene
weakness shows
no sign of ending
TRENDS P19
The European phenol market re-
mains stagnant and no major
shifts in supply and demand dy-
namics are expected in the com-
ing months, producers and con-
sumers said on 15 March.
No big things are happening
and there are no arguments to
change the market. I dont agree
with people being pessimistic
2011 was a great year and so was
2012. January and February this
year have not been that bad, a
major producer said.
However, buyers across the
phenol chain say that business is
weak and there are no signs on
the horizon that things are going
to improve soon. They also spoke
about their individual market sec-
tors becoming more and more
competitive and many said they
had taken less volume than ex-
pected so far this year.
STRONG COMPETITION
A large buyer for the phenolic
resin sector said it took less phenol
than originally planned and that
business was under pressure be-
cause co-producers were being
very competitive on price. Accord-
ing to the buyer, spot phenol was
being offered in the market at a
price below its contract and as a
contract buyer this was a problem.
Quarter one was not great and
our phenol demand is by far not
what we thought and not at the
level we forecast. Were not tak-
ing full volumes on contract, the
buyer concluded. A second major
buyer in the nylon intermediates
market described phenol as ex-
tremely quiet.
Most manufacturers have re-
duced [production] to the absolute
balance of phenol demand and op-
timising for [by-product] acetone.
Apparently they [phenol produc-
ers] can make enough money on
acetone to compensate for the loss-
es on phenol, the buyer said.
The buyer spoke about down-
stream markets in the polyamide
[nylon] chain as being under tre-
mendous pressure.
Its all about trying to get costs
to the absolute minimum. We have
normal demand but we are ghting
for market share but not making
any money. Downstream end-users
dont care carpets, housing, tyre
cord they are just not willing to
absorb the cost, the buyer added.
Because of the drop in demand
for phenol derivatives, phenol op-
erating rates in Europe are estimat-
ed to be running at 70-80 % capac-
ity, but in the feedstock benzene
market, sources estimate phenol
output to be closer to 50-60%.
Demand for phenol and phenol
derivatives has been slowing
since July 2012 and operating
rates in Europe have been running
at low levels ever since. This has
largely been the result of a drop in
global demand for major phenol
derivative polycarbonate (PC).
However, with most phenol
derivatives heavily linked to the
coatings and construction indus-
tries, the below-average tempera-
tures across Europe have had an
adverse effect on demand so far
this month.
Phenol demand is low for
March from coatings and con-
struction because of the bad
weather. Normally things get bet-
ter in March but its still very
cold, said a phenol seller. An-
other seller also said customers
had yet to return to the market for
their spring purchases.
Meanwhile, very rarely does
phenol get a mention in the ben-
zene market, particularly by trad-
ers, but benzene sources have
noticed that there has been less
demand from the phenol market.
One normally very active ben-
zene trader said: Ive seen fewer
phenol nominations.
A phenol producer said: Ben-
zene people mentioning phenol,
now thats worth a mention. I
think its some sort of message but
I dont see the [phenol] market
being worse than three months
ago. Its been stable for ve to six
month now.
BENZENE DEPENDENCY
The unpredictable nature of major
feedstock benzene is problematic
for the phenol market, because it
is so heavily linked to the monthly
benzene contract price.
Phenol consumers have no in-
uence over the direction of ben-
zene, although from the top to the
bottom of the phenol chain, ben-
zene is a determining factor in not
only price but often also demand.
The high cost of benzene has
created what some described as
demand damage, but a major
phenol producer strongly believes
that it is simply a demand story
and not a feedstock price one.
Meanwhile, benzene spot pric-
es hit their lowest point since
May 2012.
On 15 March, March spot ben-
zene was trading $1,250-1,260/
tonne (963-970/tonne) CIF (cost,
insurance and freight) ARA (Am-
sterdam-Rotterdam-Antwerp).
INTERMEDIATES JULIA MEEHAN LONDON
All quiet on the Europe phenol front
Because of the drop in demand for derivatives, phenol operating rates in Europe are estimated to be running at 70-80%
/tonne, spot FD NWE
EUROPE PHENOL PRICES
1,200
1,250
1,300
1,350
1,400
Mar
2013
Mar
2012
Below-average temperatures have reduced phenol demand from coatings and construction sectors, further drying up market activity
R
e
x

F
e
a
t
u
r
e
s
ICB_250313_012-013 13 20/3/13 16:14:49
www.icis.com 14
|
|
Demand for spot polyethylene (PE)
in Europe is weak, and producers
are struggling to lift prices follow-
ing the 50/tonne ($65/tonne) in-
crease in the March ethylene con-
tract price as many sources now
expect an upstream decrease for
April, sources said on 15 March.
We are no longer targeting a
50/tonne increase, said one
supplier. For so long nobody has
been buying anything anywhere,
said a trader.
Producers had started the month
targeting hikes in line with the 50/
tonne rise in the ethylene contract
price but those goals soon softened
as it became clear that demand
would not support such levels.
Spot prices rose by some euros
at the beginning of the month but
offers are back to end-February lev-
els in mid-March and trading activ-
ity is very limited. Traders, howev-
er, are not able to buy new volumes
at workable price levels and nd
themselves chasing meagre sales.
Theres no cheap material on
the sourcing side. Were trying
hard to move quantities but its a
hard game right now, said anoth-
er trader. Producers spot offers are
also limited as most have adjusted
production to control inventories
in todays lacklustre market.
FALLING NAPHTHA
Now that naphtha prices have
begun to trend down there are ex-
pectations of a lower ethylene con-
tract in April, in spite of a heavy
slate of scheduled shutdowns at
the cracker level. Expectations of a
decrease in the April ethylene
monomer contract price have
begun to have a dampening effect
of demand and price expectations.
I am running down my stock,
said a large PE buyer. Itll [PE pric-
ing] go down in April. If you settled
early this month youll regret it.
It is more difcult to pass in-
creases through now compared to
the beginning of the month,
agreed a supplier.
Contractual volumes move
along as normal, as long as the
price is right, admitted a couple
of producers. We are hitting our
sales forecast for the month but
are not able to lift prices beyond
20/tonne, said one.
Another said: I am happy with
the demand, its just the prices they
want to pay I am not happy with!
One major supplier said busi-
ness was up by as much as 40/
tonne for March, but the starting
point was not clear.
Net low density polyethylene
(LDPE) prices are trading at
1,300-1,350/tonne FD (free de-
livered) NWE (northwest Eu-
rope). PE is used widely in the
packaging, household goods and
agricultural sectors.
/tonne, GP lm, spot FD NWE
EUROPE LDPE PRICES
1,000
1,100
1,200
1,300
1,400
1,500
Mar
2013
Mar
2012
Polyethylene (PE) demand in Tur-
key is low, at a time when the vol-
ume of offers from various regions
has increased and global demand
has taken a hit, sources said.
The market is asleep, said one
trader. People arent buying be-
cause they expect prices to fall.
In the past few days offers
have gone down drastically, said
another on 18 March.
Material from Europe is now
being offered into Turkey, as a re-
sult of at demand elsewhere in
the region. Low density polyeth-
ylene (LDPE) and polypropylene
(PP) offers have been heard.
OFFERS FROM EUROPE
PP offers from Europe are said to
be around 1,200/tonne ($1,558/
tonne) CFR, while LDPE is talked
at 1,260-1,270/tonne CFR. Euro-
pean product is not subject to
duty, so is higher than many of-
fers from dutiable areas on a CFR
basis. No European producer has
conrmed selling at such num-
bers but buyers in Turkey say they
have bought PP in particular.
High density polyethylene
(HPDE) is still offered from Saudi
Arabia at $1,600/tonne CFR, sub-
ject to 6.5% duty, but sources
question how much product is
behind these offers and stress that
such prices, conrmed by buyers
at the end of February, are no
longer workable.
Buyers price ideas for Iranian
HDPE are now at $1,500/tonne
CFR and sometimes below, and
little business is reported to have
been done. Holidays and truck
availability issues have also led to
a slowdown of this business, on
top of the hesitation from the
market in general.
Turkish buyers keep a close eye
on price movements in Asia, and
Iranian HDPE cargoes were offered
the week ended 15 March barely
above $1,300/tonne CFR in some
cases. The difference between
freight and the availability of trans-
port makes a big price difference
inevitable, but nevertheless Turk-
ish buyers expect levels to erode.
UNREALISTIC PRICES
Nobody is buying at $1,510/
tonne CFR let alone $1,600/tonne
[CFR], said one of the traders.
I was offered some HDPE at
$1,430/tonne FOB from Asia.
Have I bought? No, said another.
In the end, though, they are
running their factories, they will
have to buy, it added.
The local Turkish producer also
dropped its prices the week ended
15 March, by up to $25/tonne..
$/tonne, GP lm, spot CFR
TURKEY LDPE PRICES
1,250
1,350
1,450
1,550
1,650
Mar
2013
Mar
2012
POLYMERS LINDA NAYLOR LONDON
Demand weak for
PE resin in Europe
Producers fnd it diffcult to pass on a recent hike in the
feedstock ethylene contract price
Turkey polyolefns demand slows; import offers grow
POLYMERS LINDA NAYLOR LONDON
ICB_250313_014 14 20/3/13 16:12:34
Linda Sterner
Shift Leader, Oiltanking Texas City
We Can, We Care
Linda Sterner manages the ethanol blending unit at
Oiltanking Texas City with over 30 years of experience.
Despite all the regulations and the myriad of different
blending specifications, Linda s dedication to perfection
and her transparent communication bring tremendous
comfort to all stakeholders. Our customers trust that
Linda and her team make it all happen every day and
again, because they know she cares.
Your reliable storage partner for liquid bulk.
Admiralitaetstrasse 55 | D-20459 Hamburg Germany
Tel. +49-40-370990 0 | Fax +49-40-37099 499 | www.oiltanking.com
ICB_250313_015 15 21/3/13 11:21:21
www.icis.com 16
|
|
US acrylonitrile-butadiene-sty-
rene (ABS) buyers and sellers on
14 March were seeing nothing
but downward pressure with two
weeks to go until the monthly
contract settlement.
Several market participants
said that if all factors remain the
same, they see the March contract
price for general purpose US ABS
settling at below $1.30/lb ($2,866/
tonne, 2,207).
One factor pushing US ABS
prices lower is falling feedstock
prices, market sources said.
ABS is a plastic that is 40-60%
styrene, 15-35% acrylonitrile
(ACN) and 5-30% butadiene (BD).
The most commonly used compo-
sitions are made up of 60% sty-
rene, 20% ACN and 20% BD.
BUTADIENE RETHINK
The BD March contract settled
higher by 8 cents/lb at 84 cents/
lb, but high inventories and weak
demand are already making BD
buyers and sellers rethink that
price. Market sources said that if
the BD April contract were settled
today, it would come in some-
where between 80-82 cents/lb.
US Gulf spot contracts for ACN
remained unchanged the week
ended 8 March, despite the fact
that feedstock propylene dropped
by 6 cents/lb. Sources said the
drop in propylene was not enough
to cut the price of ACN but that
further reductions, which are ex-
pected, may move the ACN price
to under $1,900/tonne US FOB.
Some market participants were
warning of widespread weak de-
mand that resulted in deals in
Asia for $1,920/tonne CFR.
The one missing piece of the
ABS puzzle, market sources said,
is styrene. For the week ended 8
March, spot prices ranged from
74 cents/lb to 76.25 cents/lb US
Gulf FOB. One market participant
reported spot trades the week
ended 15 March ranging from 72
cents/lb to 74 cents/lb. Forecasts
earlier in the month had put spot
US styrene at about 78 cents/lb.
If its trading even at 74 or 75
[cents/lb], thats a signicant drop
from February, said one trader,
who noted the February spot ex-
port average was at 77.81 cents/
lb. Thats almost 3 cents/lb lower
and surely to have an effect on
the price of ABS.
Other market participants are
worried about continuing weak-
ness in Asia, where the ABS spot
price is at 85-90 cents/lb. With
weak demand in Asia, market
sources said they were worried
that Asian imports of ABS were
putting pressure on US prices.
RISE IN IMPORTS
According to the latest trade data
from the US International Trade
Commission, US ABS imports for
January rose by 14% to 11,325
tonnes from 9,949 tonnes in Janu-
ary 2012. Imports from Korea rose
83%, while Taiwan shipped 25%
more product to the US.
I regularly get quoted prices of
$1 [per tonne], said one market
source. Ive been buying materi-
al from Asia as low as 90 cents
[per tonne] delivered.
POLYMERS MARK YOST HOUSTON
US ABS faces downward pressure
Lower feedstock costs and imports weigh on prices. Continuing weakness in the Asia market is also a concern
$/tonne, DEL US Gulf
US ABS PRICES
3,200
3,250
3,300
3,350
3,400
3,450
Mar
2013
Mar
2012
Spot styrene monomer (SM) pric-
es in Asia appeared to be taking a
breather from sharp falls, but
could resume their downtrend in
the near term as supply will grow
long when turnarounds at region-
al plants are completed, industry
sources said on on 14 March.
Prices were hovering at above
$1,650/tonne (1,271/tonne) CFR
(cost and freight) China, after fall-
ing 5% from the start of the year
and hitting a low of $1,610/tonne
CFR China on 4 March.
With Asian and Middle Eastern
facilities completing their mainte-
nance by May, and [the] Taixing
Xinpu Chemical [SM plant] start-
up in late April, Asia SM supply
will be growing in the second quar-
ter, said a Korean trader.
China will get fresh SM supply
late next month, with the start-up
Taixing Xinpu Chemicals
320,000 tonne/year plant.
No imminent recovery in de-
mand is expected as the US and
eurozone economies are weak.
CARGO LIQUIDATION
SM traders were seen liquidating
cargoes, expecting consumption
of downstream styrenic resins to
decline, in line with the contin-
ued weakness in demand for
Asian-made products.
After falling to the low $1,600s/
tonne CFR China early this month,
SM prices seemed to have found
solid footing above $1,650/tonne.
Some speculators are cover-
ing their short positions, which is
sustaining prices this week, said
a Korean trader.
Some end-users were also
heard bidding for cargoes, provid-
ing further support to the market.
But this market consolidation
may be eeting as demand from
downstream styrenic resins sec-
tor remained lacklustre, some
market players said.
Expectations remains that res-
ins demand will stay soft on dis-
mal exports of nished goods by
China a key SM market.
Talks of deep-sea SM parcels
from the US and the Middle East
owing into Asia further weighed
on market sentiment.
AROMATICS CLIVE ONG SINGAPORE
Asia styrene monomer
pauses after 5% slump
$/tonne, CFR China
ASIA STYRENE PRICES
1,200
1,350
1,500
1,650
1,800
Mar
2013
Mar
2012
ICB_250313_016-017 16 20/3/13 16:08:35
|
|
17 www.icis.com
IndianOil SBR joint
venture to start
up in August
TRENDS P25
Global bearishness and softening
derivative demand has pulled the
European benzene market down
to its lowest point since May
2012, sources said.
While the US market posted a
slight recovery towards the end
of the week ended 8 March, one
North American source described
the gains as trivial.
The source cited caution among
some players following a sell-off in
the Asian benzene market, where
values dropped by as much as $40/
tonne (31/tonne) on 8 March.
The US benzene market is
still weak, said a European trad-
er, adding that lower derivative
demand was a key factor in the
recent fall in domestic pricing.
Styrene demand is lower with
the turnarounds. We are also see-
ing reduced nominations from
the phenol sector, so there is
plenty of [benzene] around.
European styrene numbers also
saw some erosion towards the end
of the week ended 8 March, with
players looking to move material
amid slower than expected con-
struction demand and the arrival
of imports into the ARA (Amster-
dam-Rotterdam-Antwerp) region.
However, the market was
bouncing back on 11 March, with
talk of one major player looking
to secure material.
Additionally, there is a growing
sense that the feedstock restrictions
that have plagued the benzene
market since early 2012 are starting
to ease, at least in the short term.
It looks like there is more pygas
[pyrolysis gasoline] being pro-
duced, said a source, but it added
it was also hearing contradictory
reports of more propane being used
in the steam cracking process.
PRICE ACTION
After deals for March delivery as
high as $1,380/tonne CIF (cost, in-
surance and freight) ARA early in
the week ended 8 March, the mar-
ket gradually lost ground ahead of
the European Petrochemical
Luncheon on 7 March.
Several sources noted that sen-
timent among benzene players at
the event was markedly bearish.
It has been a funny three
months since Christmas, said
one. There has been lots of liquid-
ity and volatility, but nobody has
been really making any money.
By 8 March, current month
values had dropped to $1,265-
1,290/tonne CIF ARA, before
deals were done at $1,265/tonne
and $1,275/tonne.
The March contract price was
settled at $1,380/tonne FOB (free
on board) NWE (northwest Eu-
rope) in US dollar terms, and
converted to 1,054/tonne.
Despite the current weakness,
several players believe European
pricing will not fall much further.
One trader said it sees $1,230/
tonne as the current oor, and that
prices are still historically high.
I dont see it moving much
lower than where it is now, unless
naphtha tanks, the trader said.
$/tonne, spot CIF ARA
EUROPE BENZENE PRICES
1,100
1,200
1,300
1,400
1,500
1,600
Mar
2013
Mar
2012
Buyers in the European acryloni-
trile-butadiene-styrene (ABS) mar-
ket are resisting price hikes of up
to 60/tonne for March contract
business because of at demand
and ample supply, sources said.
However, suppliers bullish
stance on prices may mean buyers
will not see much of a reduction
on March contract price targets.
Some producers had targeted
increases of up to 60/tonne ($78/
tonne) for March, citing higher
feedstock costs and good demand
in January and February as the
main reasons for the increase.
Other producers are waiting for
the outcome of the March feed-
stock acrylonitrile (ACN) contract
price before committing to a rm
gure for ABS hikes.
We are still waiting for ACN
[to settle] we will probably see
how raw materials are going to
change [this] week, a producer
said on 11 March.
Buyers initial reactions to the
60/tonne target were that it was
too high, and that current de-
mand levels did not warrant such
a large hike.
But producers are being bullish
on prices and not giving away
much ground in their negotiations.
Producers are being very per-
sistent and not accepting a rollo-
ver, a distributor said, adding
that it had had to accept increases
of up to 50/tonne for general
purpose grades of ABS.
Views on demand are mixed.
Producers have seen good demand
levels in February, which they ex-
pect to continue into March. While
not able to pinpoint the exact
cause of the increase, producers
said higher prices for Asian-pro-
duced ABS, as well as increased
spot enquiries for certain grades,
had kept demand satisfactory.
COUNTERBALANCED DEMAND
One supplier saw demand from
eastern European markets, as well
as Russia and Turkey, as keeping
demand levels consistent, coun-
terbalancing the drop-off in
southern Europe caused by weak
economic conditions.
However, buyers still see de-
mand as being fairly at, with
some experiencing a slight drop
compared with February. General
economic malaise in European
markets, particularly in the auto-
motive industry in southern Eu-
rope, has impacted ABS demand.
ABS prices rolled over in Feb-
ruary at 2,195-2,265/tonne free
delivered (FD) northwest Europe
(NWE) for compounding grade,
2,285-2,370/tonne FD NWE for
injection moulding (natural) and
extrusion grade (natural), accord-
ing to ICIS.
ABS is widely used in the auto-
motive and household goods sec-
tors, in the production of car inte-
riors and domestic appliances.
AROMATICS TRUONG MELLOR LONDON
Europe benzene market
reaches 10-month low
/tonne, injection moulding natural, FD NWE
EUROPE ABS PRICES
2,100
2,150
2,200
2,250
2,300
2,350
Mar
2013
Mar
2012
Europe ABS buyers
resist March hikes
POLYMERS MATT TUDBALL LONDON
Producers cite higher feedstocks, but buyers see fat demand
ICB_250313_016-017 17 20/3/13 16:08:37
Subscribe today
Your trusted weekly
summary of the global
chemical markets
A subscription to ICIS Chemical Business magazine brings you:
n The key drivers and their potential impact on the global chemical markets
n Analysis of short & long term price movements
n Supply and demand trends and the factors impacting them
n On the ground coverage in China and other growing regions
n A review of new plants, production capacities and shutdowns
n Regular special reports
ICIS Chemical Business is available in print, digital and new iPad app -
coming soon - the choice is yours.
www.icis.com
|
|
19 www.icis.com
Polymers in 3D
MARKET OUTLOOK P30
Indias polystyrene (PS) con-
sumption looks set to end the cur-
rent scal year at below 250,000
tonnes, representing a 6-7% de-
cline from the previous year, with
the weakness expected to contin-
ue and weigh on prices of the ma-
terial, industry sources said.
A growing trend of substitution,
particularly for high impact PS
(HIPS) by acrylonitrile-butadiene-
styrene (ABS), is partly to blame
for the weaker demand in the year
ending 31 March 2013, they said.
On 8 March, general purpose
PS (GPPS) prices were assessed at
an average of $1,920/tonne CFR
(cost and freight) India, down by
$2.50/tonne from the previous
week, while high impact PS
(HIPS) were steady at $2,030/
tonne, according to ICIS.
PS is widely used in casings of
household appliances, including
air-conditioners, refrigerators and
televisions which are referred
to as white goods.
Sale of white goods are de-
nitely down from last year that
has affected demand for PS, said a
source at a major Indian producer.
Uncertainty in the economic
outlook and rising domestic inter-
est rates have made Indian con-
sumers cautious, leading to lower
sales of electronics and house-
hold appliances, consequently
hurting PS demand, he said.
DOMESTIC PRODUCTION
Indias PS requirement is mostly
covered by domestic production,
industry sources said.
Major producers in the country
include Supreme Petrochem with
a 272,000 tonne/year capacity; LG
Polymers India with an 80,000
tonne/year capacity; and BASF
with a 60,000 tonne/year capacity.
India is also a major exporter of
PS to the Gulf Cooperation Coun-
cil (GCC) countries Bahrain,
Kuwait, Oman, Qatar, Saudi Ara-
bia and the UAE and East Medi-
terranean markets. India also im-
ports the material but only in
small volumes, mainly from Sin-
gapore or Taiwan.
PS has another major end-use
in food packaging, being the raw
material for the production of sty-
rofoam. It is the worlds fourth
most widely used polymer after
polyethylene (PE), polyvinyl
chloride (PVC) and polypropyl-
ene (PP).
SUBSTITUTION PREFERRED
High cost, backed by rm prices
of feedstock styrene monomer
(SM) is among the main deter-
rents to PS consumption as it en-
courages substitution.
For the most part of current s-
cal year, which started April
2012, HIPS prices in India were
rm as SM prices were kept high
by tight supply.
In September 2012, SM prices
rose to a record high of $1,820/
tonne FOB (free on board) Rotter-
dam. Prices of the feedstock have
also been on an uptrend for near-
ly a year, peaking at $1,800/tonne
CFR China in early January 2013,
according to ICIS.
PS converters, however, could
not easily pass on their high pro-
duction cost to consumers,
prompting cautious buying to
avoid an inventory build-up. A
number of them have begun to
evaluate substitutes such as poly-
ethylene terephthalate (PET) and
PP for applications in food pack-
aging, and the use of ABS instead
of HIPS, industry sources said.
ABS which is traditionally
more expensive than HIPS be-
cause of its better strength proper-
ties found increasing accept-
ance among manufacturers of
electronic appliances, as prices of
the rival material rose steeply,
narrowing the price gap between
ABS and HIPS.
CRT TV SWITCH-OFF
The gradual phasing-out of cath-
ode ray tube (CRT) televisions
(TVs) in India, with the advent of
new technology that made slim-
mer models possible, exacerbated
the decline in demand for HIPS.
ABS is used in the now popular
light-emitting diode (LED) and
light crystal display (LCD) TVs, as
it lends a glossy nish to applianc-
es. HIPS, on the other hand, tends
to give a duller and matt nish.
The phase-out of CRT TVs in
the country is likely to affect PS
demand further, as these form a
signicant portion of the PS mar-
ket, a source from another Indi-
an PS maker said.
PS is now relegated to the back
portions of LCD and LED TVs,
while for the visible areas that re-
quire a high-gloss nish, ABS is
now being used.
In the food packaging sector,
PET and PP are gaining populari-
ty in view of the high PS prices.
Plastic converters in the GCC
are also nding difculty passing
on the high PS prices to end-us-
ers, thereby also weakening the
demand for Indias PS, industry
sources said.
Supreme Petrochem and LG
Polymers are the major exporters
of PS to the Middle East.
$/tonne, CFR India
India GPPS
India HIPS
Styrene, CFR China
INDIA POLYSTYRENE PRICES
1,200
1,400
1,600
1,800
2,000
2,200
Mar
2013
Mar
2012
POLYMERS VEENA PATHARE SINGAPORE
India polystyrene
weakness shows
no sign of ending
A major substitution trend is taking place, with more ABS
being used in modern televisions
The phase-out of CRT televisions in India is hitting PS demand
R
e
x

F
e
a
t
u
r
e
s
Sale of white goods
are denitely down
from last year that
has affected demand
for polystyrene
SOURCE
Major Indian producer
ICB_250313_019 19 20/3/13 15:49:42
www.icis.com 20
|
|
European polyol contract settle-
ments in March have been mixed
between rollovers and increases
of 10-40/tonne ($13-52/tonne),
as higher upstream propylene
costs were weighed against fragile
downstream demand and reason-
ably good supply, said market
players on 13 March.
Despite the stable-to-rmer sen-
timent, any price increases in
March were largely incorporated
within the existing ranges. Europe-
an March contract prices remain
steady at 1,770-1,870/tonne FD
(free delivered) NWE (northwest
Europe) for exible polyols and
rigid polyols, according to ICIS.
GIVE AND TAKE
Numbers either side of the ranges
were also heard, but they were not
widely conrmed. One producer
said it had been rm on its price
stance and secured increases of
20-30/tonne for both exible and
rigid polyol monthly business in
March. However, it conceded that
it had also lost some volumes.
Other sellers had accepted roll-
overs for exible polyols in
March in most cases, albeit with
some minor selective increases.
They said that while there was an
underlying need to increase pric-
es across the board because of in-
tensied cost pressure, they said
it had been difcult to achieve be-
cause of strong competition and
modest downstream demand.
Flexible polyols buyers con-
rmed rollovers and minor in-
creases, with some variation, de-
pending on supplier. One customer
said it had concluded the bulk of
its exible polyol business at a roll-
over prior to news of the increase
in the propylene contract price for
March and said it accepted increas-
es of up to 30/tonne for limited
volumes only. A second buyer said
it had resisted any polyol price
rises in March, despite higher costs,
because of good availability. A few
other customers, however, said
they had accepted minor increases
based on higher costs only.
For rigid polyols, prices largely
rolled over into March, taking into
account a large proportion of quar-
terly business, where prices are
xed until the end of March. For
monthly business, which remains
limited, rollovers were heard, as
well as a few rises of 10-30/tonne.
SUBDUED DEMAND
Flexible polyols demand in the
downstream bedding and furniture
sectors remain subdued for eco-
nomic and weather-related rea-
sons. Rigid polyols demand from
the main downstream construction
sector is expected to seasonally
pick up over the next few months
weather permitting but this is
also likely to be weighed against
how the economy pans out.
Flexible polyols supply is gen-
erally described as good, but ad-
vanced polyols remain structur-
ally tight because of their lower
yield when compared with
standard grades. Players are
closely monitoring polyols sup-
ply over the next few months,
taking into account a spate of
polyol plant turnarounds and the
expected seasonal uptick in rigid
demand. Buyers, however, said
they do not expect to see any ad-
verse effects on supply as the
turnarounds are planned and de-
mand is modest anyway.
PLANT SHUTDOWNS
In manufacturing news, Dow
Chemicals polyols operations at
Terneuzen, the Netherlands, is
due to enter into a ve-week
planned maintenance turnaround
for all grades starting 22 March.
There is also market talk that
Shell Chemicals polyols facility at
Pernis in the Netherlands is also
expected to undergo planned
maintenance work over the next
few months, possibly in the early
part of the second quarter. How-
ever, this has not been conrmed.
Planned maintenance is under
way at Bayer MaterialSciences
polyols plant maintenance at Fos-
sur-Mer site in France. Details on
duration were not available.
POLYMERS HEIDI FINCH LONDON
Europe March polyols mostly steady
Flexible polyols demand is subdued while rigid polyols demand is expected to seasonally pick up
US March methyl methacrylate
(MMA) contracts are expected to
increase on strong demand and
higher feedstock costs, sources
said on 14 March.
With price-increase nomina-
tions of 5 cents/lb ($110/tonne,
85/tonne) and 7 cents/lb, market
sources said March contracts are
generally going up by 6 cents/lb.
The increase is partly driven
by raw materials, party by supply
and demand, a producer said.
The low-$1.20s/lb is where the
market is settling.
February contracts were as-
sessed by ICIS at $1.15-1.19/lb on
an FD railcar (free delivered via
railcar) basis.
Demand is strengthening most-
ly because US coatings producers
are ramping up production for the
busy spring and summer seasons.
Demand last year started un-
seasonably early, the producer
said. This year were expecting it
to stair-step and start a little later.
However, that strong demand
could face destruction from high
prices, especially as upstream
propylene values are falling.
This level is the classic tip-
ping point for this market, a
buyer said. I think this increase
will go through, but [its likely]
another one wouldnt.
Market sources agreed that
most demand from the coatings
market is coming from the remod-
eling of existing homes and some
new construction.
Additionally, February acetone
contracts increased by 4.5 cents/lb
month on month, adding strength
to March MMA price initiatives.
/tonne, contract FD WE
EUROPE FLEXIBLE POLYOL PRICES
1,750
1,800
1,850
1,900
1,950
Mar
2013
Mar
2012
Cents/lb, contract FD railcar
US MMA PRICES
100
110
120
130
Mar
2013
Mar
2012
US MMA prices expected to increase in March
INTERMEDIATES JOHN DIETRICH HOUSTON
ICB_250313_020-021 20 20/3/13 15:46:02
|
|
21 www.icis.com
Second chance
for refners on
the US east coast
MARKET OUTLOOK P32
US March acrylic acid and acr-
ylate esters contracts are begin-
ning to settle up but are lower
than levels sought by producers,
sources conrmed on 14 March.
The major sellers have each pro-
posed March hikes of 6-7 cents/lb
($132-154/tonne, 102-119/tonne)
on February feedstock pressure
February chemical-grade pro-
pylene (CGP) increases of 6 cents/
lb are driving the March acrylates
momentum, but persistent soft
demand is weakening suppliers
chances for a full settlement.
I am seeing March acrylates
settle at plus 4-5 cents/lb, a
buyer said. And, with propylene
falling off a cliff for March, its
going to be fun negotiating prices
for a change. I expect to get all of
this increase back in April, and
hopefully a little more.
EARLY DAYS
However, at least one seller in-
sisted that is too early to tell how
successful the pushback will be.
The producer also said there has
been less resistance than it ex-
pected, given continuing softness
from the coatings sector.
Although two buyers said de-
mand from the adhesives sector
has improved after a weak Janu-
ary, other sources said full-year
demand growth there is unlikely
to exceed estimated GDP of 2-3%.
Paint makers say architectural
coatings demand is still lagging
year-ago levels, but some sources
remain optimistic that demand
will pick up soon despite the delay
to the spring coatings season partly
because of inclement weather.
February glacial acrylic acid
(GAA) is in a range of $1.19-1.23/
lb, as assessed by ICIS.
$/lb, contract FD
US ACRYLIC ACID PRICES
1.10
1.15
1.20
1.25
1.30
Feb
2013
Mar
2012
European ethanolamine prices
are steady-to-rm moving from
February to March, but supply
remains ample for most grades
and demand relatively at from
most derivatives, sources said.
One seller of monoethanolanine
(MEA), diethanolamine (DEA)
and triethanolamine (TEA) said its
March prices are the same as Feb-
ruary. Weve seen no changes [in
price] to previous weeks. Its very
quiet and we expected after the
ethylene settlement that eth-
anolamine prices would increase,
the seller said on 13 March.
The March ethylene contract
settled at a 50/tonne ($65/tonne)
increase from the previous month.
For March, the seller quoted
MEA at 1,380-1,440/tonne FD
(free delivered) NWE (northwest
Europe), TEA was quoted at
1,400/tonne, with DEA at
1,080-1,200/tonne.
AVAILABILITY POSITIVITY
There are no availability prob-
lems, I see the market more long
than short. Even with a producer
having problems there has been no
impact on the market, it added.
Others felt no major surge in de-
mand but believed any length felt
in January and February had evap-
orated. Sources agreed the second
quarter typically brings the great-
est demand, particularly for ester-
quats (clothes softener) and any-
thing construction-related.
We announced to our custom-
ers an increase of 50-75/tonne [for
March], a major producer said.
It said its March MEA price was
on average 1,540/tonne FD
NWE, with DEA 25/tonne above
this price. Its lowest offer for TEA
was now 1,200/tonne, it added.
Looking ahead to April, the pro-
ducer said: We will be rm on
prices. Quarter two is always a
strong quarter. MEA and TEA go
into places where demand is better.
People buy more fabric softener
and construction only works when
the weather is getting better.
A third seller of ethanolamine
said it expects to see prices in-
crease in April due of various
outages taking place and because
demand is typically at its strong-
est in the second quarter.
The selling source said its March
prices were similar to February, al-
though it saw TEA above 1,200/
tonne. It said the increase in the fee
of feedstock ethylene oxide (EO)
had helped its business.
What helps us most is the EO
situation. The increase in the con-
tract fees has applied more pres-
sure, the producer said.
RECORD EO HIGHS
The March EO contract price as-
sessed by ICIS increased by 41/
tonne, reaching a record level at the
high end of ranges for northwest
Europe and the Mediterranean.
March contract prices were as-
sessed at 1,429-1,596/tonne FD
NWE and 1,484-1,641/tonne FD
Med (Mediterranean).
Major German producer BASF
will shut down its 500,000 tonne/
year feedstock EO plant in Ant-
werp, Belgium, for the rst three
weeks of May for planned mainte-
nance. This will mean halting eth-
anolamine operations, but BASF
was unable to give exact dates.
INEOS Oxide also has EO out-
ages planned: in late April at its
420,000 tonne/year plant in Ant-
werp, and at its 220,000 tonne/year
plant in Lavera, France, in June.
/tonne, monoethanolamine, contract FD NWE
EUROPE ETHANOLAMINE PRICES
1,300
1,350
1,400
1,450
1,500
1,550
Feb
2013
Feb
2012
INTERMEDIATES LARRY TERRY HOUSTON
US acrylates initiatives
weaken on soft demand
INTERMEDIATES JULIA MEEHAN LONDON
Europe ethanolamines steady-to-rm
Looking ahead to the second quarter, sources agree this is typically the strongest time of year for demand
ICB_250313_020-021 21 20/3/13 15:46:05
www.icis.com 22
|
|
US-based midstream company
Williams will proceed with
plans to build and operate an on-
purpose propylene plant in Al-
berta, Canada.
The propane dehydrogenation
(PDH) plant will have a capacity
to produce 1.1bn lb/year (500,000
tonnes/year) of polymer-grade
propylene (PGP), the company
said. In addition, the capacity
could be doubled in the future.
Williams expects the plant to
cost $900m (693m), and opera-
tions to start in the second quarter
of 2016. The plant will be close to
Williamss Redwater fractionation
plant near Edmonton, Alberta.
Redwaters fractionation opera-
tions are being expanded to pro-
duce about 5m bbl/year of propane
and 280m lb/year of propylene
from offgas derived from Albertas
oil sand production. The Redwater
operations, in fact, will be the pri-
mary source of propane for the on-
purpose propylene plant.
GULF COAST TARGET
The resulting propylene will be
sent to petrochemical plants
along the US Gulf Coast, Williams
said. The company expects the
PGP will be among the lowest-
cost PDH-sourced monomer in
North America.
Meanwhile, the company is ex-
ploring the development of new
propylene markets for its produc-
tion in Alberta, the company said.
The plant will use Oleex
process technology, provided by
Honeywells UOP, Williams said.
Were thrilled to be moving
full-speed ahead on Canadas rst
and only PDH facility. The project
ts strategically within Williams
operations in Alberta, leverages
our expertise in propylene and
adds further value to a byproduct
of oil sands upgraders, said
David Chappell, president of Wil-
liams Energy Canada.
Once operational, this new
propane dehydrogenation facility
will expand market opportunities
for Canada, feed the demands of
North Americas growing petro-
chemical industry and allow for
the creation of a new value chain
in Alberta, he added.
RETURN ON INVESTMENT
Williams CEO Alan Armstrong
said: We expect the PDH facility
to deliver a very attractive return
on investment as well as provide a
long-term natural hedge of the
propane volumes we control in
our Canadian offgas processing
business. Our planned PDH facil-
ity will enable Williams to capture
the full value between natural gas
and polymer-grade propylene
rather than just the value between
natural gas and propane.
Williams set to go ahead with PDH plant in Alberta
PROJECTS AL GREENWOOD HOUSTON
Asias butadiene (BD) prices may
drift below $1,800/tonne (1,386/
tonne) this month after a 9%
slump the week ended 8 March,
as supply outstrips demand be-
cause of a weak downstream syn-
thetic rubber market, industry
sources said.
On 8 March, spot prices were
assessed at $1,860/tonne CFR
(cost and freight) northeast (NE)
Asia, down by $190/tonne or 9%
from the previous week, accord-
ing to ICIS.
Demand has remained sub-
dued, much to the chagrin of trad-
ers that had stocked up on BD ear-
lier in anticipation of a resurgence
in Chinese demand after the week-
long Lunar New Year holiday. The
key China market was on holiday
from 9-15 February.
CONSUMERS RETREAT
Instead, major BD consumers
the synthetic rubber producers
retreated to the sidelines after the
Lunar New Year, forcing traders
with BD stocks in hand to cut
their prices below $1,900/tonne
CFR NE Asia in the week ended 8
March to draw buying interest,
industry sources said.
There are more cargoes chas-
ing too few customers, so traders
were forced to [lower] the BD
prices if they wished to attract
buyers, an industry source said.
BD is a raw material used in
the manufacture of synthetic
rubbers, which go into tyres for
the automotive sector. A sluggish
global automotive market has
weakened demand for synthetic
rubbers and consequently, for
raw material BD.
In February, car sales in China
and India have fallen. China is the
worlds largest automotive car
market, while India is an emerging
market for automotive makers.
Major car makers, including
General Motors, Honda Motor
and Mazda Motor reported lower
sales in China last month, while
Maruti Suzuki and Tata Motors
reported steep falls in sales in
India in the same period.
HIKES RESISTED
In light of the weak macroeco-
nomic conditions, synthetic rub-
ber producers, in particular, the
butadiene rubber (BR) makers,
have been nding it difcult to
raise prices amid a strong resist-
ance from the tyre makers.
Asia BR makers have attempt-
ed to hike offers to $2,700-2,800/
tonne CFR NE Asia but have
been unsuccessful.
Prices have stayed at an average
of $2,600/tonne CFR NE Asia since
28 February, ICIS data showed.
Falling prices of natural rubber
(NR) a substitute product for BR
in making tyres are adding to the
woes of BR producers. NR prices
have declined by more than $200/
tonne since early February.
SMR 20 NR prices were at
$2,900/tonne FOB (free on board)
Malaysia at the Malaysian Rubber
Exchange on 11 March, down
from $3,130/tonne FOB Malaysia
on 6 February.
POOR DEMAND OUTLOOK
Demand for neither synthetic
rubber nor natural rubber is ex-
pected to pick up signicantly,
given the weak economic condi-
tions across the globe.
Europe is still mired in a debt
crisis, while the US trying to bol-
ster its fragile economy.
It is going to be a difcult year,
given the uncertain global market
outlook, and we will adopt a cau-
tious stance, a tyre maker said.
OLEFINS HELEN YAN SINGAPORE
Asia BD price slump may continue
Butadiene prices plunge and the downturn may not be over as the downstream synthetic rubber market is weak
$/tonne, CFR NE Asia
ASIA BUTADIENE PRICES
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Mar
2013
Mar
2012
ICB_250313_022-023 22 20/3/13 16:01:46
|
|
23 www.icis.com
BASF and Dow Chemicals methyl
di-p-phenylene isocyanate (MDI)
facilities in northwest Europe will
run at reduced operating rates dur-
ing March and possibly until the
end of April respectively because
of ongoing feedstock constraints,
according to company sources.
Output at Dow Chemicals MDI
facility at Stade, Germany, which
has capacity to produce 200,000-
220,000 tonnes/year has been re-
stricted over the last few months.
Reduced MDI operating rates
at Stade are expected to continue
until upstream maintenance is
carried out at the companys other
site, scheduled for April.
We dont expect any ramp-up
at [the MDI plant in] Stade until
May, said a Dow source.
BASFs unit at Antwerp, Bel-
gium, whose nameplate capacity
of 560,000 tonnes/year makes it
the largest MDI unit in Europe, has
run at reduced rates since Febru-
ary, for upstream-related reasons.
Planned maintenance is also
expected at Huntsmans MDI op-
erations at Rozenburg, the Neth-
erlands, in mid-March for around
four weeks. However, this has not
been ofcially conrmed.
The combined MDI capacity at
the Dutch site is estimated by ICIS
at 400,000 tonnes/year.
The European crude MDI mar-
ket is largely balanced, despite
these output constraints, as they
are being weighed against ongoing
low season demand from the main
downstream construction sector.
One manufacturer, however,
suggested the crude MDI market
could tighten in March if demand
seasonally improves and coincides
with both planned and unplanned
output constraints at European
MDI plants over the next month.
ECONOMIC CONSTRAINTS
However, some crude MDI buyers
said they have not experienced
any supply limitations, because
demand is low, and they question
the extent of any seasonal pick-up
in consumption given the ongo-
ing economic constraints.
One crude MDI customer con-
siders supply plentiful and said
one producer affected by some
output constraints is still offering
volumes. However, this has not
been conrmed at source.
There is some talk, however,
that pure MDI availability is limit-
ed, because as a by-product of MDI
manufacturing, its lower yield
means it is more affected by out-
put constraints than crude MDI.
Consumption for pure MDI is
reasonable to seasonally healthy.
MDI March settlement informa-
tion has so far shown rollovers to
increases of 20-75/tonne ($26-
97/tonne).
/tonne, contract FD WE
Crude MDI
Pure MDI
EUROPE MDI PRICES
2,000
2,050
2,100
2,150
2,200
Feb
2013
Mar
2012
ISOCYANATES HEIDI FINCH LONDON
BASF, Dow reduce
MDI output in Mar
Facilities in northwest Europe to run at reduced rates
during March and April on lack of feedstock

G
r
a
i
n

P
r
o
c
e
s
s
i
n
g

C
o
r
p
o
r
a
t
i
o
n
3.375X9.6875_GPC_alcohol_industrialNEWlogo.indd 1 9/29/10 3:42 PM
ICB_250313_022-023 23 20/3/13 16:01:48
Subscribe today
Your trusted weekly
chemical markets
www.icis.com
|
|
25 www.icis.com
Confdence
shines out
AFPM SUPPLEMENT
Styrene butadiene rubber (SBR)
prices fell during the week in Asia
as plunging feedstock butadiene
(BD) prices, abundant supply and
weak demand forced traders to sell
off their stocks at sharply reduced
prices, industry sources said.
Non-oil grade 1502 SBR prices
were at $2,350-2,450/tonne
(1,809-1886/tonne) CIF (cost,
freight, insurance) China on 13
March, down by $50-100/tonne
from the previous week, accord-
ing to ICIS data.
Chinese domestic non-oil
grade 1502 prices fell by yuan
(CNY) 1,000/tonne ($161/tonne)
to CNY16,000/tonne EXWH (ex-
warehouse) during the week, ac-
cording to Chemease, an ICIS
service in China.
HIGH INVENTORIES
Things are really bad. There is
no demand for SBR, as everyone
is holding high inventories, in-
cluding traders, producers and
tyre makers, a producer said.
We may cut the operating rate
of our SBR plant in the second
quarter to 70-80% capacity, as
demand is really weak, the pro-
ducer added.
The sharp fall in SBR prices
was triggered by the plunging
feedstock BD costs, industry
sources said.
Feedstock BD prices fell by 9%,
or $190/tonne, from the previous
week to $1,860/tonne CFR (cost
and freight) northeast (NE) Asia on
8 March, ICIS data showed.
BD is a major raw material in
SBR, making up around 70% of its
composition and production costs.
In view of the plummeting BD
prices, traders have quickly liqui-
dated their SBR stocks as they
fear further price declines.
The clearing out of SBR stocks
was also fuelled by recent weak
economic data from China,
which showed slowing industri-
al production growth and ag-
ging retail sales in the worlds
second largest economy.
Chinas industrial output had
the weakest start to a year since
2009, showing only a 9.9%
growth for January-February,
compared with 10.3% in Decem-
ber last year.
SALES GROWTH SLOWS
Meanwhile, Chinese domestic
retail sales growth fell from
15.2% in December to 12.3% in
January-February.
Figures for January-February
are combined to even out the im-
pact of the Lunar New Year holi-
day, which fell on 9-15 February
in China this year. This ensures
consistency when comparing
with past years gures.
Meanwhile, the high inventory
levels of natural rubber (NR) and
SBR at warehouses at Qingdao in
Shandong province are adding to
the woes of SBR producers.
It will take about two months
for the [NR and SBR] stocks to
clear, as demand is really weak,
an industry source said.
NR and SBR are substitutes for
each other in the production of
tyres in the automotive industry,
so their prices tend to have an im-
pact on each other.
SMR20 NR prices closed at
$2,790/tonne FOB Malaysia at
the Malaysian Rubber Exchange
(MRE) on 13 March, down by
$340/tonne from 6 February,
when prices were at $3,130/tonne
FOB Malaysia.
Market sentiment is weak and
the second quarter may be worse
than expected, another industry
source said.
$/tonne, non-oil grade 1502, spot CIF China
ASIA SBR PRICES
2,000
2,500
3,000
3,500
Mar
2013
Mar
2012
PETROCHEMICALS HELEN YAN SINGAPORE
Asia SBR prices
fall on lower BD
Feedstock BD prices fell by 9%, or $190/tonne, from the
previous week to $1,860/tonne CFR NE Asia on 8 March
IndianOils joint venture styrene
butadiene rubber (SBR) plant at
Panipat, Haryana, is due to start
operations in August.
The plant is likely to run at
around 60% for three months
after which operations will be
ramped up to 80%. We are likely
to see full operations in Q1 2014,
said Siddhartha Mitra, executive
director for petrochemicals at In-
dianOil, on the sidelines of the
Petrochemical Conclave in Gur-
gaon organised by the company.
The 120,000 tonnes/year plant
is a joint venture between Indi-
anOil, TSRC, of Taiwan, and
Marubeni Corp. It will have two
lines, each with a 60,000 tonne/
year capacity.
The plan is to sell the entire
volume in the domestic market.
We have already started discus-
sions with tyre manufacturers,
he added.
As the product approval proc-
ess at tyre companies is likely to
take time, the joint venture will
initially sell higher volumes to
the non-tyre sector.
Feedstock butadiene would be
sourced from IndianOils naphtha
cracker at Panipat while styrene
would be imported.
We have the potential to pro-
duce 140,000 tonnes/year of buta-
diene at the Panipat cracker, we
will initially use about 80,000
tonnes/year at the SBR plant and
sell the balance locally or export,
said Mitra.
In the longer run, the joint ven-
ture also plans to add a third SBR
line of 60,000 tonnes/year.
IndianOils board has cleared
this investment, we are now wait-
ing for the partners to secure
board approval, he added.
Additional reporting by Prema
Viswanathan
IndianOil SBR joint venture to start up in August
PROJECTS MALINI HARIHARAN GURAGON, INDIA
IndianOil has started discussions with local tyre manufacturers
R
e
x

F
e
a
t
u
r
e
s
ICB_250313_025 25 20/3/13 15:40:52
regardless of whether the
compound is a blend of
nylon 6 and nylon 6,6 or
whether it is reinforced with
glass bres or carbon bres.
LANXESSs Durethan A polymer
is based on nylon 6,6, while its
Durethan B is based on nylon 6.
Because of its knowledge of the
compounds performance,
LANXESS can model the part
through computer engineering,
Dooley said. That will give the
OEM industry the condence to
switch from metal to plastic.
MEXICO AUTO GROWTH
Mexicos large automobile industry
will continue growing quickly in
the upcoming years, increasing the
demand for plastics, said Dooley.
The industry has already been
seen to have recovered from the
recession. In 2012, automobile
production reached its highest
level since at least 2008, accord-
ing to the Asociacion Mexicana
de la Industria Automotriz
(AMIA), a trade group that repre-
sents automobile producers.
Many of the vehicles produced
in Mexico are exported. Mean-
while, Mexicos light vehicle
sales reached 987,747 in 2012, up
9% year on year, according to the
Asociacion Mexicana de Dis-
tribuidores de Automotores
(AMDA), a trade group represent-
ing auto distributors in Mexico.
2012 was the third best and
strongest year since 2008, ac-
cording to AMDA.
Automobiles are a major
consumer of chemicals.
The American Chemistry
Council (ACC) estimates
that each vehicle contains
an average of $3,297 worth
of chemicals, such as acrylo-
nitrile-butadiene-styrene (ABS),
nylon and polycarbonate (PC).
LANXESS expects demand for
its products from the Mexican au-
tomobile industry to grow by dou-
ble digits in the next 3-5 years,
Dooley said. The trend will con-
tinue. We are seeing more and
more investment in Mexico.
www.icis.com 26
|
|
POLYMERS AL GREENWOOD MEXICO CITY
Automotive use of nylon could grow
LANXESS director expects further growth in use of nylon to replace metal in vehicles
We see quite a bit
of opportunity in
the auto industry,
particularly in the
body or the space
frame of the vehicle
BRENDAN DOOLEY
Director of sales and OEM
development, LANXESS
stricter emission regulations as
lighter vehicles consume less
fuel, he added.
This trend towards lighter ve-
hicles could lead to nylon substi-
tuting more parts in an automo-
bile, Dooley said. We see quite a
bit of opportunity in the auto in-
dustry, particularly in the body or
the space frame of the vehicle.
In addition, companies are de-
signing automobiles with smaller
engines, Dooley said. To get more
power out of a smaller engine, au-
tomakers are putting turbo charg-
ers on the engines. That, in turn,
is increasing demand for high-
temperature turbo ducts.
PLASTIC TURBO DUCTS
Normally, those ducts would be
made from metal, Dooley said.
However, LANXESS is replacing
them with plastic.
LANXESS is also researching
more applications for nylon com-
pounds. Such applications, how-
ever, will not come from simply
replacing metal with nylon.
Instead, such innovation will
come from knowing how nylon
compounds will behave in a par-
ticular application, Dooley said,
LANXESSs
Durethan
polyamides
can with-
stand high
pressure
Nylon compounds, which have
already replaced metal in several
automobile parts, still have much
room to grow as the raw material
for vehicle components, an exec-
utive at German specialty chemi-
cal producer LANXESS said.
Nylon compounds are resistant
to both heat and grease, making
them an ideal material for compo-
nents under the cars hood, said
Brendan Dooley on the sidelines
of the Plastimagen 2013 plastics
conference in Mexico City.
Dooley is the director of sales
and OEM (original equipment
manufacturers) development as
well as manager for the NAFTA
(North American Free Trade
Agreement) region for
LANXESSs high-performance
materials in Mexico.
FABRICATION ADVANTAGE
Nylon is a popular raw material
because it performs well, lowers a
vehicles weight and is less expen-
sive than metal, Dooley said. Auto
producers can save money, be-
cause it is much easier to fabricate
parts using nylon compounds in-
stead of metal, he added.
For example, metal threading
requires special and expensive ma-
chining. For nylon, those threads
can be moulded, Dooley said.
Because nylon parts are easier
to fabricate, they can be made at
a greater degree of precision than
metal parts, Dooley said. This
improves the alignment of parts
such as headlights throughout
the automobile.
Nylon parts can also absorb
more energy than metal during
crashes, making automobiles
safer, Dooley said. Nylon absorbs
vibrations as well, making auto-
mobiles ride smoother and quiet-
er, he added.
Meanwhile, nylon compounds
can signicantly reduce the
weight of a vehicle, especially if
they replace the parts made with
steel, Dooley said.
Automobile makers are eager
to lower the weight of their vehi-
cles, so they can comply with L
A
N
X
E
S
S
ICB_250313_026 26 20/3/13 15:39:19
Subscribe today
Your trusted weekly
chemical markets
www.icis.com
The 17th World
Chlor-alkali Conference
Thursday 20
th
& Friday 21
st
1une 2013 5ingapore
"II is a congregaIion Io meeI Ihe key pIayers in Ihe indusIry"
Marketing Advisor, SABIC-SADAF
Produced by:
Attend the 17th World Chlor-alkali
conference to:
Hear !rom Ieading indusIry
experIs incIuding.
Review the gIobaI suppIy and demand baIances !or
chlorine and caustic soda
Receive the IaIesI in!ormaIion regarding nev capaciIies
and pIanned projecIs worldwide
InvesIigaIe drivers and chaIIenges in key dovnsIream
markeIs a closer look at the market situation for PVC,
alumina and pulp and paper
Reviev Ihe impIicaIions o! Ihe Carbon Emission Trading
5cheme for the chemical industry
Take a cIoser Iook aI Ihe saII markeI in Asia-Pacic
Discover Ihe gIobaI Irends in Ihe chemicaI Ianker markeI
and the implications for shipping liquid caustic
Andrev M. 1ones, Vice President Chlor-
Alkali & Vinyl, DOW CHEMICAL
fred PeIerson, Chairman, PROE
ECONOMIC5 U5A
Mayank 5. 5harma, Chief Marketing
Ofcer, ADITYA IRLA
Charles Fryer, Chairman, TECNON
ORICHEM UK
VIadimir M. 5edivy, President, 5ALT
PARTNER5
Mike Anderson, Energy Markets Editor,
LOOMERG NEW5, 5INGAPORE
Adrian rovn, Senior Research Analyst,
5IMP5ON, 5PENCE & YOUNG (55Y)
PeIer Kahn, Director, South East Asia,
POYRY MANAGEMENT CON5ULTING
1aneI WrighI, Business Manager Chlor-
Alkali & Vinyls, TECNON ORICHEM UK
For more information and to register your place:
vvv.icis.comlvorIdchIoraIkaIi
+44 (0)20 8652 3887 or

evenIs.regisIraIionicis.com
Please quote promo code RYU94114 when registering your place.
apore
Group
discounts
avaiIabIe!
uoIe promo code
RYU94114
Last years conference was our largest yet with more than
120 gIobaI senior chIor-aIkaIi execuIives from 30 different
countries in attendance, and we expect 2013 to be even bigger.
Make sure you register your place today.
Drinks Reception Sponsor:
Sponsor:
PLANTS & PROJECTS
|
|
29 www.icis.com
US shale gas
boom drives
cracker wave
SUPPLEMENT P8
NEW PROJECTS AND PERMANENT PLANT SHUTDOWNS
9-15 MARCH 2013
NEW PROJECTS
Company Location Product Capacity* Process Contractor Cost Start-up Status
Bunge Fertilizantes Nova Mutum, Mato
Grosso do Sul, Brazil
biodiesel 150,000
cubic metres
- - - Mar 2013 C
China Resources
Packaging
Zhuhai, Guangdong,
China
polyethylene
terephthalate (PET)
(x)300,000,
600,000T
- - - - P
Indonesia/Ferrostaal West Papua, Indonesia propylene tbc - - - 2019 S
dimethyl ether (DME) 200,000 - - - 2019 S
methanol 1m - - - 2019 S
polypropylene (PP) 400,000 - - - 2019 S
LyondellBasell US polyethylene (PE) 454,000 - - $200m 2016 S
PT Pertamina/PTT Global
Chemical
Java, Indonesia ethylene 1m - - - 2017 P
SK Gas Ulsan, South Korea propylene 600,000 CB&I
Lummus
CB&I Lummus - 2016 P
Ube Industries/Lotte
Chemical/Mitsubishi
Johor, Malaysia polybutadiene rubber 50,000 - - - 2014 P
Notes: *Capacity: fgures given in tonnes/year; tonnes/day are converted by multiplying by 330. (x) = expansion; T = total capacity including expansion.
Start-up: Dates given are for planned start-up. H1 = 1st half year; H2 = 2nd half year; Q1 = 1st quarter; Q2 = 2nd quarter; Q3 = 3rd quarter; Q4 = 4th quarter.
Status: S = study; P = planned; A = approval; E = engineering; U = under construction; C = completed; D = delayed.
Find out more at: www.icis.com/SupplyDemandService
Alternatively email: allison.farone@icis.com
Supply & Demand service
Navigate your way through the changing market-place
ICIS can offer you a service that provides a wealth of market data on refning, petrochemical feedstock,
base chemical, intermediates and derivatives. The service gives you:
Four databases via a single online interface Global data across 160 countries and 100 markets
Historical data and projections from 1978 to 2030 Direct contact to our analysts
Access to additional consultancy support
ICIS-supply_demand_filler_third_hori_V6.indd 1 08/03/2013 14:04
ICB_250313_029 29 20/3/13 15:37:28
www.icis.com 30
|
|
Sign up to receive free ICIS updates
by email, tailored to the markets you are
interested in. Visit icis.com/keep-in-touch
MARKET OUTLOOK INNOVATION
TRACY DANG HOUSTON
Demand is growing rapidly for new technologies in 3D printing that use polymers
such as acrylonitrile-butadiene-styrene (ABS), polycarbonate (PC) and polyamide
Polymers in 3D
Stratasys equipment can create customised pieces such as this turbine
I
magine a car with a frame that was built by
depositing thin layers of composite mate-
rial until they are fused into a solid, or a
robot with parts that were made by a spe-
cial machine that makes three-dimensional
prints. How about prosthetics or implants
created with such precision that they can be
customised for each individual?
It has all been accomplished recently with
additive manufacturing, more commonly
known as 3D printing.
Additive manufacturing is the process of
joining materials, usually layer upon layer, to
make objects from 3D model data, typically by
using computer-aided design (CAD) software.
It is a rapidly growing industry with a
compound annual growth rate of 29.4% in
2011, according to Wohlers Associates, a
consulting rm that specialises in additive
manufacturing. Associate consultant Tim
Caffrey said the rm does not have 2012 g-
ures, but the additive manufacturing indus-
try sold more than $1.7bn (1.3bn) in prod-
ucts and services in 2011.
3D printing is changing the way products
are designed and manufactured, particularly
through traditional subtractive methodolo-
gies, Wohlers Associates said.
Its better for the environment because it
reduces waste, said Jeff DeGrange, vice presi-
dent of Stratasys, which owns an industrial
line of 3D printers.
With additive manufacturing, you only
use as much material as you need for the part
youre printing, DeGrange said. But with
machining, youre shaping objects by remov-
ing material from a larger block until you
S
t
r
a
t
a
s
y
s
ICB_250313_030-031 30 20/3/13 15:30:54
www.icis.com 25 March-7 April 2013
|
|
31
MARKET OUTLOOK INNOVATION
modify these polymer feedstock materials,
Stonecash said. I have a very limited range in
type of materials used for rapid prototyping.
For example, with ABS, you want to touch
and feel it, but you dont want to drop it.
Now that they have gotten better with this
technology, they can use different types of
materials stronger plastics that melt at high-
er temperatures and you can use it for some-
thing rather than just a model, he added.
PolyOne will scale up the polymer feed-
stock and develop engineering materials that
can be used to create prototypes and produc-
tion parts.
The company currently sells resin formula-
tions and colour additives for producing pro-
totype parts for polycarbonates, ABS and
polylactic acid applications.
We are now moving toward the produc-
tion of engineering polymers to be used in the
production of manufactured parts, Hughes
said. Resin formulations being developed in-
clude nylons [polyamide], high-temperature
polymers like PEEK [polyetheretherketone],
polyetherimides [PEI] and polyimides [PI].
In addition, Stratasys will integrate the new
material into its additive manufacturing sys-
tems, and Rapid Prototype Plus Manufactur-
ing (RP+M) will handle the manufacturing.
The push behind this is with the materials
that can be used for parts in the aerospace in-
dustry. You lose a lot of money to create a
$20,000 tool to make a couple of hundred
parts, said Patrick Gannon, a spokesman for
RP+M. From that perspective, it doesnt
make any sense. If we can nd a material [that
can be used in 3D], we have a huge market out
there for companies that are looking for that
sort of thing.
Additive manufacturing recently made head-
lines when US President Barack Obama men-
tioned it in his state of the union address on 12
February. He said it is a priority to make the US
a magnet for new jobs and manufacturing.
The National Additive Manufacturing Inno-
vation Institute (NAMII) is a pilot centre estab-
lished in August 2012 in Youngstown, Ohio, to
accelerate such technologies in the US and in-
crease domestic manufacturing competition.
The NAMII is the rst of up to 15 institutes
in the National Network for Manufacturing In-
novation (NNMI), a $1bn initiative announced
by Obama in March 2012 that will help inte-
grate capabilities, focus enterprise and address
have the desired form, so there is a good bit
of wasted materials.
Additive manufacturing can also save im-
pressive amounts of time and money when
used correctly, Wohler Associates added.
EVOLVING INDUSTRY
The concept has been around since 1984
when Charles Hull developed the technology.
He later founded 3D Systems, which pro-
duced the rst commercial 3D printing ma-
chine. In 1988, the company developed the
rst version for the general public.
Prototyping is touchy-feely, and it gives
customers a model rather than a complicated
engineering design, said Jared Stonecash,
an engineer in composites manufacturing
and testing at the University of Dayton Re-
search Institute (UDRI) in Ohio. Its some-
thing they can physically put in their hand.
Also, 3D printing allows organisations to cre-
ate a prototype without the investment in the
tooling equipment used to create the model.
Once the investment is made, it is very dif-
cult and very expensive to make design
changes to the model, Stonecash added. 3D
printing is a much simpler, much easier way
to ne-tune your parts by 3 degrees or raise
the ceiling by an inch.
But 3D printing technology has come a
long way from its early days of making mod-
els and prototypes.
In this next horizon, providers are ena-
bling engineers to design parts on their com-
puter and then create the physical part using
the same digital data, said Thomas Hughes,
program director for open innovation at Poly-
One, a formulator and provider of specialised
polymer materials.
Instead of merely printing a picture of the
design, they are able to print an actual pro-
duction part for use in an automobile, jet en-
gine, operating room or other application,
Hughes said. Another option is to print the
tooling required to mass-produce parts.
FUNDED RESEARCH
The additive manufacturing industry is al-
ready advancing in leaps and bounds, but
companies and research centres are exploring
new innovations and applications to progress
the technology even further.
UDRI is trying to nd a specialised mate-
rial that can be used to print an actual
working part that would be installed in a
new aircraft engine.
In July 2012, UDRI was awarded a $3m
grant from state technology-based economic
development programme Ohio Third Fron-
tier. It will work with several other companies
to develop aircraft engine components, as
well as other parts in the aerospace and auto-
motive industries.
What were looking to do is change or
Let our dedicated newswire keep you updated
on the latest chemical news, including com-
pany performance at icis.com/news
We are now moving toward
the production of engineering
polymers to be used in
manufactured parts
THOMAS HUGHES
Program director for open innovation, PolyOne
challenges in advanced manufacturing.
A once-shuttered warehouse is now a state-
of-the-art lab, where new workers are mastering
the 3D printing that has the potential to revolu-
tionise the way we make almost everything,
Obama said his state of the union address.
THE FUTURE
The industry is expected to continue to grow
very quickly, Caffrey said. We try to be rela-
tively conservative in our forecast, but the sale
of products and services worldwide is expect-
ed to grow to $3.7bn in 2015, he said. In
2019, the industry will be over $6bn.
Caffrey added that the personal 3D printer
business, which includes systems under
$5,000, has been growing at a very fast pace,
possibly increasing by more than three times
in 2011.
The personal 3D printers are only 5% of
total revenues, Caffrey said. So in the last
ve years, it has gone from almost nonexistent
to being quite large.
The availability of these systems, for both
industrial and personal uses, allows just about
anyone to create their own model or product.
If you can design something, you can
build it theres no additional cost in com-
plexity, Caffrey said. With 3D printing,
making a single custom product is no more
expensive per unit than making 10 or 100.
While it is now possible to make a million
car frames or plastic cups using a 3D printer,
Caffrey said it will more likely be used in ap-
plications that require customisation, such as
personalised jewellery and promotional prod-
ucts or even medical implants and prosthetics.
However, it could also be used for mass
production in hundreds as opposed to mil-
lions of more expensive parts such as aero-
space components.
There are some novel downstream bene-
ts from that concept, like making lightweight
parts for airplanes, where you can take a lot of
weight off and save a ton of money in fuel,
Caffrey said. Several things like that you
cant do with conventional manufacturing.
Whatever the customer intends to make,
whether it is a plastic product intended for use
in the home or a small production line of auto-
mobile parts, the possibilities are endless.
We like to use the analogy that 20-30 years
ago, there werent any [personal computers]
and no Internet, Caffrey said. Yet, here we
are. We have smart phones and have little elec-
tronic devices that play movies in colour.
With 3D printing, we dont necessarily
know where its going and what the next ap-
plication is going to be, he added. But the
modications are going to grow, and new ap-
plications will be developed.
ICB_250313_030-031 31 20/3/13 15:30:55
MARKET OUTLOOK SHALE GAS
Sign up to receive free ICIS updates
by email, tailored to the markets you are
interested in. Visit icis.com/keep-in-touch
AMY FAULCONBRIDGE
T.A. COOK CONSULTANTS
The shale gas boom and private equity investment are revitalising reneries on
the US eastern seaboard. What will the impact be on propylene production?
Second chance
for reners on
the US east coast
T
he shale oil and gas boom in the US
has been widely reported and ana-
lysed, especially when it concerns
the issue of US energy independence.
Fears about energy dependence on the Middle
East underlined a deep insecurity in Washing-
ton about future energy resources.
Such angst has been exacerbated by ageing
US infrastructure, which has kept domestic
oil in Cushing, Oklahoma the US oil storage
hub and has drawn a kind of wall across the
US from Detroit to New Orleans. Heavy crude
produced in Canada has not been able to
reach the US east coast because the pipelines
to carry it simply do not exist, creating a
bottleneck in Cushing.
As a result, east coast reneries have been
forced to import Brent crude from Europe and
north Africa a lighter crude that requires dif-
ferent technology and produces different co-
and byproducts.
Brent crude owes its name to the Brent eld
in the North Sea where it is produced, but the
term is now used generically to describe the
crudes deliverable to the Brent futures contract,
long considered the worlds oil benchmark.
As oil has owed into Cushing, the lack of
pipeline infrastructure has caused oversupply
of the domestic West Texas Intermediate
(WTI) crude, forcing prices to drop drastically
against Brent, and creating a sharp difference
in price between the two contracts the WTI/
Brent spread.
At the end of 2011, the spread had reached
$28/bbl, although it had decreased to $19/bbl
at the end of 2012.
East coast refineries are
already equipped to process
lighter, sweeter crudes, such as
those produced from shale
ICB_250313_032-033 32 20/3/13 15:34:40
|
|
33
MARKET OUTLOOK SHALE GAS
A
la
m
y
Even with that spread decrease, east coast
reneries have been long forced to pay a pre-
mium for Brent, putting them at a competitive
disadvantage against midland reners that
can easily access cheap WTI crude.
And then there is the reversal of the 500-
mile Seaway pipeline, which now runs from
Cushing to the US Gulf Coast. Gulf Coast re-
ners are now able to access heavy crudes,
which their plants are set up to handle, still at
a discount against Brent.
Whether the opening of Cushing stocks will
have the effect of balancing out the price of
WTI against global markets is still unclear,
however. This is widely debated. We might
still have WTI being heavily discounted
against Brent as the US cant export crude due
to legislation, said Anthony Pears and Stefan
Glassel, analysts at global commodities trad-
ing house Tragura.
A lot of Gulf Coast reneries have made
changes to be able to run more heavy, sour
crude, so they will need to be incentivised to
shift back to the light, sweet shale crudes that
are building up.
KNIGHTS IN SHALE ARMOR
In the meantime, the effects of such a disad-
vantage on the east coast have been drastic.
Only last year, Sunoco announced that it
would sell its Philadelphia and Marcus Hook
reneries, while ConocoPhillips moved to
close its Trainer, Pennsylvania, renery.
Enter shale. Because shale crude is lighter
and sweeter, investigations into whether it
can be used in reneries along the east coast
already set up for processing light Brent
have sparked acquisition interest, and not
only from private equity.
Delta Airlines purchased the Trainer ren-
ery in June, and plans to spend $100m on it in
order to optimise jet fuel production.
Meanwhile, private equity rm The Carlyle
Group announced it will take a two-thirds
stake in Sunocos Philadelphia renery. Fur-
ther inland, TPG Capital joined three other
private equity rms to buy the majority of
Marathon Oils assets in Minnesota.
At the same time, oil companies have
begun to bring domestic shale east by rail then
ship it down the coast, while Carlyle Group is
building a high-speed rail facility so that the
Philadelphia renery can receive it.
This would provide east coast reneries
with enough access to cheaper domestic sup-
ply to allow them to move away from depend-
ence on more expensive Brent from Africa
and Europe. Such a move could produce quite
impressive margin improvements.
PETROCHEMICAL TWIST
Another aspect to east coast renery regenera-
tion is the effect that shale processing has had
on the petrochemical industry, specically
with regard to propylene production.
Propylene is used as a feedstock to produce
a number of other olens used in the automo-
tive, construction, packaging, medical and
electronics industries.
Historically, propylene has been produced
as a co-product of heavy liquid cracking.
However, the increased processing of shale
which also produces natural gas liquids (NGL)
has meant an increase in propane availabil-
ity, causing prices to decrease. Over the last
year, the price of propane has decreased from
$2.87/gal to a current $2.48/gal, after a low in
October 2012 of $2.37 per gallon.
US propylene supply declined in the rst
quarter of 2012 to 6.5m lb/day, 8.5% less than
the rst quarter of 2011, largely due to the fact
that cracking the cheaper, lighter feedstocks
produces signicantly less propylene co-
product than cracking heavy liquids does.
A number of companies are rushing to ll
that demand gap among them PetroLogis-
tics, which uses propane to produce propyl-
ene via dehydrogenation. If the companies
behind pipeline and infrastructure expansion
have their way, reners on the east coast
could gain access not just to cheap domestic
feedstock, but also to a high-demand propyl-
ene market, both domestically and abroad.
THE EXPORT CONUNDRUM
While all of the above factors point towards a
marked regeneration of east coast reners and
their margins, it may not all be smooth sailing.
As the US is producing shale to such a large,
somewhat unexpected extent and NGL prices
are low, calls for restrictions on the export of
liqueed natural gas (LNG) have created a po-
litical mineeld, both in the US and globally.
How much LNG should be exported, and
the effect that it would have on domestic
prices, competitiveness and margins has yet
to be claried.
Considering Japan is also one of the
worlds largest buyers of LNG, it should per-
haps not come as a surprise that Japanese
Prime Minister Shinzo Abe requested the
right to import US shale gas when he met US
President Barack Obama in February.
Meanwhile, BASF announced its enthusi-
asm for shale gas production in Germany,
aware of the competitive advantage the
US could develop over Europe should feed-
stock prices remain comparatively high in
the eurozone.
RELENTLESS COST CONTROL
Amid such market uidity, the only way re-
neries can protect themselves and add mo-
mentum to the recent regeneration is via rigid
cost control.
Operators must squeeze every dollar out
of their cost structure. Proper management of
the big levers such as contracted costs, labour
productivity and material spend are all impli-
cated by the shale boom, says Dirk Frame,
managing partner at T.A. Cook Consultants.
Reners cannot sit back and hope to ride
the wave without contributing to it. Made in
America requires petrochemical sites to look
hard at their operating practices and question
long-standing assumptions relating to the ef-
fectiveness and efciency of processes gov-
erning maintenance, shutdowns and capital
expenditure, he adds.
The outcome of the US-EU trade talks,
Japan prime minister Abes request and the ef-
fect shale development will have on global oil
and chemical markets remains to be seen. But
for the moment at least, it looks as if the east
coast has been given a second chance.
Amy Faulconbridge is communications
manager, consulting at T.A. Cook in
Berlin. Since 2006, she has provided
strategic communications advice to cli-
ents in consulting and private equity.
Oil companies have begun
to bring domestic shale
east by rail then ship it
down the coast, while
Carlyle Group is building
a high-speed rail facility
ICB_250313_032-033 33 20/3/13 15:34:42
Everything we do, everything we produce
adds value to your business. Our Process
Oils and Wax have led the way in
contributions to manufacturing effciency and
product quality, and will continue to do so.
From Integrity to Innovation. HollyFrontier
takes the lead in bringing the increased value
of The Best Oils on the Planet
* to you.
For more details email: ProcessOilTeam@
hollyfrontier.com. Well help you transform our
oil into your opportunity.
www.HollyFrontierLSP.com
* As measured by saturates and sulfur levels.
2013 Hollymarks, LLC used with permission by HollyFrontier Refning & Marketing, LLC
TM
HollyFrontier, the secure choice to leverage tomorrows opportunities.
ECS_250313_304 304 15/3/13 12:20:42
SHALE GAS REVIVAL
CONFIDENCE
SHINES OUT
Producers believe issues of midstream
infrastructure, manpower shortages
and LNG export are not game-breakers
International Petrochemical Conference 2013
Publication prepared by
For the 38th International Petrochemical Conference
24-26 March 2013 | San Antonio, Texas, US
ECS_250313_301 1 14/3/13 10:32:58
What you need, when you need it.
In today's highly competitive global marketplace, we continually strive to fnd
new ways to create and deliver value to our customers. There is a reason that
thousands of customers rely on us every day. Whether you value technical
expertise, or the service reliability that a private feet can offer, our dedicated
employees work hard every day to deliver the peace of mind you deserve.

Discover Nexeo Solutions and our services.

Scan here to connect or
visit nexeosolutions.com/ICIS
Excellence
in worldwide
chemical
distribution
1 . 8 0 0 . 5 3 1 . 7 1 0 6 | n e x e o s o l u t i o n s . c o m
C HE MI C A L S | P L A S T I C S | C OMP O S I T E S | E N V I R ONME N T A L S E R V I C E S
NEX-9318.Chemicals.ICIS.Ad.indd 1 10/9/12 12:03 PM
ECS_250313_302 302 15/3/13 12:16:57
www.icis.com

VOLUME 279 NUMBER 0000 MARCH 2013
March 2013
|
AFPM Supplement
|
3
units and pipelines need to be put in
place to get them to customers
OLEFINS AND POLYMERS
FACE UP TO SOFT DEMAND
28 Pricing and margins are not the main issue,
as feedstocks are cheap, but sluggish
demand growth raises the question of
where all the new output will go
RECRUITMENT POSES
NEW CHALLENGES
32 With demand for engineers, managers
and plant workers booming as expansion
gets underway, companies are having to
re-evaluate recruitment practices
AFPM SUITE LISTING
34 Where to fnd company suites at the
International Petrochemical Conference
in San Antonio
ROAD BLOCKS AHEAD
FOR SHALE REVIVAL?
4 The US government must clear the way
for low-cost energy and expansion in
petrochemicals to boost manufacturing
PRODUCER CONFIDENCE
IS STILL STRONG
8 Leading North American petrochemical
executives remain in bullish mood
SHALE GAS DRIVES
PETROCHEMICAL REVIVAL
18 Producers continue to develop plans for
a wave of new ethylene capacity and
downstream units in North America
MIDSTREAM INVESTMENT
REQUIRED FOR PROGRESS
24 Before petrochemical producers can exploit
shale oil and gas fully, refneries, extraction
Editor John Baker
+44 20 8652 3153
john.baker@icis.com
ICIS contributors
Cynthia Challener, Joe
Chang, Bobbie Clark, Tracy
Dang, John Dietrich, Ken
Fountain, Al Greenwood, Joe
Kamalick, Michelle Klump,
Leela Landress, Anna
Matherne, Jeremy Pafford,
Mark Yost
Production Louise Murrell,
Lizabeth Davis
Design Lauren Mills,
Numa Randell
Copy editing Dan Bloch
Americas sales manager
Bernard Petersen
+1 646 961 0708
bernard.petersen@icis.com
Americas sales
representative Karen Yaniro
+1 212 791 4251
karen.yaniro@icis.com
Europe, Middle East and
Asia sales manager
John Hill
+44 20 8652 3893
john.hill@icis.com
EMEA sales representative
Tom Iredale
+44 20 8652 3812
tom.iredale@icis.com
Product director
David Stanworth
Publishing director
Chris Flook
Printing Fry Communications

ICIS, The Quadrant, Sutton,
Surrey, SM2 5AS,UK
www.icis.com
2013 by Reed Business Information. All rights reserved. No part of this
publication may be reprinted, or reproduced or utilised in any form or by
electronic, mechanical or other means, now known or hereafter invented,
including photocopying and recording or in any information storage and
retrieval system without prior permission in writing from the publisher.
COMMENTARY
JOHN BAKER LONDON
john.baker@icis.com
F
ive years is a relatively short span of time for the petrochemicals industry. But as
industry leaders in this special publication, prepared by ICIS for the AFPMs annual
International Petrochemical Conference in San Antonio, Texas, point out, it is suff-
cient for dramatic changes to unfold.
The US shale phenomenon, now pumping low-cost oil and gas into the US energy
and manufacturing sectors to great competitive beneft, has turned the fortunes of the
North American petrochemicals producers on their head.
Only a few years ago, companies were spending capital resources to close facilities
and investing more abroad than at home. Now that has all changed, as more than half
a dozen crackers and associated downstream units are on the drawing board. They will
consume considerable amounts of ethane, which has to be extracted and delivered to
the new plants, to be located mainly in the US Gulf.
While the industry and its executive leaders are bullish (see interviews on pages
8-16), a number of issues need to be addressed. Midstream infrastructure needs to
be invested in and built; huge numbers of skilled and experienced workers need to be
hired; and issues surrounding export of natural gas, which could drive up energy and
feedstock prices, need to be addressed. The latter has certainly generated its own
prodigious amount of heat recently!
On top of this, as Charlie Drevna, president of AFPM, warns (see page 4): govern-
ment policy and regulation must ensure that the road to shale gas development is
kept clear, so that the US can reap the competitive advantage offered by low-cost and
abundant energy and feedstocks.
In this publication ICIS editors examine the shale gas situation in detail, looking
upstream and downstream. I hope you fnd their analysis both stimulating and useful.
Government policy
and regulation
must ensure that
the road to shale
gas development
is kept clear
F
r
o
n
t

c
o
v
e
r
:

E
x
x
o
n
M
o
b
il
C
h
e
m
ic
a
l
US government must clear the way for low-cost energy and expanded
petrochemicals to drive a manufacturing ren
ECS_250313_003 3 14/3/13 10:42:29
www.icis.com
AFPM EXECUTIVE INTERVIEW
4
|
AFPM Supplement
|
March 2013
JOE KAMALICK WASHINGTON DC
Low-cost energy and expansion in petrochemicals can
drive a US manufacturing renaissance, says AFPM
president Charlie Drevna, but government has to clear
the way ahead for the industry to grow
T
he US energy and petrochemical sec-
tors can power the nations broader
production industries to a major
manufacturing renaissance over the
next few years, says AFPM president Charlie
Drevna if the White House will just get out
of the way.
Five or six years ago we werent looking
for a particularly robust US petrochemicals
industry, Drevna says, referring to the years
before newly abundant supplies of natural gas
began to ow from shale deposits. These
shale plays have been an absolute game-
changer from just ve years ago.
Before the ood of shale gas, argues Drevna,
we were expecting to see more exporting of
production and jobs overseas; now companies
are looking to make billions and billions of
dollars worth of investments here in the US.
I am cautiously optimistic that we can get
this done, that there will be a manufacturing
renaissance in the US, returning manufactur-
ing to US shores, he adds.
In fact, Im verging on very optimistic
simply because we dont have a choice. This
is a binary proposition: yes or no. Do we want
to maintain our position as the worlds domi-
nant economic force, or do we want to cede
our economic prosperity to other nations?
A lot depends on policy choices, he says.
Our new energy resources and our revived
petrochemicals industry can provide a bright
and viable future; there really can be a manu-
facturing renaissance in the nation. But it all
has to start with policies, decisions being
made well before the feedstock enters a crack-
er, policies around access to resources, per-
mitting, fracking, and allowing industry to
build things.
Drevna believes that President Barack
Obama now has an opportunity to enable a
manufacturing renaissance. How the presi-
dent handles his second term will determine
his legacy, and he has a chance to write his
legacy with his all of the above energy policy
but he has to acknowledge the central role
that oil and natural gas will play in the eco-
nomic revitalisation of the nation.
Take two key issues, says Drevna. One,
open access to our natural resources, and
two, getting these developments permitted
and allowed to go forward. There have been
delays, delays and more delays by those who
oppose our energy development. And this is
the challenge for the petrochemicals indus-
try for this year and on into the second
Obama administration.
Drevna does not think that outright federal
opposition what he calls the Obama ad-
ministrations war on fossil fuels can ac-
tually shut down the natural gas boom and
all of its downstream benets, but persistent
federal government opposition could chill
the renaissance.
The government and those that support
them can present signicant impediments,
Drevna says. And once there is an impedi-
ment to capital investment, then that capital
will look for opportunities elsewhere.
Jim Cooper, AFPM vice president for petro-
chemicals, points out that the government
permitting authority can keep throwing road-
blocks in front of energy development for
years on end. Witness the nearly four-year-
long US federal permitting consideration for
the Keystone XL pipeline project, an approval
process that is still not done and whose out-
come is far from certain.
MIDSTREAM INVESTMENT NEEDED
There is broad potential for midstream in-
terference, Cooper says, citing permitting
for infrastructure needed to move feedstock
to producers. We have product coming out
of the ground, but that feedstock has to be
transited, separated, stored and routed, and
thats where there can be signicant interfer-
ence, he says.
Cooper says that the need for expanding
midstream infrastructure capacity in the tri-
state area Pennsylvania, Ohio and West Vir-
ginia, where the Marcellus shale play is radi-
cally shifting the paradigm of industry is
critical, and is critically dependent on govern-
ment permitting processes.
The potential is real for a logjam crisis with
Avoid shale
road jams
Once there is an impediment
to capital investment, then
that capital will look for
opportunities elsewhere
CHARLIE DREVNA
President, AFPM
ECS_250313_004-006 4 14/3/13 10:59:00
www.icis.com March 2013
|
AFPM Supplement
|
5

short-lived proposition, referring to con-
cerns that the shale gas boom might falter
when private resources ultimately are de-
pleted while vast reserves under federal
lands remain off-limits.
He notes too that not all private sector shale
gas resources are necessarily productive, and
that some shale plays are dry, lacking the
natural gas liquids that are the key feedstock
for US petrochemical producers.
Can the US petrochemical sector rely on
private sector shale gas resources and other
existing conventional gas production for feed-
stock? Yes, we can continue for a while,
Drevna says. But if we are going to be the
dominant energy supplier in the world and
the manufacturing renaissance is to be a long-
term proposition, we cant just focus on one
geographical region or just one category of re-
sources, he says.
HELP OR HINDRANCE?
We have an opportunity to get this country off
the dime and moving forward. The question is
whether this administration will be a help or a
hindrance. I hope Obama will look at the po-
tential for a great energy legacy instead of leav-
ing the nation with a $20 trillion debt.
The potential impact of federal govern-
ment policies on energy development and
uses could be magnied as demand for natu-
ral gas expands beyond conventional mar-
kets. Electric utilities are increasingly turn-
ing to natural gas as a fuel instead of coal, in
no small measure because of Environmental
Protection Agency (EPA) restrictions on coal-
red power generation.
There are campaigns afoot in the private
sector and in Congress to encourage broader
use of natural gas as a transportation fuel by
switching diesel-powered truck eets to gas
by subsidising engine conversions.
And the US Department of Energy is con-
sidering 20 or more permit applications from
companies wanting to export liqueed natural
gas (LNG) to foreign markets.
FREE AND OPEN MARKET
Some in the US petrochemicals industry and
downstream chemicals sector worry that a
galloping troika of expanding natural gas de-
mand growth utilities, transportation and
LNG exports could trample the chemicals
industrys new-found feedstock advantage by
driving natural gas prices sharply higher. But
Drevna says that broadening use for natural
gas is not a major concern, if we have such
an abundance of natural gas that we can sat-
isfy all these additional needs if we can en-
sure that we will have open access to all the
nations gas resources, he says.
At AFPM, we are always in favour of a free
and open market approach, but you cant have
a truly free and open market for natural gas
when gas resources are being held hostage,
he argues, referring to the vast majority of US
federal lands that are off-limits to oil and gas
exploration and development.
When you look at a map of US onshore
natural gas resources and what is available for
production and what is not, you see that 90%
of it is not available, he says. That has to
change, Drevna says. If US energy producers
can have access to those resources, everything
is possible.
So if you have access to enough of the re-
sources, then we can indeed compete globally
with LNG exports and increase our domestic
use going forward but that depends on gov-
ernment allowing domestic oil and gas devel-
opment and allowing energy imports from
Canada, he says.
This is not complicated, Drevna says.
Its paint-by-the numbers and connect-the-
dots, its not that difcult to see.
He notes that in the recent past, eastern
Europe has been held hostage to Russian gas
supplies and that Japan would welcome ac-
cess to US natural gas exports, adding:
We could be the dominant energy force
in the world, the swing producer, the game-
changer but it all starts with production,
increasing domestic US demand for natural gas
on one side and on the other side reluctance of
government agencies to allow the production
or delivery of that energy resource.
Drevna notes that there will be a lot of
competing interests for natural gas going for-
ward and locking up 97% of the potential gas
resources on federal lands could raise doubts
about whether there will be sufcient supply
for all interests, electric utilities, home heat-
ing, transportation. And if the manufacturing
renaissance is to develop, that additional
manufacturing capacity will need additional
supplies of energy, chiey natural gas.
To provide the energy framework for all
those downstream consumers, were going to
need an increasing supply of natural gas. Do
we have those resources? Absolutely. But so
far, it has been resources on private lands that
have enabled the shale boom; private lands
have been the foundation.
But to keep moving forward, all industry
needs to have the assurance of a consistent,
long-term supply, to ensure that capital in-
vestments are encouraged and made and jobs
are created, the economy revived.
But, says Drevna, investors have to have
some assurance that this is not going to be a
The road to shale gas
development must
be kept clear
R
e
x

F
e
a
t
u
r
e
s
ECS_250313_004-006 5 14/3/13 10:59:26
www.icis.com
AFPM EXECUTIVE INTERVIEW
6
|
AFPM Supplement
|
March 2013
All events take place at the Grand Hyatt San
Antonio, Texas, unless otherwise stated. All
registration takes place in the Lone Star
Ballroom Prefunction A
Saturday 23 March
2:00pm-7:00pm
Registration
Sunday 24 March
8:00am-7:00pm
Registration
6:00pm-8:00pm
Welcome reception
The Grotto along the River (Convention
Center next to the Grand Hyatt)
Monday 25 March
7:30am-1:00pm
Registration
7:30am-8:00am
Breakfast
Lone Star Ballroom ABC, Second foor
8:00am-10:00am
General session 17th Petrochemical
Heritage Award presentation
plus
American Petrochemical Renaissance: A
Midstream Perspective
NGLs Market Call, with Kelly Van Hull, senior
NGL analyst, Bentek Energy
US Ethane Outlook: Will the Supply Last? with
Peter Fasulla, principal, En*Vantage
Lone Star Ballroom ABC, Second foor
Tuesday 26 March
9:00am-12:00pm
Registration
10:00am-11:15am Petrochemical Forum
Future Use of the American Shale Prosperity: A
Panel Discussion
with Nigel Davis, ICIS; Daniel Brusstar, CME
Group; Brian Habacivch, FellonMcCord; Ford
West, The Fertilizer Institute; and David Witte,
IHS Chemical
Lone Star Ballroom
ABC, Second foor
11:30am-2:00pm
International
Petrochemical
Luncheon
Featuring George W
Bush, 43rd President
of the US (right)
Texas Ballroom,
Fourth Floor
(tickets required)
AFPM IPC CONFERENCE PROGRAMME
38TH AFPM 2013
INTERNATIONAL
PETROCHEMICAL
CONFERENCE
getting it out of the ground. These and
other energy- and feedstock-related issues
have energised AFPMs new outreach cam-
paign, Drevna says.
We are expanding our outreach and en-
hancing our message to local areas beyond
our traditional oil and petrochemicals patch.
If manufacturing drives the US economy, our
industry is the engine that drives manufac-
turing, and that is the message that AFPM is
trying to advance.
He cites AFPMs recent partnership with
Carnegie Mellon Universitys Scott Institute
for Energy Innovation as part of AFPMs out-
reach effort, designed to bring multiple ener-
gy and manufacturing stakeholders into a
multi-year evaluation of US energy potential
and applications.
Within the partnership with Carnegie Mel-
lon, Drevna says, were looking at using our
natural resources in a productive manner, and
this discussion has just begun.
Were talking to state and local leaders and
opinion shapers as part of an expanded effort
to ensure that consumers understand and ap-
preciate the value that these combined indus-
tries bring to their daily lives, he says.
He describes the effort as an exponential
increase in our outreach, drawing in other
stakeholders such as academia, labour, other
industries. We want to make sure that all
sides are part of it.
EDUCATION AND SUPPORT
We all wont agree all the time, but we all see
that there is this opportunity within our na-
tions grasp and how we can take advantage of
the incredible resources provided to this na-
tion in an environmentally safe and sound
manner, he adds. We can do this, we can
have this if we have the right policies,
Drevna says.
Cooper says that the partnership with
Carnegie Mellon and other energy supply
chain industries is going to be about creat-
ing an education policy over the next couple
of years to support advocacy. People, con-
sumers have to appreciate the supply chain
and the importance of what is under ground.
The whole idea of the Carnegie Mellon part-
nership is to write the playbook, the outline
of what needs to be done over the next cou-
ple of years.
When talking of things of this magnitude,
of this complexity, we want to take our time
and make sure that we have a solid stakehold-
er group and a way forward, Cooper says.
Among the federal policy issues that con-
front the US energy picture, Drevna says, are
modernisation of the Toxic Substances Con-
trol Act (TSCA) and Obamas renewed cam-
paign to try to inuence climate change. In
talks with congressional and other policymak-
ers on how to modernise TSCA, Cooper says
that it is a question of whether the whole na-
ture of conversation is going to change.
TSCA REFORM CAN WAIT
As Drevna puts it: Wed be in what we
thought were bipartisan talks with various
stakeholders and members of Congress, and
we thought we were making progress. But
then wed see a draft bill that bore no resem-
blance whatever to what wed been discuss-
ing with congressional staffers.
Many in the US chemicals sector and cer-
tainly among environmental groups want to
see a TSCA modernisation bill passed this
year if at all possible, but Cooper says that ur-
gency is not necessarily a top AFPM goal. Be-
cause of the complexity involved in TSCA
modernisation, we dont necessarily share
others urgency, Cooper says.
We want to see it done but we want to
see it done right the rst time, rather than re-
visiting the issue every couple of years, he
says. If that means taking an extra year or
two to get it right, that works for us.
On the presidents renewed focus on cli-
mate change policy and regulations, Drevna
says that Obama has a choice to make. Do
we want an economic and manufacturing
renaissance, or do we want to cede our eco-
nomic and manufacturing prowess to China,
India, Brazil, Russia and other nations,
Drevna says.
This is another binary choice. Do you
want this nation to have a broadly revived
manufacturing sector and get people back to
work and remain an economic superpower, or
do you want to continue talking about things
that sound good alternative energy but that
in reality are not going to get us where we
need to be. The president can lead us into a
manufacturing renaissance or into an
abyss, Drevna concludes. R
e
x

F
e
a
t
u
r
e
s
Feedstock has to be
transited, separated, stored
and routed, and thats where
there can be signicant
interference
JIM COOPER
Vice president for petrochemicals, AFPM

ECS_250313_004-006 6 14/3/13 11:00:13
ECS_250313_007 7 15/3/13 11:56:05
www.icis.com
AFPM INTERVIEWS
8
|
AFPM Supplement
|
March 2013
THE ADVENT of shale gas, reviving North
Americas petrochemical industry, has also
created a rift between the producers and con-
sumers of the fuel. Energy producers, saddled
with some of the worlds cheapest natural gas,
want the US to allow them to export liquefed
natural gas (LNG). Petrochemical producers,
wary about losing their cost advantage, want the
US to place some restrictions on exports, warn-
ing that higher energy prices could threaten an
incipient recovery in manufacturing.
ExxonMobil sits on both sides of the argu-
ment, as it is both the largest natural gas and
chemical producer in the US. However, its mes-
sage is clear. Restricting LNG exports amounts
to government interference in the market, warns
Stephen Pryor, president of ExxonMobil
Chemical. That kind of government interfer-
ence in the market is tantamount to introducing
price controls on natural gas.
Restricting exports would effectively allow
the government to control supply, Pryor adds.
From there, the government would indirectly
control price. Any time we have allowed gov-
ernment to substitute its judgement for that of
the market, we get in trouble.
The US government has meddled in natural gas
markets in the past, Pryor says. The intent of that
government interference back in the 1970s and
1980s [was] about achieving reasonable prices,
achieving good supply. But it never works out that
way, he says. Instead, the result created some of
JOHN BAKER LONDON
Over the next six pages, ICIS talks to eight industry
leaders, giving a fascinating insight into current thinking,
the investments born of renewed optimism, but also the
concerns that still nag in the background
Executive
condence
still strong
S
enior US petrochemical executives
are in bullish mood and no won-
der, given the shale gas phenomenon
that has transformed the sector over
the past ve years.
There can be no doubt that the petrochemi-
cal sector is embarking on a manufacturing
renaissance, driven by access to low-cost ener-
gy and feedstocks as a result of shale gas pro-
duction. This is reversing many years of low
investment in the US, cutbacks and closures.
As Peter Huntsman, puts it: I dont think
there has ever been a time when the US has
had such an advantage over so much of the
rest of the world when it comes to petrochem-
ical production. This certainly is as large a
game changer as Ive seen in the last 30 years.
Four years ago, out of our growth capital
virtually none was in North America. We were
spending more money shutting down assets in
North America than we were in building or ex-
panding assets [here], he says. Think about
that. That was just ve years ago. And today,
well over half of our expansion capital globally
is in North America.
But the rapid pace of expansion brings its
own problems to exercise executive minds. In-
frastructure is needed to get the oil and gas to
the petrochemical industry, based largely in the
US Gulf, and skilled engineers and craftsmen
will be needed, although they are at present in
short supply, as well as in the wrong place.
As Peter Cella of Chevron Phillips Chemi-
cal notes, the biggest challenge the petro-
chemical industry is facing is ensuring it has
adequate workers and resources to pursue
these projects successfully.
Were opportunity long and people re-
source short, Cella says.
Were looking for more diverse and expe-
rienced hires, he adds. These are jobs that
require some level of technical competency.
Most are going to be experienced people al-
ready working someplace else.
There is also widespread concern and de-
bate amongst chemical executives over the
export of shale gas from the US and whether
this should be allowed or not. Energy produc-
ers argue they need to export to support pric-
es; chemical producers do not want to see
their cost advantage diminished and feed-
stocks used by overseas competitors.
FREE TRADE ARGUMENTS
Stephen Pryor, of ExxonMobil Chemical, ar-
gues that government interference in the
market is tantamount to introducing price
controls on natural gas. Any time we have al-
lowed government to substitute its judgment
for that of the market, we get in trouble.
And Dennis Seith of INEOS notes: Its hard
to set limits on exporting one product when
youre arguing for open exports of others [such
as crude oil].
But others are not so sure. Dow Chemicals
James Fitterling says: We need to be prudent
[about exports]. He argues that keeping much
of the newly discovered natural gas in the coun-
try, both for feedstocks and energy uses, would
help spur a renaissance in US manufacturing.
Five million jobs can be created, he says.
The following pages also include inter-
views with Beate Ehle of BASF, Mike McDon-
nell of TPC and Grant Thomson of NOVA
Chemicals, who discuss their views on shale
and resulting planned investments. The pic-
ture certainly is one of renewed condence
and investment.
Stephen Pryor, ExxonMobil Chemical
Any time we have allowed
government to substitute its
judgement for that of the
market, we get in trouble
AL GREENWOOD HOUSTON
Pryor advises
government not to
interfere on LNG
ECS_250313_008-016 8 14/3/13 11:38:53
|
AFPM Supplement
|
9
L
ike many major petrochemical companies,
Dow Chemical is taking a cautiously opti-
mistic outlook for the industry in 2013 and
the years immediately afterward. Beyond that,
however, the expectation for Dow is for a
healthy future for the industry.
For Dow, the optimism derives from the ad-
vent of the shale gas revolution and the bene-
ts it is projected to bring to US manufactur-
ing. The caution, by contrast, stems from
uncertainty over US scal policy and eco-
nomic headwinds in both Europe and Asia.
James Fitterling, executive vice president
with oversight for feedstocks, performance
plastics and operations in the Asia-Pacic re-
gion and Latin America, says Dow, through its
investments in both North America and the
Middle East, is well positioned to take advan-
tage of the new peak in the ethylene cycle.
Fitterling says Dow expects to have a some-
what better 2013 than 2012, in which the
company faced the same challenges as other
petrochemical majors: weakened demand
across many parts of the globe especially the
eurozone with its continuing debt crisis and
slowing growth in China.
Were projecting 2.5 to 2.6% gross domestic
product growth across the globe in 2013, Fit-
terling notes. While hardly spectacular, that
incremental growth is much better than that
seen in the depths of the recession. Fitterling
adds that Dow expects the global economy to
begin a more robust growth rate in 2014-2015.
For Dow, the shale gas phenomenon is a
once-in-a-lifetime (if not even rarer) opportu-
nity for the US to restore its manufacturing
base after years of offshoring. The ethane ad-
vantage afforded by plentiful shale gas
made more accessible by hydraulic fracturing
and horizontal drilling will put American
chemical manufacturers in good stead against
competitors in Asia and elsewhere.
Fitterling says Dow is moving at a rapid rate
to capitalise on that advantage with a host of
new investments. These include a planned
1.5m tonne/year ethylene cracker in Freeport,
Texas, scheduled for start-up in 2017; the recent
start-up of its formerly idled 380,000 tonne/year
cracker in St Charles, Louisiana; a 750,000
tonne/year propane dehydrogenation (PDH)
unit in Freeport set for completion in 2015; and
an ethane conversion at its cracker in Plaquem-
ine, Louisiana, also set for completion in 2015.
In the Middle East, Dow is in the midst of
completing its planned gas-based feedstock
chemical complex in Saudi Arabia, a joint
venture with state oil rm Saudi Aramco
called Sadara Chemical Company. Sadara is
well under construction, Fitterling says. First
production is set for the second half of 2015.
HARD TIME PLANNING
Fitterling says Dow leaders are most immedi-
ately concerned with the economic uncertain-
ties posed by continuing wrangling by US
policymakers President Barack Obama and
Congressional Republicans over scal is-
sues. Those include the so-called sequester,
an extension of the federal budget and the de-
bate over raising the governments debt ceil-
ing. As long as those battles continue, Dow
and other businesses will have a hard time
planning for the future, Fitterling says.
For Dow (and some other US petrochemical
companies), the shale gas phenomenon comes
with a major caveat. While many natural gas
producers are seeking federal permits for the ex-
port of liqueed natural gas (LNG), Dow and
many of its cohorts are arguing for more limited
exports. Dow CEO Andrew Liveris, in both
media outlets and in testimony before Congress,
has argued that nearly unlimited exports of LNG
will drive up prices, offsetting the feedstock cost
advantage now enjoyed by manufacturers.
Fitterling says Dow is not opposed to all LNG
exports, and in fact supports exports if they are
part of a broader national policy that takes full
advantage of the shale gas phenomenon.
We need to be prudent [about exports],
Fitterling says. Keeping much of the newly
discovered natural gas in the country, both for
feedstocks energy uses, would help spur a
renaissance in US manufacturing. Five mil-
lion jobs can be created, he says.
the highest natural-gas prices in the world.
We had a reduction in investments, we had
a reduction in supply, we had a dampening in
economic opportunity, he says. For the chemi-
cal business, because we are so energy inten-
sive, it was a dark period. It was a period of
declining production, declining exports, declin-
ing investments and, of course, declining em-
ployment. We killed jobs.
In addition, the argument behind supply con-
trols is based on dubious logic, because it treats
energy supply and demand as a zero-sum game,
Pryor explains. Free markets do not work that way.
If you allow demand for natural gas to rise
because of LNG exports, thats going to encour-
age increased supply, he says. Conversely, if
government tries to restrict demand and cap
prices, thats going to shrink supply.
Such interference produces unintended conse-
quences, Pryor says. When you get involved in
protectionism and price controls or market con-
trols, you end up shrinking the economic pie.
When you allow the free market to work and free
trade to work, the economic pie expands because
it attracts investments and it creates jobs.
EXPANSION PLANS
ExxonMobil itself is developing a $10bn LNG
export project in Texas under a joint venture,
Pryor says. Construction alone should create
45,000 jobs. ExxonMobil estimates that the
project will create 3,800 permanent jobs and
$31 billion in economic activity during its life.
Its a tremendous, tremendous amount of
economic activity, job creation, however you look
at it, Pryor says. So you really have to say to
yourself, Why should the government discrimi-
nate between an LNG investment to liquefy gas
versus a chemical investment to solidify gas
into plastic pellets? Why should the government
discriminate between those two?
In fact, ExxonMobil is also expanding chemi-
cal production at its complex in Baytown, Texas,
the largest integrated refning and petrochemi-
cal complex in the country. The rationale for the
project, however, does not rest solely on low-
cost feedstock, says Pryor. The petrochemical
industry is global, competitive and cyclical, so
any project would need more than just cheap
feedstocks to succeed, he explains.
ExxonMobils Baytown complex achieves this, in
part, by further expanding what is already the larg-
est refning and petrochemical complex in the US,
Pryor says. As such, the expansion will beneft
from the integration and scale already present at
Baytown. What we are doing now is building on
that model, making it even more robust by incorpo-
rating additional integration, not just with refning
but with our upstream business, he says.
Shale gas is a big opportunity, but you still
have to have projects that are robust and will
stand the test of time, both cost wise and in
terms of the products it produces.
James Fitterling, Dow Chemical
Leaders are most immediately
concerned with the economic
uncertainties posed by
wrangling by US policymakers
KEN FOUNTAIN HOUSTON
Shale gas presents unique opportunity
to restore US manufacturing base
ECS_250313_008-016 9 14/3/13 11:39:08
ECS_250313_010 10 15/3/13 11:57:29
|
AFPM Supplement
|
11
AFPM INTERVIEWS
J
ust like its peers in North America, Hunts-
man has beneted from the advent of shale
gas, giving it access to some of the cheapest
feedstock in the world. It was less than 10
years ago that Huntsman and other North
American producers were shutting down
plants because the region had some of the
most expensive natural gas in the world.
Nobody seems to be talking about that,
says the companys CEO, Peter Huntsman.
But Huntsman warns that bad policy could
cause North American producers to lose their
advantage in low-cost energy and feedstock.
Specically, the US may approve more export
terminals for liqueed natural gas (LNG).
For energy producers, the potential prots
Peter Cella, Chevron Phillips Chemical
Peter Huntsman, Huntsman Corporation
TRACY DANG HOUSTON
The US is a competitive region for olens and derivatives
AL GREENWOOD HOUSTON
Do not surrender price gains through gas exports
are enormous. US natural gas prices are below
$4/MM Btu. They are more than twice that
amount in much of the world. However, open-
ing the US gas market to exports could also
open it to international energy prices, Hunts-
man warns. If you look at international energy
prices, they are set by the price of oil. As you
look at who controls the price of oil, it is
OPEC, says Huntsman. Do we want that to
be the marker for our natural gas?
He adds: Do we want to keep this advan-
tage in North America or do we want to take
market-based prices in North America today
and surrender those to prices of energy that
are set by a cartel?
The North American market, meanwhile, is
MANY PETROCHEMICAL companies are examin-
ing investment opportunities in the US, since
abundant shale resources provide access to low-
cost natural-gas-based feedstock. Peter Cella,
CEO of Chevron Phillips Chemical (CP Chem),
says shale hydrocarbons also signifcantly reduce
energy costs and transportation costs, giving the
US several advantages over other countries that
rely on more expensive conventional resources.
It has certainly affected the investment op-
portunities for companies like mine, Cella says.
Its a signifcant incentive for petrochemical
companies to take a hard look at taking their
next unit and capacity to the US.
CP Chem is capitalising on shale-driven invest-
ment opportunities. It is building a 1.5m tonne/
year ethane cracker at its Cedar Bayou plant in
Baytown, Texas, as well as two polyethylene (PE)
units with a combined capacity of 1m tonnes/
year near its Sweeny plant in Old Ocean, Texas.
The projects are currently in the front-end engi-
neering and design (FEED) stage for the next month
or so, says Cella. The company will spend most of
the second quarter negotiating engineering, pro-
curement and construction (EPC) contracts and
other estimates before making a fnal investment
decision. I have no reason to believe they will be
anything but approved, he says. Once approved,
we do see three to three and a half years for the
construction phase, with completion in early 2017
and start-up in mid to late 2017.
While the industry has been inundated with
announcements of new plants and expansion
plans, Cella says he is not concerned about
overinvestment. I think what you will see is
more exports, he says.
The US is becoming a competitive region to
produce olefns and olefn derivatives globally.
Global demand is growing at 1.5 times gross
domestic product (GDP), says Cella, and the
world needs to build four or fve crackers a year
to satisfy global demand growth.
CP Chem is also expanding its natural gas liq-
uids fractionator (NGL) complex at its Sweeny
plant in order to process more NGL from the Eagle
Ford and Permian shale basins. Cella says start-up
should occur in a few months, increasing capacity
by about 20% at the 116,000 bbl/day unit.
ADDED 1-HEXENE AND NAO
In addition, CP Chem is building a 250,000
tonne/year on-purpose 1-hexene plant at its
Cedar Bayou complex to ensure it has suffcient
supply to meet global demand. The project is
expected to start up during the frst half of 2014.
Coinciding with that project CP Chem is study-
ing the possibility of expanding its normal
alphaolefns (NAO) capacity at the site. We ex-
pect the study to be completed at the end of the
year, Cella says. Itll probably be a couple of
years for any expansion and debottlenecking to
be complete. Were targeting at least a 20% in-
crease in a phased approach.
Cella adds that while the company is excited
about whats happening in the US, the shale re-
source boom is not the full story for CP Chem as it
strives to be a world-class customer service or-
ganisation with a number of global investments.
The biggest challenge the petrochemical indus-
try is facing in the shale resource boom is ensuring
it has adequate workers and resources to pursue
these projects successfully. Were opportunity
long and people-resource short, Cella says.
CP Chem is re-examining its recruiting process-
es, including expanding opportunities available to
college graduates in its rotation and development
programmes, as well as reaching out to those in
community colleges and technical schools.
Were also looking for more diverse and expe-
rienced hires, Cella says. These are jobs that
require some level of technical competency. Most
are going to be experienced people already work-
ing someplace else. While ensuring that there is
a steady supply of talented workers is an industry-
wide challenge, Cella says he does not see any
show stoppers with the advent of shale.
Certainly, the catalyst for all this is the shale
resource, and anything that would impair that
would be detrimental to the entire value chain,
he says. We are not aware of any big issues ex-
pressed by any groups that cant be overcome
with technology that has already been proven.
Its a signicant incentive
for companies to take a hard
look at taking their next unit
and capacity to the US

ECS_250313_008-016 11 14/3/13 11:40:06
www.icis.com
AFPM INTERVIEWS
12
|
AFPM Supplement
|
March 2013
THE SO-CALLED shale revolution has nurtured
hopes that the US petrochemical industry
and the wider manufacturing sector can re-
gain the lustre it once had before a wave of
offshoring sent factories and jobs overseas.
Companies such as INEOS Olefns & Polymers
North America, one of the newer players in the
neighbourhood, are vying to take full advantage
of what CEO Dennis Seith terms a manufac-
turing renaissance.
Its been nothing short of phenomenal, Seith
says of the new developments in shale oil and
gas, brought on by improved technologies such
as hydraulic fracturing and horizontal drilling.
Seith notes that the US petrochemical sector is
expanding its midstream capabilities through the
expansion of pipeline capacity and other resourc-
es designed to move vast new quantities of shale
gas to manufacturing facilities.
The expansion of the refning and chemical
production sector, with many millions of dollars
worth of announced capital projects, will create
a new wave of jobs, Seith adds.
INEOS is moving to take advantage of the new
shale gas opportunity by expanding capacity at
its Chocolate Bayou facility in Texas with the con-
struction of a new ethylene furnace that will add
211,000 tonnes/year of capacity. That comes on
top of an already-planned 115,000 tonne/year
debottlenecking project at the facility, which is
slated for completion at the end of 2013.
ECONOMY STILL A WORRY
Meanwhile, INEOS Group is considering three
sites on the US Gulf Coast as possible locations
for a planned 500,000 tonne/year ethylene ox-
ide (EO) and derivatives capacity investment.
Those sites are the Battleground facility in La
Porte, Texas; the Chocolate Bayou faculty; and a
third facility in Plaquemine, Louisiana.
But in the near term, macroeconomic concerns
are still a worry. We had a great recession in the
economy, a major downturn, says Seith. Such an
event always has an effect on consumer demand
for end-products. At the end of the day, he says,
the US petrochemical industry depends on both a
strong US economy and global economy.
With economic headwinds still blowing in the
eurozone and slowing growth in China, and con-
tinuing political wrangling over US fscal policy,
Seith believes there are still concerns for the
next couple of years. But, he notes, in 2012 the
global petrochemical industry ran assets at
86-88% of capacity, indicating that worldwide
demand for products is getting healthier.
Still, there are some major areas of concern,
Seith concedes, including a long-discussed tran-
sition as many US-based petrochemical compa-
nies struggle to fnd younger skilled workers to
replace those who are retiring.
Its been a long time since we were hiring
people at levels of this signifcance, Seith ex-
plains, alluding to the years when much of the
petrochemical industry shifted overseas. In that
period, much of the training in technical skills
such as welding was not being done at the
same pace as during the last boom period.
But with US economy still showing only mod-
est improvements in unemployment rates, Seith
says, one of the other bright spots of the shale
gas phenomenon is that displaced workers may
be drawn to new careers in a booming petro-
chemical industry.
Another, more controversial, aspect of the
shale gas picture is how much of the new boun-
ty should be kept within US borders for energy
and feedstock purposes, and how much should
be allowed to be exported.
While gas producers say that there should be
few if any limits on the amount that can be ex-
ported in the form of liquefed natural gas (LNG),
some companies that use gas for energy and
feedstock purposes, wary of possible increased
prices, have argued for more limited exports.
Seith says his company supports a policy
based on free trade. Its hard to set limits on
exporting one product when youre arguing for
open exports of others [such as crude oil], he
says. Moreover, he adds, building the infrastruc-
ture necessary to support LNG will pay other
dividends in the near term and in the future.
adjusting to low gas prices without energy
producers going under. Huntsman says the re-
gions natural-gas demand should rise as power
plants switch from coal to natural gas. And the
nations petrochemical industry is undergoing
a renaissance, with companies announcing
ethylene, isobutylene and propylene projects
I dont think there has ever been a time
when the US has had such an advantage over
so much of the rest of the world when it comes
to petrochemical production, says Hunts-
man. This certainly is as large a game chang-
er as Ive seen in the last 30 years.
SWITCH TO INVESTMENT
In fact, what is happening in North America is
comparable with the build-up in capacity in
the Middle East and China during the last dec-
ade, Huntsman believes, especially when you
consider the dismal health of the regions
petrochemical industry ve years ago.
This industry was shutting down billions of
dollars worth of investment in North America,
and here we are ve years later investing bil-
lions of dollars, he says. The Middle East and
China have always been gradually growing and
then growing at a faster rate. In neither of those
cases have you seen such massive cyclicality,
where literally billions of pounds of product
have been shut down and then subsequently
reversed within a matter of two to three years.
Looking ahead, where North Americas in-
dustry goes will depend, to a large part on
how smartly the region plays its energy op-
tions, Huntsman says. If we look at our raw
material sources as an opportunity, there is no
doubt that the US would be a preferred loca-
tion for not just petrochemical but for energy-
intensive manufacturing for the next decade.
As you look at aluminium, steel, chemicals
and automotive components and aerospace
all of these areas really have a unique opportu-
nity to expand in the worlds largest economic
market and to do so in a very competitive man-
ner because of this abundance of raw material.
Huntsman has experienced both extremes
of his industry. Four years ago, out of our
growth capital as a company, virtually none
of that was in North America. We were spend-
ing more money shutting down assets in
North America than we were in building or
expanding assets in North America, he says.
Think about that. That was just ve years
ago. And today, well over half of our expan-
sion capital globally is in North America.
Dennis Seith, INEOS Olefins & Polymers
Its hard to set limits on
exporting one product when
youre arguing for open
exports of others
KEN FOUNTAIN HOUSTON
INEOS expects demand growth in spite
of lingering macroeconomic concerns
I dont think there has ever
been a time when the US has
had such an advantage over so
much of the rest of the world

ECS_250313_008-016 12 14/3/13 11:41:01
U.S. Chemicals mission is to provide the highest quality chemicals at
worldwide prices with unparalleled customer service.
U.S. Chemicals is based in Darien CT, and has 14 strategically
located warehouses throughout North America. We offer prompt and
effcient delivery to the following industries:
Paint-Ink & Coating
Chemical & Textile
Cosmetic
U.S. Chemicals, LCC, is a member of the National Association of
Chemical Distributers and is committed to the Responsible
Distribution Process. We are actively involved with environmental
organizations to create a cleaner and safer environment now and for
the future.
Call U.S. Chemicals for all your chemical sourcing needs.
16 Thorndal Circle, Darien, CT 06820
203-655-8878
sales@Uschemicals.com
Flame Retardants
Food & Pharmaceutical
Plastic & Rubber
US Chemical ad draft_arial.indd 1 5/3/13 13:31:07
AF-PANACHEM-MedPag-Cadena-Final.indd 1 3/13/13 10:32 AM
ECS_250313_013 13 15/3/13 16:26:27
ECS_250313_014 14 15/3/13 12:04:31
www.icis.com
BEATE EHLE remembers a quieter North
American petrochemical scene, a time when
there were no thoughts of building new crackers
and companies looked at just about anywhere but
the US when it came to planning future produc-
tion. That was just 10 years ago, the BASF presi-
dent for market and business development for
North America notes.
Times more specifcally, feedstock costs
certainly have changed. Cheaper raw materials
and energy thanks to the shale gas boom have
transformed North America into a petrochemical
hotbed of activity, and German chemical maker
BASF is knee-deep in that transformation.
Its real, Ehle says of the shale boom.
Shale gas is very real in the US, and its benefts
are also real in the US With that, investments
that might not have been feasible for the US fve
to 10 years ago are now quite attractive.
I would say the cheap raw material and energy
costs have been the missing link for the US to be
a very attractive investment market for the petro-
chemical industry, Ehle explains. What the US
also offered in the past and still offers and will
offer in the future is political stability. Its the sec-
ond biggest chemical market. You have the infra-
structure to deal with petrochemicals, to deal with
chemicals. You have the customer structure. So
adding now cheap raw material and energy costs,
I would say it is the perfect storm.
Ehles optimistic viewpoint is one shared by
many in the petrochemical industry, although
she does see a few clouds in an otherwise sun-
ny sky. While shale gas has changed the supply
picture, the demand side of the equation for pet-
rochemicals has not changed, she says. And
with that, the dynamics are changing in the US
petrochemical industry, but it will not eliminate
the cyclicality [of the marketplace].
Right now, the US has 26m-27m tonnes/
year of ethylene capacity, and another roughly
11m tonnes/year have been announced. I would
say thats more than the US can digest in the
whole market. That might somehow impact at
least for a certain period of time the supply-de-
mand balance, Ehle says.
LABOUR SUPPLY AN ISSUE
With all the plans announced to build more ethyl-
ene crackers and on-purpose propylene plants,
there is a need for qualifed labour to build and
operate the facilities. But the supply of that
labour could be an issue. Especially in the Gulf
coast area, we have to make sure that we have
enough installation services available for who-
ever wants to build there, Ehle says.
The move away in the US from naphtha to cheap
ethane cracking has created a supply-demand is-
sue with olefns. Ethylene now is in great supply
because of the change, while propylene and butadi-
ene production have fallen in response. Various
companies have announced plans to build pro-
pane dehydrogenation plants to make on-purpose
propylene, thus possibly flling that gap down the
road. But butadiene production looks to stay low
as more ethane crackers come on line.
The change to lighter feedstocks in crackers
has changed the ratio between C2 ethylene, C3
propylene and C4 butadiene. C2 is long, C3 is
short and expensive, and the same is true for C4,
Ehle notes. Now moving forward, there are a lot of
announcements for C3 on-purpose. I think overall
seven PDH plants have been announced for US. If
all of that comes true, I think it would balance
more or less what we have lost in North America in
C3 capacity due to changes in the refnery activity
and due to primarily changes to lighter feedstock,
so this would defnitely have an impact on C3 avail-
ability and C3 pricing in North America.
For C4, the storys a little bit different, be-
cause so far for C4, at least Im not aware of any
good on-purpose technology for C4, so the other
picture is a little bit unclear as to what will
change the current situation where C4 is short
and quite expensive, she adds.
In a nutshell, will more investment come to
the US? I would say yes, Ehle concludes.
March 2013
|
AFPM Supplement
|
15
AFPM INTERVIEWS
W
hile the shale gas development has pro-
vided the US petrochemical industry
with an abundance of natural gas liquids
(NGL) as an alternative to more expensive
naphtha, the cracking of lighter feedstock is
resulting in constrained supplies of co-prod-
ucts such as butadiene (BD).
BD is typically extracted from a four-carbon
(C4) mixture that is produced along with eth-
ylene and other olens in the steam cracking
process. A naphtha cracker produces about
18lb (8kg) of BD per 100 lb of ethylene, where-
as an ethane cracker produces only about 2.5lb
of BD as a co-product, says Mike McDonnell,
CEO of US butadiene producer TPC Group.
Over time, the US has shifted from cracking
naphtha to lighter feedstock, he adds, and the
current feed slate in the US is roughly 60% Mike McDonnell, TPC Group
JEREMY PAFFORD HOUSTON
Shale gas the missing link for US to attract investment
Investments that might
not have been feasible for
the US ve to 10 years ago
are now quite attractive
TRACY DANG HOUSTON
TPC focuses on securing C4 supply for volatile butadiene
ethane. Since 2007 to about 2012, generation
from ethylene production in the US has
dropped by about 20-25%, McDonnell ex-
plains. So its been a dramatic drop.
He adds that most of the change occurred
in 2007-2009. But now, we believe that most
of the lightening has occurred. C4 supply is
now relatively stable and any further lighten-
ing will be offset by ethylene debottlenecking
and new ethylene crackers in the future.
PRICE VOLATILITY
Despite the constrained but stable supply, de-
mand remains strong as BD is a mission-
critical product for a variety of end-markets
such as tyres, nylons and plastics, McDonnell
says. While BD supply is governed by crack-
er feed slate and operating rate, demand is

Beate Ehle, BASF
ECS_250313_008-016 15 14/3/13 11:43:16
www.icis.com
AFPM INTERVIEWS
16
|
AFPM Supplement
|
March 2013
driven by end-markets. Supply and de-
mand tend to be balanced through price
mechanism since there is no way to store the
BD in pure form for very long.
As a result, BD market conditions can be af-
fected by price volatility and period shortages
of the product. North American demand is
met by increasing levels of imports to help bal-
ance demand with supply, McDonnell says.
That growing supply crunch could be met by
on-purpose BD production, using the NGL feed-
stock found in shale particularly ethane and
butane. Using its proprietary Oxo-D technology,
TPC would convert butylenes from a variety of
sources into BD. TPC used the process between
the 1960s and 1980s and is planning on bringing
back on-purpose BD production, using a combi-
nation of existing and new assets, to make up to
600m lb/year (270,000 tonnes/year).
The preliminary engineering study has
been conducted, and TPC hopes to have the
engineering design optimisation completed
by the end of the third quarter of 2013. Start-
up is targeted for 2016.
Were going to bring this project on,
McDonnell says. So what do we do in the
meantime? The challenge is ensuring there
are adequate C4s for the North American
market over the next few years, and managing
the volatility of BD. TPC says it will contin-
ue to drive the efciency of aggregation,
processing, storage and distribution capabili-
ties, while it accesses additional C4 sources
globally to import into the US.
While TPC has growth strategies that target
markets with favourable, long-term fundamen-
tals, it will continue to capitalise on the supply
of products that are critically short but mission-
critical, including utilising idled dehydrogena-
tion units and excess capacity in C4 extraction,
McDonnell says. C4 is core to TPC, McDon-
nell adds. We will continue to strengthen our
C4 processing foundation to better serve our
suppliers, business partners and customers.
TPCs recent acquisition by private equity
rms SK Capital and First Reserve will help it
achieve those goals by providing access to cap-
ital to grow, as well as the networks of skills
and experience to support growth initiatives.
McDonnell adds that other challenges fac-
ing the industry include managing a growth
phase of large capital investments amid a tight
market for skilled workers and other project
resources, as well as ensuring there is ade-
quate investment in infrastructure to process,
store and transport NGLs.
LEELA LANDRESS MEDELLIN, COLOMBIA
Abundant ethane set to full feedstock
needs for NOVA Chemicals in Canada
WITH US natural gas values low and tumbling
ethane prices in the US, Canadas NOVA
Chemicals is poised to capitalise on the ethane
price advantage. Companies that succeed in
this business are the ones that react to what is
happening out there, says Grant Thomson,
president of olefns and feedstock at NOVA
Chemicals in Calgary.
Chemical manufacturers in North America are
enjoying a major cost advantage over producers
in other regions that has not been seen for more
than a decade. In Europe and Asia, where ethyl-
ene production is based mainly on naphtha, pro-
ducers have been hit by rising naphtha costs.
ETHANE BORDER FLOWS
The Canadian petrochemicals industry is short
on ethane a key natural gas component and
vital ingredient for chemicals producers. We
have seen declining border fows, especially on
those fows going east in the last 5 to 10 years,
Thomson says. And that has led to ethane
shortages here in Alberta.
After decades of volatile natural gas prices
that limited industrial demand, shale gas offers
North American competitiveness, prompting
new investment. Companies are getting innova-
tive and importing ethane from North Dakota
and Marcellus shale, and recovering off-gases
from bitumen upgraders, according to Thomson.
We are going to be bringing ethane in from
the Bakken area, explains Thomson who adds
that the Vantage pipeline, which will be operated
by NOVA, is in the process of being built. The
Vantage pipeline is a high vapour pressure pipe-
line that will carry ethane from a source near
Tioga, North Dakota in the US, northwest to a
site near Empress, Alberta, in Canada, accord-
ing to the US Department of State.
The conduit is expected to have the capacity of
40,000 bbl/day, expandable to 60,000 bbl/day
of liquid ethane from existing natural gas facili-
ties in North Dakota to the Alberta Ethane
Gathering System in Alberta, according to the
federal agency. The pipeline is expected to be up
and running by the end of 2013, says Thomson.
NOVA also plans to diversify its feedstock
portfolio with plans to get feedstock from off-gas
fows from the oil sands. We are putting facili-
ties in place to be able to extract the ethane out
of that liquids-rich stream and use that as an-
other major source of feedstock and with that
we are going to be maximising our ethylene pro-
duction and building a derivative plant here in
Alberta, he says. Thomson adds that the com-
pany is planning to spend about $2bn of capital
in projects over the next few years.
These include a 1bn lb/year (454,000
tonnes/year) polyethylene (PE) project in
Alberta, which is expected to be fnished by the
end of 2015, and a $250m conversion of its
Corunna cracker facility in Ontario to a 100%
light feed plant to take advantage of the low-
cost gas environment. The plant will only use
natural gas liquids (NGLs) and is expected to be
fnished at the end of this year.
NOVA is also in the early engineering phase for
some of the eastern assets looking at the expan-
sion of the ethylene facility, Thomson says.
In the US, six new 100% gas-fed crackers are
scheduled to come on stream over the next fve
years, in 2016-2017, with another due around
2019-2020. The new crackers, expansions of
existing facilities and restarts of previously shut-
down facilities could add 10.2m tonnes/year to
US ethylene capacity a 38% increase.
US ethane prices have tumbled in the last
year, enabling sharp increases in margins for
ethylene and its derivatives. Average US ethane
prices declined by nearly 50% in 2012 com-
pared with 2011 and Nova has positioned itself
to take advantage of privileged feedstocks.
NOVA is going to continue to do what we do
well, says Thomson. We make ethylene and we
make PE and we want to continue to take advan-
tage of competitively priced feedstock.
Grant Thomson, NOVA Chemicals
We have seen declining
border ows, especially on
those ows going east in the
last 5 to 10 years. And that
has led to ethane shortages
here in Alberta
The challenge is ensuring
there are adequate C4s for
the North American market
over the next few years

ECS_250313_008-016 16 14/3/13 11:44:00
Todays petrochemical industry provides the building blocks for a wide
range of materials. As the global leader in catalysis, BASF provides
a strong foundation of product and process innovations across the
petrochemical value chain. The result is a broad petrochemical catalyst
and adsorbent portfolio backed by dedicated customer and technical
service and enabled through the strength of BASF The Chemical
Company. At BASF, we create chemistry for a sustainable future.
www.catalysts.basf.com/petrochemicals
We create
chemistry
that makes building
blocks love strong
foundations.
Visit BASF at the
AFPM International
Petrochemical Conference
GOLD SPONSOR
March 24-26, 2013
BASF9030_IPC-BuildingBlocks_ChemicalProcessing_7.76x10.51.indd 1 3/12/13 2:22 PM
ECS_250313_017 17 15/3/13 12:06:18
www.icis.com 18
|
AFPM Supplement
|
March 2013
AFPM SHALE GAS
JOSEPH CHANG NEW YORK
US shale gas
boom drives
cracker wave
Plans to build seven new
crackers and expand
existing plants could add
almost 10m tonnes/year of
ethylene capacity, or 37%
of the total today
G
et ready for an unprecedented wave
of new cracker construction in the
US. The nation has moved further
down the global cost curve in petro-
chemical production on the back of the shale
gas boom, leading to the launch of seven new
worldscale cracker projects and more expan-
sions. This could ultimately add as much as
37% to existing US ethylene capacity by the
end of the decade and signicantly boost the
US footprint in the global petrochemical arena.
Meanwhile, US producers are enjoying
record prot margins as feedstock natural gas
liquids (NGL) ethane and propane have fallen,
conditions that Wall Street analysts expect to
extend into a peak in 2014-2016. The outlook
is no doubt very positive for the coming years.
Yet the massive projects set to come on stream
in 2016-2017 are likely to lead eventually to
overcapacity and a downturn in the cycle.
Looking at the revised cost curves and
what we expect to be a capacity addition vac-
uum in the 2012-2017 time period, we expect
to see a long duration and high amplitude
peak in the commodity chemical cycle as
early as 2015-2016, says Hassan Ahmed, an-
by a dip and then another peak, but rather a
doubly good peak in the form of higher mar-
gins from low NGL feedstock costs, coupled
with higher operating rates.
Wet shale gas dynamics are fundamentally
changing the game for integrated North Amer-
ican-based producers like Dow, said Liveris
on the companys fourth-quarter conference
call in February. This is clearly evidenced by
operating rates in the US and Canada being in
the 90s [%] while Asia and Europe have been
in the 70%s.
Further, as global demand outstrips sup-
ply in the next few years and world GDP gains
further traction, we anticipate operating rates
higher than 90%, leading to substantial mar-
gin expansion a double peak, so to speak,
Liveris said.
OIL AND GAS CORRELATIONS
In 2012, US petrochemical producers benet-
ed mightily from falling ethane feedstock
costs. They also beneted on the price side as
chemical prices remained high along with oil
prices. Even though around 85% of US chem-
ical production is based on natural gas, US
R
e
x

F
e
a
t
u
r
e
s
alyst at Alembic Global Advisors. This sug-
gests that there may still be substantial room
for positive earnings revisions and in turn, a
further share price rally for US ethylene ex-
posed names.
Vincent Andrews, analyst at US-based in-
vestment bank Morgan Stanley, also sees the
potential for an ethylene super-cycle in the
2014-2016 timeframe.
US-based Dow Chemical CEO Andrew Liv-
eris expects the US ethylene cycle to hit a
double peak in the coming years not in
the traditional sense where a peak is followed
ECS_250313_018-022 18 14/3/13 12:24:51
|
AFPM Supplement
|
19

petrochemical prices as measured by the US
ICIS Petrochemical Index (IPEX) follow crude
oil prices rather than those of natural gas.
The r-squared (R2) or signicance of correla-
tion between the US IPEX and West Texas In-
termediate (WTI) crude oil prices going back
to 2000 is 84.4%, according to an ICIS analy-
sis, indicating a high degree of correlation. The
R2 between the US IPEX and Henry Hub natu-
ral gas prices was an insignicant 5.8%.
This gives US producers a double edge
lower natural gas-based feedstock costs and
higher chemical prices based on high crude
oil prices.
Companies most leveraged to US ethylene
production were among the top performing
stocks in 2012. Shares of LyondellBasell
surged by 76% to $57.09 by the end of 2012,
while Westlake Chemical jumped by 97% to
$79.30, even after paying a special dividend
of $3.94 in November. More diversied play-
ers such as Dow Chemical fared less well. Its
stock price rose 12% to $32.33.
WORLDSCALE CRACKERS
Companies ush with cash and encouraged
by low US ethane prices are rushing to bring
on new ethylene capacity.
Right now, there are seven worldscale
crackers planned in the US, along with seven
planned expansions of existing facilities that
together amount to the capacity of almost
one more worldscale cracker. We dene a
worldscale cracker at between 1m-1.5m
tonnes/year of capacity.
The companies proceeding with plans to
build new crackers include Dow Chemical,
ExxonMobil Chemical, Chevron Phillips
Chemical, Formosa Plastics, Sasol, Shell
Chemicals and Occidental Chemical/Mex-
ichem. All but one of the planned seven new
crackers are based in the US Gulf Coast the
exception is Shells in Monaco, Pennsylva-
nia, in the heart of the Marcellus shale region
in the northeast US. That cracker will likely
come on line in 2019-2020 if it proceeds,
while all the rest are scheduled to come on
line between 2016-2017.
The total planned ethylene capacity addi-
tions amount to 9.78m tonnes/year, or a stun-
ning 37% of existing US capacity. This ex-
cludes Dows restart of its 380,000 tonne/year St
Charles, Louisiana cracker in December 2012.
And there are more companies that have
said they are exploring the potential of build-
ing a new cracker in the US. These include
Thailand-based Indorama Ventures, Thai-
lands PTT Global Chemical, Brazils Braskem,
Saudi Arabias SABIC and US-based Axiall
(former Georgia Gulf).
US start-up Aither Chemicals has also an-
nounced a small 272,000 tonne/year cracker
in the northeast US. An ofcial at South Korea-
based Hanwha Chemical was also quoted in a
local media report in February that it is in-
volved in talks concerning the building of a
cracker in the US.
US EXPORTS RAMP UP
The low-cost position of US petrochemical
producers relative to their counterparts in Eu-
rope and Asia, which primarily use oil-based
naphtha feedstock, has led to an increasing
volume of US chemical exports.
US chemical exports totalled $190.7bn in
2012, up by 1.8% from 2011, and are projected
to rise by 4.7% to $199.7bn in 2013, and an-
other 6.2% to 209.6bn in 2014, according to
the American Chemistry Council (ACC). The
US chemical industry swung back to a net ex-
port position in 2012, and is expected to main-
tain a trade surplus for the foreseeable future.
Renewed competitiveness from shale gas
and the resulting disconnect between US
natural gas prices and global oil prices will
boost US exports in the years ahead, says
ACC chief economist Kevin Swift. New in-
vestments to take advantage of this competi-
tive position will begin to supply export mar-
kets in the coming years.
US chemical production volumes are
poised to surge between 5-6%/year from
2014-2017, driven by the shale gas boom.
Most forecast models are demand-driven,
but the US shale gas phenomenon is a supply-
side shock a positive shock that will have a
knock-on effect on chemical production and
GDP for the next 10 years, says Swift.
Models dont capture the supply side.
While the consensus outlook calls for produc-
tion growth in the 2-5%/year range, we think
the growth prole will be much higher, he
adds For the coming years, he sees US chemi-
cal production volumes, excluding pharma-
ceuticals, rising by 2.9% in 2013, followed by
a 5.4% surge in 2014 and another 6.0% jump
in 2015.
Already there have been over 50
chemical projects requiring
capital investment of more
than $40bn announced in the
US to capitalise on the shale
gas advantage, says ACC
economist Martha Moore.
We see shale gas fuelling the US manufac-
turing sector, which will also pull on chemical
demand. But also some of the surplus will be
going to exports because of renewed US com-
petitiveness, Moore says.
US chemical exports have continued to
nd a home, in part displacing local produc-
tion primarily in Asia and to some extent
Latin America. This has helped support pric-
ing and margins by maintaining high operat-
ing rates, says Charles Nievert, analyst at US-
based investment bank Dahlman Rose.
Clearly, low-cost nat gas is directly trans-
lating to a low-cost position for US plastics
producers. This competitive advantage has
created a global market opportunity, which is
a nice offset during times of lacklustre domes-
tic demand, notes Frank Mitsch, analyst with
US-based investment bank Wells Fargo.
In 2011 and 2012, we estimate that polyvi-
nyl chloride [PVC] exports accounted for 39%
and 37% of North America production, re-
spectively. Polyethylene [PE] exports have not
risen as dramatically, but have stepped into
the 20%+ range after averaging in the mid-
teens from 2000-2006, he adds.
ETHANE OUTLOOK
Many believe US ethane and propane prices
will remain low for years to come, allowing US
petrochemical producers to sustain their cost
advantage. Ethane prices have fallen from al-
Notes: R2 US IPEX, natgas = 0.058, R2 US IPEX, crude oil = 0.844
$/bbl
Henry Hub Natural gas price
WTI Crude Oil US IPEX
US CHEMICAL PRICES TRACK CRUDE OIL NOT NATURAL GAS
0
40
80
120
160
2012 2010 2008 2006 2004 2002 2000
IPEX index (1993=100)
0
100
200
300
400
Clearly, low-cost nat gas is
directly translating to a
low-cost position for US
plastics producers. This
competitive advantage has
created a global market
opportunity
FRANK MITSCH
Analyst, Wells Fargo
ECS_250313_018-022 19 14/3/13 12:25:07
Keep in touch with ICIS
Access FREE updates across
the chemical markets:
Insightful analysis
News articles on the
latest developments
Thought-provoking
white papers
Outlooks for
different sectors
Sign up to receive free insights
www.icis.com/keep-in-touch
MARKET UPDATE:
Global polymers to face
heightened competition
The global commodity polymers market
continues to be under severe pressure
from challenges such as the European
debt crisis, slowing emerging market
growth and increased competition.
Despite these challenges, overall polymers
consumption is poised to grow at a
compounded annual growth rate (CAGR)
of 4.7%/year through 2015.
China Impact
In the frst quarter of 2012, the CFR (cost &
freight) Japan naphtha price has risen to its
highest level since May 2011 supported by
strong demand, tight supplies and strong
crude values.
Energy and feedstocks:
Asia crackers ramp
up production,
boosting naphtha
Natural gas prices, front month
Global Naphtha prices
Register for ICIS Petrochemicalss training courses
at: www.icis.com/PetChemTrainingCourses
Contact : training@icis.com | Tel: +65 6780 4353
Petrochemicals training
Get a clearer understanding
of the petrochemical industry
from ICIS training
ICIS training courses
help you understand
the fundamentals of the
petrochemical industry
- from what drives
petrochemical prices
to how the conversion
industry functions. Our
training will help you gain
the expertise you need
to operate effectively in
this complex market.
2013
Untitled-1 1 6/2/13 16:00:44
ECS_250313_020 20 15/3/13 12:10:28
|
AFPM Supplement
|
21
AFPM SHALE GAS
most 80 cents/gal in January 2012, to the
mid-20 cents/gal range as of late February.
Dow CEO Liveris expects the US ethane
market will remain long for the next four-to-
ve years. One would expect were going
to benet from this 20-something number for
a few years to come. If it goes into the 30s, it
will be due to aberrations, said Liveris on the
companys fourth quarter conference call on
31 January.
Dow has a $25bn asset base in the US that
will benet from low ethane prices, Liveris
said. Dow also expects to take advantage of
low propane prices, as it uses both ethane and
propane feedstock at its crackers.
We are especially bullish on propane. In
fact, going forward, we see structurally long
propane creating a ceiling on ethane pricing,
Liveris said. And you can be sure Dows
feedstock exibility will allow us to continue
to pivot, so we continue to take advantage of
our uniquely advantaged feedstock slate.

THE DEBATE on US liquefed natu-
ral gas (LNG) exports is heating up,
with oil and gas companies lined up
on one side and the chemical sec-
tor on the other.
More than 20 companies have
applied for approvals with the US
Department of Energy (DOE) to ex-
port LNG. The combined planned
LNG export capacity amounts to
around 200m tonnes/year or about
40% of US natural gas consumption,
according to an ICIS analysis.
For those US LNG export
projects with disclosed completion
dates all between 2015 and
2018 the capacity amounts to
129m tonnes, which is still a sub-
stantial amount.
This has caused concern
among a number of US chemical
company CEOs, who fear that un-
limited LNG exports could take
away the US competitive advan-
tage both in cheap natural gas
liquids (NGL) feedstock for chemi-
cal production, as well as cheap
energy for overall manufacturing.
If you look over the impressive
list of planned projects for US LNG
exports, its hard not to see a paral-
lel in the heavy project slate for
planned new world scale crackers
in the US. Both are being driven by
the US shale gas boom.
Unlimited US LNG exports could
create volatility in natural gas and
NGL prices, contends US-based
Dow Chemical.
While LNG exports for fuel would
consist primarily of dry gas, with
NGL stripped out in the process,
LNG containing ethane and pro-
pane could be shipped out as well,
according to the company.
It is not a given that NGL will
always be stripped out prior to
shipping, says Kevin Kolevar, vice
president of government affairs
and public policy at Dow. For ex-
ample, Japan has specs for wet
gas concentrate in LNG. And to
what extent would other countries
look to use wet gas? We have not
heard assurances from the oil and
gas community that they would
strip out the NGL.
This is an important aspect for
the chemical sector. Theres another
argument that LNG exports could
actually increase NGL supplies, pre-
cisely because it is stripped out.
Dow estimates that over a 10-
year timeframe, the US could ex-
port up to between 5 billion cubic
feet (bcf)/day or 141.5 million
cubic metres (mcm)/day - and
6bcf/day (169.8mcm/day) of natu-
ral gas through LNG without disrupt-
ing the market, if that capacity
comes on in a linear fashion.
That would amount to 38m-46m
tonnes/year of LNG. Yet, there is a
total of 200m tonnes/year of
LNG export capacity being planned
in the US. While not all that capac-
ity would be built, if the LNG
projects get full approvals to pro-
ceed, there is virtually no chance
they would come on in a disci-
plined, linear fashion neither
will the wave of new worldscale
ethane crackers.
The battleground is now set over
DOE approvals of US LNG exports to
countries that do not have free trade
agreements (FTAs) with the US. As of
the end of January, the DOE has
granted 20 approvals for LNG ex-
ports to FTA countries, but only one to
non-FTA countries that of Cheniere
Energys Sabine Pass project.
Exports to non-FTA countries is
the big game, as these nations in-
clude Japan, China and all of
Europe major target markets.
Japan is a huge importer of LNG for
its fuel needs. In 2012, Japans
LNG imports jumped by 11.2% to a
record 87.3m tonnes.
The DOE notes on its website
that for non-FTA countries, it is
required to grant applications for
export authorisations unless the
Department fnds that the pro-
posed exports will not be consist-
ent with the public interest.
Factors for consideration include
economic, energy, security and en-
vironmental impacts.
Thats where chemical compa-
nies are bringing the fght citing
the public interest provision in
the DOEs remit, and claiming un-
checked LNG exports will erode US
manufacturing competitiveness.
ENERGY JOSEPH CHANG NEW YORK
THE GREAT LNG EXPORT DEBATE
Cheniere Energy has LNG export facilities under construction at its Sabine Pass terminal
We expect to see a long
duration and high amplitude
peak in the commodity
chemical cycle as early as
2015-2016
HASSAN AHMED
Analyst, Alembic Global Advisors
C
h
e
n
ie
r
e

E
n
e
r
g
y
ECS_250313_018-022 21 14/3/13 12:44:53
www.icis.com 22
|
AFPM Supplement
|
March 2013
AFPM SHALE GAS
Gregg Goodnight, analyst at global invest-
ment bank UBS, also sees low ethane prices
for the next four years.
We believe that ethane will be oversup-
plied until the rst grassroots cracker expan-
sions are seen in 2016-2017, says Goodnight.
Low ethane prices should assure that Lyon-
dellBasells light feed crackers will achieve
outstanding EBITDA [earnings before interest,
tax, depreciation and amortisation] margins
near $0.30/gal.
Before 2008, US ethane supply and de-
mand had been in relative balance at around
900,000-1m bbl/day. But after the rapid accel-
eration of shale gas production, which tends
to be rich in NGL, todays ethane supply of
around 1.1m bbl/day has outpaced US crack-
ers ability to consume ethane of about 1m
bbl/day, notes Goodnight. This has led to
ethane rejection of between 100,000-
200,000 bbl/day, where this excess ethane is
added back to gas streams to be sold as fuel.
MIDDLE EAST MOVES UP THE CURVE
While the US moves down the global ethylene
cost curve on the back of cheap ethane costs,
the Middle East is moving up, according to
Alembic Global Advisors Ahmed.
Middle East ethane crackers still enjoy the
lowest costs in the world, with a 46% cost ad-
vantage relative to US ethane crackers, but
Middle East mixed feed crackers have a 24%
cost disadvantage to US ethane crackers, says
the analyst.
NGL production in Saudi Arabia has re-
mained relatively at over the last few years
while ethylene capacity has increased consid-
erably, says Ahmed. Saudi Arabia has been
running short of NGL since 2009 and, not sur-
prisingly, is considering heavier feeds like
naphtha for further chemical expansions.
The analyst adds that state oil and gas com-
pany Saudi Aramco has not made any new
ethane allocations to the chemical sector in
Saudi Arabia since 2006, because it is likely
that it foresaw ethane shortages.
New projects, such as Saudi Aramcos Sa-
dara joint venture with Dow Chemical and its
Petro Rabigh venture with Japans Sumitomo
Chemical, involve mixed feed crackers.
In Qatar, a moratorium on ad-
ditional gas development
projects in its massive offshore
North Field through 2014 will
limit new supplies. This has
clear ramications on petro-
chemical supply in Qatar.
Even if the very day the moratorium were
lifted, the decision to add a new cracker was
announced, it would still take four years to
bring it on stream, says Ahmed.
In Iran, aside from the global trade sanc-
tions led by the US, which is severely limiting
its petrochemical and derivative exports, the
government plans to eventually set natural
gas prices to market prices, noted the analyst.
Industrial projects, including the petro-
chemical projects, now have to pay around
$2/MMBtu for natural gas for the rst year of
the reform plan, which is considerably higher
than the past price of $0.53/MMbtu in early
2010, says Ahmed.
Looking ahead, Iran plans to increase gas
prices to 65% of the average export gas price
within 10 years, suggesting gas prices of $5.20-
6.50/MMBtu, the analyst adds.
Ultimately, all these changing cost factors
are worth another look when considering the
Middle Easts position on the global ethylene
cost curve.
Our view of an imminent peak in the com-
modity chemical cycle is primarily predicated
on what we consider to be a capacity vacuum
arising between 2012 and 2017 as Middle
Eastern producers exit the capacity game and
US capacity additions are still years out,
Ahmed says.
CONSIDERATIONS
Yet taking the longer view, many things have
to go right for the US market to absorb a 37%
increase in ethylene capacity over a relatively
short period of time. Methanol capacity is also
set to rise dramatically, as is propylene, with
seven propane dehydrogenation plants being
planned in North America.
Meanwhile, it is important to realise that the
US chemical sector is not the only group seek-
ing to take advantage of low natural gas prices.
In the coming years, there will be increas-
ing demand draws on natural gas, including
new electric power plants, fertilizer plants,
and liqueed natural gas (LNG) exports. The
debate on the latter issue is heating up with a
number of US chemical CEOs lining up
against unrestricted LNG exports, fearing that
this would diminish the industrys competi-
tive edge, along with lower energy prices en-
joyed by the wider manufacturing sector.
Already Switzerland-headquarted INEOS
plans to ship ethane from Pennsylvania to
its cracker in Norway by 2015. What could
be next?
SOURCE: ICIS Consulting
Ethane price, cents/gal Ethylene margin, cents/lb
Ethane price
Ethylene margin
US ETHYLENE MARGINS INCREASED DRAMATICALLY IN 2012 AS ETHANE PRICES FELL
0
40
80
120
160
2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
0
10
20
30
40
TIMING OF US ETHYLENE CAPACITY EXPANSIONS
m tonnes/year
Note: Includes ICIS estimate of Shell's cracker to be completed by 2019-2020
0
1
2
3
4
5
6
2019 2018 2017 2016 2015 2014 2013
Wet shale gas dynamics
are fundamentally changing
the game for integrated
North American-based
producers like Dow
ANDREW LIVERIS
CEO, Dow Chemical

ECS_250313_018-022 22 14/3/13 12:33:17
ECS_250313_023 23 15/3/13 12:38:50
www.icis.com 24
|
AFPM Supplement
|
March 2013
AFPM SHALE INFRASTRUCTURE
The booming production
of shale gas and oil is
raising serious questions
over how to get it directly
into the hands of customers
and how much can be
exported without affecting
the low-cost advantage
that is revitalising
manufacturing in the US
Delivering
on the shale
gas promise
SEVERAL REFINERIES have al-
ready begun or have announced
projects to increase light domestic
crude refning capacity, which has
the potential to cause a drop in
foreign crude imports.
Before the peak of demand in
2007 and the recession in 2008-
2009, seven new refnery projects
were planned to be completed be-
tween 2011 and 2015, which
would add about 1.1m bbl/day of
medium and heavy crude capacity
while reducing light capacity by
630,000 bbl/day, according to en-
gineering consulting frm Turner,
Mason & Company (TM&C).
However, since the shale oil pro-
duction boom, refners have reset
course for projects that will in-
crease light crude capacity while
maintaining medium and heavy
processing capacity.
This will lead to an increase in
overall refning capacity.
In addition to several refneries
that are maintaining current capac-
ity by processing more light domes-
tic grades and reducing foreign
crudes, six new projects have been
initiated or planned which will add
108,000 bbl/day of new light crude
capacity alone, TM&C said.
Both Valero and Flint Hills have
recently announced plans to in-
crease the processing capabilities
of Eagle Ford crude at their
Houston and Corpus Christi refner-
ies in Texas, respectively, while not
changing total crude rates.
Despite growth from heavy
Canadian crude growth and
projects at BPs Whiting refnery in
Indiana and Marathons Detroit re-
fnery in Michigan in order to meet
increasing mid-continent demand
Canadian crude will not be a ma-
jor competitor to Latin American
heavy crudes on the US Gulf Coast
until the Keystone XL pipeline is
completed, according to TM&C.
The domestic crudes are dis-
placing light sweet crudes that are
available for imports because the
import of light sweet is pegged to
the Brent price, explains Jeff
Hazle, AFPMs senior director of
refning technology.
The effect on prices is depend-
ent on last marginal barrel wher-
ever its from. This means that
there is not going to be a lot of
change. Refners will continue the
relationships with foreign import-
ers, Hazle says.
The real question is, can light
sweet domestic production grow to
a point where it can completely dis-
place other imports and sustain
that level?
One problem that arises is within
the product itself. According to
Hazle, there are issues posed by
domestic light sweet crudes be-
cause they are so paraffnic in
chemical composition that they do
not mix well with other crudes. This
can cause refners to run into op-
erational problems.
Refners will take in as much as
they can, but there are potential pit-
falls, says Hazle. It will be an inter-
esting story down the road. Have they
gotten everything out of them?
REFINERIES ANNA MATHERNE & BOBBIE CLARK HOUSTON
REFINERY FEEDSTOCKS SHIFT TO LIGHTER CRUDES
The shale boom has caused refiners to rethink capacity projects
R
o
y

L
u
c
k
T
he resurgence of oil and gas production
in the US because of the vast shale gas
plays has brought about fresh issues
and opportunities for the industry. One
of the biggest challenges is nding the means to
transport the shale products to where they can
be utilised effectively as feedstocks. This is crit-
ical to the petrochemical sector that is looking
to boost its ethylene production, which will
feed into new downstream investment.
As you know, our member companies have
shifted the feedstocks they use over time, says
Jim Cooper, vice president of petro chemicals at
We can use the ethane that
comes from shale production
and were very competitive
worldwide regarding ethylene
JIM COOPER
Vice president for petrochemicals, AFPM
ANNA MATHERNE & BOBBIE CLARK
HOUSTON
ECS_250313_024-027 24 14/3/13 12:52:26
|
AFPM Supplement
|
25

which serves reneries locally and in the Hou-
ston area, and it includes dock facilities at Free-
port and Texas City.
However, since its started, the Seaway pipe-
line has not been running at full capacity,
which is raising an even bigger issue for some.
Enterprise spokesman Rick Rainey claries
that the reduction is not because of technical
problems with Seaway, or with the terminal,
but because customers are not taking enough oil
out of the terminal. This may signal larger con-
cerns, that instead of alleviating the glut at
Cushing, we may just be exchanging one glut
for another, says Phil Flynn, senior market an-
alyst at Price Futures Group. Are we are pro-
ducing oil faster than the demand or the logis-
tics and storage will allow? There are fears of a
never-ending glut that may mean that we might
not be able to take full advantage of our growing
production prowess.
According to Flynn, the answer may be to
allow widespread export of US oil and gas. But,
as Flynn explains, under present legislation,
that may pose an even larger problem. Back
during the Arab oil embargo, the US passed a
law that banned all oil exports except for a few
specic instances and President Reagan did
allow exports to Canada. This president does
have the authority to allow exports to other
counties, yet that may be tough seeing that he is
anti-oil, Flynn explains.
NATURAL GAS EXPORTS
The abundant shale resources in the US has
also sparked a debate over whether to export
natural gas as liqueed natural gas (LNG), creat-
ing rifts between industrial users and mid-
stream project developers that want to ship
LNG to overseas markets. In recent weeks, the
various stakeholders have rmly entrenched
AFPM. In the US, we have a lot of exibility in
our manufacturing that other regions dont
have. We can use the ethane that comes from
shale production and were very competitive
worldwide regarding ethylene.
As each test-well from shale reserves pro-
duces more positive numbers, the problem of
bringing the oil and gas down to the US Gulf
region has increased. According to Cooper,
there have been signicant advances when it
comes to drilling in the shale plays. The im-
aging used when drilling has improved dra-
matically. We now have a much better under-
standing of what the shale play looks like,
Cooper explains. The advancement and ex-
perimentation of fracturing uids has im-
proved and is ongoing, including those that
dont use water at all.
But once the oil is drilled, transporting it be-
comes the next struggle. Enter the Keystone XL
and Seaway pipelines.
The Keystone XL pipeline would provide
US reneries with upwards of 700,000 bbl/
day of crude including conventional oil, shale
oil, partially upgraded synthetic oil and oil
sandsderived bitumen blends. The 875 mile
(1,408 km) pipeline, a project of TransCanada,
would cross the border between the US and
Canada. It would transport oil from Hardisty
in Alberta, and the Bakken shale formation in
the US, to Nebraska and eventually to rener-
ies along the US Gulf Coast.
However, the approval process on the pipe-
line has been a big struggle. On 1 March, the
US Department of State issued an expected
Environ mental Impact Statement (EIS) as part
of the process in the development of the Key-
stone XL pipeline.
While the state department did not judge
the project, since other federal agencies will
have an opportunity to review the draft and
public comments will be welcomed, the EIS
concluded that approval or denial of the pro-
posed project is unlikely to have a substantial
impact on the rate of development in the oil
sands or on the amount of heavy crude oil re-
ned in the Gulf coast area.
The draft also said that TransCanadas
Keystone XL pipeline would have little effect
on most resources along the projects pro-
posed route if the company takes certain miti-
gation measures.
On 22 January, Nebraskas governor Dave
Heineman announced the approval of a re-
vised route for the Keystone XL pipeline. With
that hurdle cleared, the next step is the review
from the state department.
The Obama administrations decision is not
expected until about mid-year.
Meanwhile, Enterprise Products and part-
ner Enbridge completed the expansion of the
500 mile Seaway crude oil pipeline
from Cushing, Oklahoma, to the US Gulf
Coast in January this year. The expansion al-
lowed capacity to increase from 150,000 bbl/
day to 400,000 bbl/day.
In addition to the pipeline that transports
crude oil from Cushing to the Gulf Coast, the
Seaway system includes a terminal and distri-
bution network originating in Texas City, Texas,
S
h
a
n
n
o
n
p
a
t
r
ic
k
Instead of alleviating the
glut at Cushing, we may
just be exchanging one
glut for another
PHIL FLYNN
Senior market analyst at Price Futures Group
ECS_250313_024-027 25 14/3/13 15:06:05
www.icis.com 26
|
AFPM Supplement
|
March 2013
AFPM SHALE INFRASTRUCTURE
THE INCREASE of natural gas
liquids (NGL) production has
created a massive oversupply
situation in the US, one that
has caused prices to fall dra-
matically year on year.
AFPMs Cooper says that if
the US can keep ethane abun-
dant, it will remain more com-
petitive with other countries.
But it will take a while to build
up infrastructure to get the pro-
panes and butanes to petro-
chemical facilities. Build-up in
capacity is different than a
grassroots plant, says Cooper.
Ethane is certainly abundant
right now, so much so that
some processors have resorted
to ethane rejection, where it is
left in the natural gas stream
and used to heat homes and
businesses. ONEOK Partners, a
natural gas processing com-
pany, had to revise its 2013
operating income outlook
based on lower expected NGL
volumes because of antici-
pated widespread and pro-
longed ethane rejection.
The company said ethane
rejection will be commonplace
in 2013, adding that it has
heard estimates that ethane
rejection volumes are between
150,000 and 175,000 bbl/day.
We believe the ethane rejec-
tion number is higher, based
upon what weve seen from mid-
Continent and Rockies plants
connected to our NGL sys-
tems, says ONEOK president
Terry Spencer. We are currently
experiencing over 90,000 bbl/
day of ethane rejection across
our NGL systems and expect it
to remain at those levels for
much of this year.
However, he says they ex-
pect full ethane recovery during
most of 2014 and 2015. As
we move through 2016 into
2017, we anticipate an under-
supplied position as ethane
demand will increase when
these cracker expansions and
new worldclass petrochemical
facilities are completed.
Those facilities are projected
to add 700,000 bbl/day of de-
mand to the market, he adds.
However, William Waldheim, a
director for DCP Midstream,
says ethane rejection is not as
widespread as people think.
The ethane environment is
going to be oversupplied... but I
think... its really that the ethane
has been rejected in the disad-
vantaged areas, which is
Wyoming, the Bakken, in those
types of areas, he argues.
Those areas do not have the
infrastructure, such as pipe-
lines, to proftably extract
ethane and transport it to the
right places.
So I would generally say
that we wont be affected nec-
essarily by ethane rejection.
And I just remind everybody that
the ethane component of the
barrel is only about 10% of its
value. We really are looking for a
recovery in the price of propane
with these export terminals that
will be starting as we speak.
And actually this summer, with
increased propane exports, we
would expect propane to begin
to move to higher levels, which
actually should help the price of
ethane as well.
Two companies, Enterprise
Partners and Targa, have an-
nounced plans to expand pro-
pane export facilities, and Vitol
along with ConocoPhillips are
considering building ports to
handle propane exports.
Propane is currently oversup-
plied in the Gulf Coast, as a
result of last years mild winter
and increased production.
Accordingly, spot prices have
been much lower.
In fact, some chemical com-
panies have decided to take
advantage of the low price
and crack propane instead
of ethane.
Analysts say the amount of
propane being cracked today
is at record levels, although
ethane continues to be the
feedstock of choice for most
petrochemical producers.
AJ Teague, chief operating
offcer of Enterprise Products,
says once the expansion of its
export terminal is complete,
propane prices should strength-
en. Propane is enjoying a bet-
ter winter than last year, and its
relative weakness, I believe, is a
refection at least in part of the
delay in our export expansion,
Teague says.
The 40m bbl we exported
last year will grow to over 60m
bbl this year. In 2012,
Enterprise debottlenecked its
existing export facility to add
100,000 bbl/day of capacity.
Once the current expansion
project is complete, capacity will
increase by up to 3.5m bbl/
month, bringing the total capac-
ity to 7.5m bbl/month.
The other thing that I think
ultimately helps ethane to some
extent is that propane compet-
ing with ethane and the crack-
ers, because of the warm winter
we had in the last year primarily,
youre having a little stronger
winter this year. When that ex-
port terminal comes up, were
going to be exporting quite a lot
more propane, Teague argues.
So I think it will have the ten-
dency to pull propane out of that
competition with ethane and
the crackers.
www.icis.com
their positions, as the regulatory US De-
partment of Energy (DOE) is expected to renew
its consideration of pending LNG export licenc-
es. Industrial consumers, primarily led by US
manufacturing heavyweight Dow Chemical,
have also become more vocal in supporting
their stance to protect domestic natural gas
prices. Dow Chemical opposes unchecked ap-
provals of LNG exports and throws caution on
the existing regulatory procedure.
Meanwhile, the Center for LNG, the US
LNG industrys main trade organisation, and
the American Petroleum Institute, have
stepped up advocacy efforts to back approvals
for LNG exports. More than 20 export projects
have sought export licences from the US De-
partment of Energy (DOE). Nearly all the pro-
posals are seeking to export to countries out-
side free-trade agreements with the US, to
nations such as Japan, China and India, which
are major LNG consumers.
However, the DOE has halted approvals of
any new LNG export licences for these coun-
tries since granting the rst non-free-trade-
agreement licence to US-based project devel-
oper Cheniere, which is adapting its existing
Sabine Pass import terminal in Cameron Par-
ish, Louisiana, to create an 18m tonne/year liq-
uefaction facility.
Although the backlog of pending projects
now totals more than 29bn cubic feet (bcf)/day
of potential exports, most industry analysts esti-
mate US LNG capacity will see expansion to
between 6-8bcf/day by 2020, given the high bar-
riers of capital costs and commercial realisation
of lique faction facilities.
A recent assumption by investment bank
Goldman Sachs puts this estimate at about
6.76bcf/day of liquefaction capacity to be built
between 2016 and 2020. However, we high-
light that potential demand growth in the next
10 years, particularly from Asia, is likely to
once again tighten spot markets, creating the
necessary conditions to accommodate some
(but not all) of the large liquefaction projects
currently being proposed in North America,
according to a 19 February analysts note.
Yet some believe that exporting shale
resources is not the best way to capitalise
on the value of all that oil and gas. At a recent
hearing in front of the US Senate Energy and
Natural Resources Committee, Dow Chemical
CEO Andrew Liveris expressed his concern
that large-scale expansion of US LNG exports
NGLS ANNA MATHERNE & BOBBIE CLARK HOUSTON
CURRENT OVERSUPPLY WILL NOT LAST FOR LONG
Propane is enjoying a better winter than last year
The question before us
is not whether we have the
energy we need to grow and
prosper. We do
JACK GERARD
President of the American Petroleum Institute
S
a
r
a
h

A
c
k
e
r
m
a
n

ECS_250313_024-027 26 20/3/13 18:54:15
|
AFPM Supplement
|
27
could combine with broader electric utility
use of gas, an increasing role for natural gas
as a transportation fuel and expanding drill-
ing regulations to effectively kill the golden
goose by driving domestic natural gas prices
ever higher.
Dow supports expanded exports and
trade, Liveris said. But we also believe it is
crucial that DOE have the information and
analysis necessary to properly apply the Natu-
ral Gas Act requirement that exports be con-
sistent with the public interest. He urged
Congress to ensure that DOEs LNG export-
permitting process be opened to wider com-
ment by the full range of industries that de-
pend on natural gas as a fuel or feedstock.
But Jack Gerard, president of the American
Petroleum Institute (API), argues that in addi-
tion to driving a domestic manufacturing ren-
aissance, the new availability of natural gas po-
sitions the US as a global energy superpower.
LNG exports will create thousands of US jobs,
generate billions of dollars in revenue, improve
our trade decit and spur major investment in
infrastructure, which will strengthen our ener-
gy security, he said in his testimony. The
question before us is not whether we have the
energy we need to grow and prosper. We do,
Gerard said, adding: The question is whether
we have the political wisdom and foresight to
create a national energy policy that harnesses
our great potential as an energy superpower.
RENAISSANCE DISCUSSIONS
Andrew Gellman, the head of chemical engi-
neering for Carnegie Mellon University in Pitts-
burgh, Pennsylvania, says the real way to gain
full value from shale gas is to keep it in the US to
use as feedstock for chemical production. If we
ship it out well have to buy the chemicals back
from whomever gets it, he adds. Its clear that
we want to keep it here and try to process it.
Gellman and Carnegie University have
teamed up with the AFPM to deliver a series of
discussions entitled the Manufacturing Ren-
aissance Series, that will focus on the return of
manufacturing to the US as a result of increased
shale production. The rst of these discussions
took place on 10 January in Pittsburgh, Penn-
sylvania, at Carnegie Mellon.
At that meeting, they brainstormed the major
issues associated with establishing a signicant
chemical manufacturing industry based on
shale gas. Each issue will be addressed more
deeply at upcoming meetings. The next one is
set for 4 April in Pittsburgh. As of press time,
the topic had not yet been decided. Possible
topics that will be addressed include infastruc-
ture, research and innovation, education and
workforce development, the environment,
public policy and nancing. But the export of
shale resources was denitely a hot topic at the
most recent event.
I think therell be some real tension between
those who are in the business of exporting versus
those in the business of adding value, Gellman
says. That tension is certainly going to be there.
Further complicating matters is the fact that
many companies only a few years ago built ter-
minals to accept natural gas imports. Then the
price of natural gas and oil went through the
roof and vast stores of untapped resources were
suddenly protable.
Now that we are no longer in a position to im-
port natural gas, all those terminals are just
white elephants, not doing anything, Gellman
says. If there is an opportunity for those com-
panies to use the same terminals to export natu-
ral gas, they will certainly want to do that.
Additional reporting by ICIS editors Ruth Liao and
Joe Kamalick
www.songwon.com
SONGNOX

Basic and Specialty Antioxidants
SONGNOX
OPS
One Pack Systems
SABOSTAB
Hindered Amine Light Stabilizers

SONGLIGHT

Hindered Amine Light Stabilizers
SONGSORB

UV Light Absorbers
SONGSTAB

Acid Scavengers
SONGSTAB

PVC Stabilizers
SONGCAT

Tin Intermediates
SONGCIZER

Plasticizers
ECS_250313_024-027 27 14/3/13 12:54:19
www.icis.com 28
|
AFPM Supplement
|
March 2013
AFPM OLEFINS/POLYMERS
MICHELLE KLUMP & JOHN DIETRICH HOUSTON
US olens and polymers markets are facing pressures
from uncertain end-use markets, rather than high
feedstock prices
Where will
all the new
output go?
T
he US olens market seems to have
its feedstock issues largely sorted out,
leaving the evolution of end-market
demand as its biggest concern.
With a spate of ethane crackers scheduled
for construction in the coming years, using
cheap shale gas as feedstock, market players
expect ethylene costs to go down and margins
to increase. Propylene supply is expected to
be bolstered by construction of several pro-
pane dehydrogenation (PDH) units, creating a
cheap supply of on-purpose material. How-
ever, cheap feedstocks are no guarantee of
strong future sales.
At the end of the day, 6bn lb (2.7m tonnes)
of propylene derivatives have to be exported,
says Dan Lippe, president of Petral Consulting
Company. Its the same thing for ethylene,
only more so.
Announcements by market players have
projected that an additional 10m tonnes/year
of ethylene capacity will be started up in the
US by 2017.
Lippe argues that the US ethylene cost
structure must change in order for down-
stream derivatives such as polyethylene (PE)
and polyvinyl chloride (PVC) to ourish on
the export market. The industry is basing its
costs on the very highest-cost basis of pro-
duction, using naphtha, Lippe says. That
has to change.
Another consultant notes that the key issue
remains what US PE and PVC prices are rela-
tive to overseas prices, rather than ethylene.
Right now, the ethylene guys are making all
the margins because supply is tight, the con-
sultant says. Once we get all this new ethyl-
ene, the margins will shift downstream.
For 2012, export sales of PE accounted for
roughly 17-22% of total sales for the year, ac-
cording to the American Chemistry Council
(ACC). By the end of the decade, the share of
US PE production going into exports could
rise to as high as 42%, according to Laurence
Alexander, an analyst with the banking
group Jefferies.
That potential growth in the US export
market is what is fuelling capacity expansion
talk in North America. While much of the talk
has centred on the ethylene market, there
have been a few announcements in the PE
arena. ExxonMobil, Chevron Phillips Chemi-
cal, Dow Chemical, Formosa Plastics and
Shell Chemicals have each announced at least
tentative plans to build PE units downstream
of proposed crackers or cracker expansions.
There is even talk of a start-up company
Appalachian Resins which has announced
plans to build a 500m lb/year PE plant at an
undisclosed location south of Wheeling,
West Virginia. Details about investors for the
proposed plant have not been released.
There are some of those that are pretty
well going to happen, says one market par-
ticipant, referring to projects such as Chevron
Phillips and ExxonMobils, which are further
along in the planning process. The other
ones are a little more tenuous.
One producer adds that the increase in ex-
port demand will lead to more stable pricing
in the future, with fewer swings up and down.
The producer says that dynamic would also
take away some of the power of North Ameri-
can buyers. It will be a sellers market, the
producer warned.
However, another producer is more scepti-
cal of the improved export market for the US,
adding that even as the US adds capacity, other
countries are adding capacity as well. There is
no guarantee that the global market will buy
the excess US material, says the producer.
Another risk is the possibility of exports of
liqueed natural gas, adds the producer. That
has kind of reared its ugly head, the producer
says, adding that it could have a negative ef-
fect on feedstock pricing in the US and on
that advantage that everybody is betting on
over here.
ON-PURPOSE PROPYLENE BOOM
A similar trend will be key for propylene and
its derivatives, mostly in the polypropylene
(PP) market. Thanks to the expected cost ad-
vantages of PDH technology, at least seven
new units have been announced with start-
up dates between 2015 and 2018. At least 3m
tonnes/year of new propylene capacity is ex-
pected, and most of the projections have an
additional 6m tonnes/year coming out of the
US market.
Most of that new capacity will have to be
sold as PP or acrylonitrile (ACN). Exports of Exports of polyolefins from the US are set to rise sharply
B
o
r
o
u
g
e
ECS_250313_028-030 28 14/3/13 14:47:47
|
AFPM Supplement
|
29
For the full year of 2012, high density pol-
yethylene (HDPE) saw sales growth of about
2.2%, low density polyethylene (LDPE) saw
sales growth of less than 1%, while linear
low density polyethylene (LLDPE) saw a
sales decline of around 1.7%, according to
resin statistics from the American Chemistry
Council (ACC).
DOMESTIC PICK UP IN SIGHT?
The 2012 growth rates are close to the US GDP
growth of 1.5% for 2012. One producer says it
expects a similar alignment in 2013, with pos-
sible improvement as the US economy im-
proves. Domestic demand hasnt grown a
whole lot in the last 10 years, but the domestic
market should be better this year, I think, be-
cause the economy is marginally better than it
was last year.
The automotive sector, which is not current-
ly a huge demand pull for the PE market, may
become more of a factor in 2013, according to
one producer. Another area of growth for the
industry could be shrink and stretch lm, for
which demand will improve as the construc-
tion market improves, the producer says.
However, the real future growth for the US
PE market is expected to come from export
demand, particularly as low cost feedstocks
cumene derivatives will likely be driven more
by the US benzene market rather than the pro-
pylene market.
We have three years to gear up to sell 6bn
lb/year that we arent selling, Lippe says.
The future health of the PP industry re-
mains in question, with market participants
split on the effect that the announced PDH
units will have on the PP market. Jim Gal-
logly, CEO of LyondellBasell, said during a
company conference call that he is sceptical
that everything that has been announced will
be built. Well see if all of those projects
happen, Gallogly said. Im a bit more scep-
tical, the most on this propane advantage. Its
very, very strong right now, but as you know,
propane, unlike ethylene, can be put on a
boat. And over time, there will be more pro-
pane export here in the United States.
Other producers are convinced that PDH
units will change the market, creating more
propylene which will result in capacity ex-
pansion in the PP market. PP will begin to be
like PE you will approach the lower produc-
er cost structure, and then you will begin to
see PP decouple from propylene, the pro-
ducer argues. You will have globally com-
petitive pricing.
Domestically, ethylene margins remain
strong, owing to continued cheap ethane
costs and high spot prices. Through the end
of February, US spot ethylene trades were
averaging 62.80 cents/lb in 2013, up from an
average of 61.07 cents/lb through the same
period a year ago.
The higher ethylene spot prices pushed
margins on ethane-based spot material to a
near-record high of 60.03 cents/lb for the week
ended 28 January 2013. Since then, margins
have dipped to 54.95 cents/lb at the start of
March on improved supply from several
cracker restarts.
Downstream, PE prices are following a sim-
ilar trend as in 2012, with increases in the rst
half of the year and expectations for prices to
retreat in the second half, following the com-
pletion of several cracker turnarounds.
With a similar pricing pattern, market partici-
pants are also expecting a similar rate of growth
in the market for 2013 as was seen in 2012.
R
e
x

F
e
a
t
u
r
e
s
At the end of the day, 6bn
lb of propylene derivatives
have to be exported
DAN LIPPE
President, Petral Consulting Company
Stretch and shrink wrap film are two prime areas for domestic growth for PE

ECS_250313_028-030 29 14/3/13 13:10:12
www.icis.com 30
|
AFPM Supplement
|
March 2013
AFPM OLEFINS/POLYMERS
THE US butadiene (BD) mar-
ket is facing demand issues,
which are outweighing supply
concerns. US BD contract
prices have fallen to 84
cents/lb ($1,852/tonne) in
March, down from year-ago
levels of $1.45/lb.
The 42% drop in contract
values has been largely driven
by weak demand from the key
styrene butadiene rubber
(SBR) market. Although most
SBR goes into automotive
tyres, and US automotive
sales have been strong in
2013, sales of replacement
tyres have fallen drastically.
Replacement tyre sales are
the key driver of SBR, rather
than new automotive sales.
Sources say the fall in replace-
ment tyres can be attributed to
strong sales of new cars re-
placing older ones that would
need new tyres, as well as
weak economic conditions.
US 2013 sales of light vehi-
cles and trucks are at
2,235,352 units through
February, up by 8.4% year on
year from 2,062,722 units.
The weakness in the US
domestic market has pushed
players eyes toward Asian
rubber and tyre markets. The
price increase in March was
not unexpected, says one
market source. But given the
high BD inventories following
the layoff for the Chinese
Lunar New Year, its hard to
get ultra bullish about any fur-
ther increases in BD prices
going forward.
Another market participant
says that the key for BD prices
in Asia going forward will be
how derivatives such as buta-
diene rubber SBR respond.
Unless we see some de-
mand pull, its probably going
to be diffcult for BD to get a
whole lot higher, the market
participant says.
Another source adds:
Were watching the Asian
market very carefully to see if
theres real demand from the
rubber producers.
Theres also concern that
Asian producers could cut
production even further if BD
prices rise further.
In the downstream market
for acrylonitrile butadiene sty-
rene (ABS) copolymer, demand
has been steady to strong to
start 2013, sources say.
Most of the strength has
come from an expected re-
bound in the US construction
market, as consumer electron-
ics demand has been steady
at best.
However, the increase in
demand from the ABS market
is not expected to be able to
overcome its smaller sales
volumes compared with SBR,
keeping US BD demand soft
for the frst half of 2013.
On the supply side, market
sources say the continuing
switch at US crackers to lighter
feeds is a long-term issue, but
short-term supply is balanced
because of the weak demand.
According to consulting frm
Jacobs Consulting, January
BD production was 256m lb
(116,000 tonnes), up by 2%
year on year from 251m lb.
However, imports of BD
into the US fell by 20% year
on year, according to the US
International Trade
Commission (ITC).
Imports in 2012 totalled
590,036 tonnes, down from
734,788 tonnes a year ago.
Most of the fall came from
dropping imports from
Colombia, Iraq, Algeria and
from Canada.
BUTADIENE JOHN DIETRICH & MARK YOST HOUSTON
US BUTADIENE MARKET FACING WEAKER
DEMAND AND TIGHTER SUPPLY
continue to give US producers a cost ad-
vantage, sources say. Domestic propylene
contract prices appear to be falling gradually
after hitting a 20-month high in February 2013
on tight supply.
Several cracker outages and an unplanned
23-day turnaround at PetroLogistics PDH unit
tightened supply considerably, pushing Feb-
ruary PGP contracts to settle at 79 cents/lb.
Contracts were expected to fall in March by
5-6 cents/lb, as demand weakened because of
high inventories downstream. Supply is ex-
pected to be balanced to tight for the rest of
the rst half of the year, as cracker production
is limited by lighter feeds and US reneries
keep operating rates below 90%.
The low operating rates and tight propylene
inventories have also kept RGP spot prices
high and at a narrower premium to PGP.
PGP premiums over RGP have fallen to an
average of 2.97 cents/lb for the rst nine weeks
of 2013, compared with premiums of 7.31
cents/lb for the same time period a year ago.
In the polypropylene (PP) market, feedstock
pricing volatility has resulted in weak de-
mand in the rst quarter, with prices rising by
21 cents/lb, or nearly 31%, in the rst two
months of the year.
In addition to the feedstock increases, PP
producers were able to add a penny margin so
far in 2013, with at least one producer switch-
ing many of its contracts away from monomer-
based pricing to an index-based pricing.
While market participants had expected PP
pricing to be more stable in 2013, the pricing
trend so far for the year is following a very
similar pattern to 2012, when prices rose by
38% in the rst three months of the year.
In 2012, the PP market saw a sales growth
of less than 1%, according to data from the
ACC. Domestic sales improved by more than
1%, while exports fell by 11% for the year, ac-
cording to the ACC.
At least one producer says it expects slight-
ly better sales growth in 2013, adding that it
expects to see around 2-3% growth for the
year. Growth has been strong in injection
moulding applications, as well as in com-
pounding and the automotive sector.
Automotive sales are booming and manu-
facturing is beginning to swing back to the US,
so you will have a huge increase on the de-
mand side, one producer says. But right
now, prices are too high.
Replacement tyre sales have been weak in the US, impacting SBR demand
By the end of the decade,
the share of US PE production
going into exports could rise
to as high as 42%
LAURENCE ALEXANDER
Analyst, Jefferies
R
e
x

F
e
a
t
u
r
e
s

ECS_250313_028-030 30 14/3/13 13:10:33
ICIS offers analysis and consulting services for the global petrochemical, energy and
refining industries to help you navigate the complex global markets.
Your strategic partner for
identifying medium-to-long term
business opportunities
To find out more about these services,
visit www.icis.com/services or email enquiry@icis.com
Supply & Demand (S&D) database service fully reconciled data across 160 countries
and 100 markets, with historical data and projections from 1978 2030
Annual Studies global studies, as well as dedicated reports on domestic China markets,
which provide detailed expert analysis and forecast data on supply, demand, production
and capacity for specific markets
Analysis services
ICIS has a range of data services and market insight reports which give you multiple views of the
marketplace, enabling you to steer your business forward with skill and confidence.
Global consultancy services
ICIS provides bespoke advisory services to support your individual business goals
- from expert research analysis to strategic consulting services that will guide you
through every phase of your planned investments or operational expansions.
ICIS_Analysis&Consulting_HP_Ad_AW.indd 1 16/11/12 14:27:55
Going GREEN?
CONSIDER POTASSIUM CHEMISTRY!
TM
ECS_250313_031 31 15/3/13 16:29:21
www.icis.com 32
|
AFPM Supplement
|
March 2013
AFPM TALENT AND RECRUITMENT
CYNTHIA CHALLENER VERMONT
North Americas petrochemicals industry is in an expansionary mood, but will it
nd enough of the right people to full its plans, or is the brain drain imminent?
The hunt is on for
talented workers
resources within the group of already retired
resources will still be an important aspect
going forward, Dickson believes companies
will need to extend the retirement age for those
workers that would otherwise be retiring soon,
or perhaps retain them on a part-time basis.
Regardless of the specic strategies, com-
panies denitely need to develop a new
model for managing this aspect of the human
resource equation, Heiser asserts.
Even with new strategies however, there
will still not be enough people to ll the gap
of workers needed. As the experienced people
retire, others are promoted to take their place,
and the layers of employees at the lower level
become thinner, according to Andy Talking-
ton, managing director, global chemicals and
crop science with executive re-
cruiting rm Korn Ferry Inter-
national.
Filling these positions is al-
ready difcult, without having
to meet the needs of new shale
gas-driven projects.
First, the increasing emphasis on sustaina-
bility has led to the need to save energy and
water and minimise resource consumption,
which often requires more complex produc-
tion systems that in turn require a higher
level of skill to operate, according to Heiser.
Second is the regulatory environment.
Most US policy has been in the area of safety
and the environment, and not on building de-
mand. That puts the country at a disadvan-
tage compared to many emerging regions,
where extensive investments are being made
in education and economic development,
A
ccess to cheap domestic natural gas
produced from shale deposits has
made investment in new petro-
chemical projects in North America
attractive for the rst time in decades. The
various projects announced will require high-
ly skilled workers for the initial construction
phase as well as the continued maintenance
and operation of these facilities.
Such expansion is exciting for the industry,
but comes at a time when a large number of
industry employees are now within ve to 10
years of retirement. In addition, many of these
projects will be located in areas that lack an
existing infrastructure and a pool of appropri-
ately trained workers.
A negative perception of the chemical in-
dustry among the public in general, and
among newly graduated students in particu-
lar, also continues to plague the sector, which
will be competing for available talent with
many other growing industries.
Petrochemical rms must, therefore, de-
velop and begin implementing creative strate-
gies to address their human resource needs.
The chemical industry, particularly in the
US and Europe, has been facing the prospect
of a potential brain drain for several years,
notes Duane Dickson, a principal at Deloitte
Consulting. The baby boomers that were
hired in the 1970s are all within 510 years of
retirement. That means a larger number of ex-
perienced people will soon be leaving these
companies, Dickson adds.
VALUING EXPERIENCE
The loss of company knowledge is a critical
issue. It takes a good 510 years of working to
really gain an understanding of the industry,
Craig Heiser, managing director of talent and
organisation for the energy/chemicals indus-
tries with Accenture, observes. Companies
need to look at different opportunities for mak-
ing creative use of experienced employees.
In the past, companies have often hired-
back retired workers as contractors, which
ends up costing more. While nding contract
Dickson, also the global chemicals sector
leader at Deloitte Touche Tohmatsu, says.
Thirdly, the petrochemical industry will be
looking for people in the same pool of talent
accessed by the upstream energy sector,
downstream ne and specialty chemical in-
dustries, and other related and unrelated mar-
kets such as biotechnology, healthcare, com-
puters and microelectronics.
IN THE WRONG PLACE
The energy sector, which is developing cheap
natural gas feedstock, is already struggling to
nd skilled workers, from welders to truck-
drivers to engineers, particularly in areas that
lack existing infrastructure.
Many of the planned new crackers will suf-
fer the same difculties, because they will be
located outside the typical petrochemical pro-
duction areas such as in Pennsylvania and
North Dakota where there is no infrastruc-
ture or pool of skilled labour.
The current generation does not seem to
be that interested in moving around to new
places, and those that are interested have al-
ready taken advantage of opportunities to
work in other countries in the Middle East
and Asia where the petrochemical industry
has been expanding and has been a further
drain on resources, Dickson says.
He further notes that the shale gas environ-
ment is entrepreneurial and thus constantly
changing, and the need to be able to respond
quickly only intensies the stafng issues.
Competition for newly graduated engineers
and other technically trained people is also
erce. About 20 years ago, according to Phillip
R Westmoreland, president of the American
Institute of Chemical Engineers (AIChE), 65%
of US chemical engineering graduates were
entering the fuels and chemicals industry. Ten
years later, that number had fallen to 39%.
Now the demand for chemical engineers
is growing as increasing numbers of manu-
facturing industries become more reliant on
the properties of chemicals. They arent just
assembling things any more, but forming
and processing new materials, Westmore-
land comments.
The industry faces a big
challenge in overcoming
current public perceptions
and conveying that chemistry
is fundamental to life
ANDY TALKINGTON
Managing director, global chemicals and
crop science, Korn Ferry International
ECS_250313_032-033 32 14/3/13 13:14:54
|
AFPM Supplement
|
33
The result has been a dramatic rise in the
number of students graduating with a degree
in chemical engineering up from a low of
4,900 graduates per year in 2008 to 6,500 per
year for the last two years, notes AIChE exec-
utive director June Wispelwey.
Unfortunately for the petrochemical indus-
try, according to Talkington, these new gradu-
ates prefer many of the newer sectors, for ex-
ample biotechnology and microelectronics.
Despite the fact that the chemical indus-
try has good, relatively well-paying jobs, its
attractiveness compared to other technolo-
gy-based businesses is currently very low.
The industry faces a big challenge in over-
coming public perceptions and conveying
that chemistry is fundamental to life, Talk-
ington remarks.
Trade groups, individual companies and
academic institutions are responding and at-
tempting to tell the story in a more effective
manner. The National Academy of Engi-
neers, for example, has launched a Chang-
ing the Conversation initiative highlighting
how engineers are helping to solve major glo-
bal challenges, according to Wispelwey.
Many new graduates want to be part of
these solutions. Talking to them about how
the chemical industry can help address water
quality, sustainable energy, waste manage-
ment, healthcare, and other worldwide is-
sues is much more inviting, she says.
In addition, the initiative also places a
great deal of emphasis on describing engi-
neering opportunities and careers in new
ways that are more welcoming to women and
other groups presently under-represented in
the Science, Technology, Engineering and
Mathematics (STEM) workforce.
INTERNSHIPS ARE POSITIVE
There are many programmes designed to en-
gage and educate children in grades K-12 and
at college level about chemistry and its im-
portance. Heiser also sees the growing
number of internship programmes as a posi-
tive step forward.
However, he cautions, companies need to
invest in these programmes and be sure to
give these high school and college students
an amazing and challenging experience so
that they are excited about coming back.
Engineers are just one of many types of
skilled workers that will be in short supply.
Most large companies will be able to ll man-
agerial positions either by promoting from
within, repatriating expats, or poaching from
one another and can hire retired workers as
contractors for the build phase. However,
they will struggle to nd reliable, safe people
to operate and maintain the new facilities
once they are built, according to Heiser.
Talkington adds that: It takes a specialised
skill-set to run and maintain a chemical plant,
including trades people, pipe-tters, mill-
wrights, [and] technicians, etc, and they all
need to be located physically near the plant
particularly in places like Pennsylvania and
West Virginia. These people will all need to
be brought in.
GLOBAL TALENT SEARCH
To nd these people, many companies will
have to look globally, not only by bringing
back expats, but also by using foreign nation-
als. In the short term, I expect the chemical
industry to join with IT and software indus-
tries in pushing for a better visa programme
for temporary workers, Talkington says.
The US must participate in the global talent
market; if we dont develop the skilled work-
ers we need here, then we will have to import
them. How successful the industry will be,
though, will depend on the policy-makers.
Petrochemical rms are also nding it nec-
essary to increase the attractiveness of com-
pensation packages in terms of both wages
and benets. We also hear increasingly that
companies looking to hire talented, ambitious
people that are eager to be effective and pro-
ductive, are nding that work-life balance is-
sues are very important. Those rms that are
innovative and support employees in this re-
spect will be in an advantageous position,
Talkington observes.
Overall, petrochemical companies that are
creative about managing all aspects of their
human resources effort will have better luck
attracting and retaining the skilled workforce
they need, in order to take advantage of the
opportunities afforded to the industry
through the development of shale gas.
They should consider all avenues, Dickson
says: retaining skilled workers for longer;
focusing on the technical education of young
people; increasing the attractiveness of the
industry for new graduates; accessing the glo-
bal talent pool; and offering innovative com-
pensation packages.
There is no simple solution to the
[human] resources issue that the industry
faces. However, if companies are going to nd
ways to manage these issues, they must be
planning today in order to be prepared for the
time when the situation will be most acute,
Heiser concludes.
Finding qualified people to interview may well become the hardest part of recruitment
R
e
x

F
e
a
t
u
r
e
s
ECS_250313_032-033 33 14/3/13 13:15:26
www.icis.com 34
|
AFPM Supplement
|
March 2013
AFPM LIST OF SUITES
By invitation or appointment only
Air Liquide GHS Suites
Akzo Nobel Functional Chemicals Ethyleneamines GHS
Suite
Albemarle MRC Suite
Albertas Industrial Heartland Association MRC Suite
AllChem Industrial Chemicals Group MRC Suite
AOC WES Camino Real
Arizona Chemical Company GHS Suite
Arkema Functional Additives MRC Suite
Arkema - Direct Procurement & Thiochemicals division
GHS Suite
Arkema Acrylics Business GHS Suite
Asahi Kasei Chemicals MRC Suites
Ascend Performance Materials MRC Suite
Ascend Performance Materials Chemicals WES Suite
Atlantic Methanol HPR Suite
Axiall (formerly Georgia Gulf) GHS Suite
Axiall (formerly PPG) SAM Suite
BASF MRC Suite
BASF WES Goraz Room
BASF, Catalysts Division SAM Salon A SAM Suite
BASF Polyamide and Intermediates GHS Suite
BASF MRC Suite
BP Petrochemicals MRC Conf. Room 12 Suite
Braskem GHS Travis D
Brenntag Latin America SAM Salon D
Calumet Specialty Products GHS Suite
Celanese MRC Conf. Rooms 15,16
Conf. Suite 514
Chemtura AO/UV GHS Suite
Chemtura Procurement GHS Suite
Clariant MRC Conf. Rooms 1, 8
Cornerstone Chemical Co. MRC Suite
Croda SAM Suite
Delamine GHS Suite
Deltech GHS Suite
Dow Chemical The WES Navarro Ballroom
Eastman Chemical MRC Conf. Rooms 17, 18, 19
Eastman Chemical WES La Babia Room
Elekeiroz GHS Suite
Emerald Performance Materials MRC Suite
Enterprise Products Operating SAM Salon B
Evonik Cyro MRC Suite
ExxonMobil Chemical HPR Mezzanine
ExxonMobil Chemical Intermediates HPR
Hacienda 1, Hacienda 2 and El Mirador A East
Flint Hills Resources SAM Valero Room
Gantrade MRC Conf. Rooms 13,14 Suite
GE Water & Process Technologies MRC Suite
Georgia-Pacifc Chemicals GHS Suite
Grace Davison GHS Presidio C
Great Lakes Solutions/Chemtura Organometallics GHS
Suite
Grupo Idesa MRC Suite
HollyFrontier Lubricants and Specialty Products GHS
Travis C
Huntsman MRC Salon C
Suites
ICIS Consulting SAM Suite
IHS Chemical MRC Conf. Room 11
Indorama Ventures GHS Suite
INEOS Nitriles GHS Suite
INEOS Olefns & Polymers USA MRC Suite
INEOS Oligomers MRC Suites
INEOS Oxide WES Suite
INEOS Phenol WES Zapata Room
INTEGRA SAM Suite
International Process Plants IPP MRC Suite
INVISTA MRC Conf. Room 10
KH Neochem MRC Suite
Koch Methanol GHS Suite
Kolmar Americas MRC Suite
LANXESS MRC Suite
LANXESS SAM Riverview Room
LBC Tank Terminals GHS Suite
LG International SAM Milam Room
Linde Group MRC Suite
Lucite International-Procurement MRC Suite
LyondellBasell Industries MRC Suites
M. Cassab Group MRC Suite
Marubeni SAM Bowie & Travis Rooms Suite
MEGlobal GHS Suites
Merisol MRC Suite
Methanex WES Villa Room
Mitsui & Co GHS Bonham A,B,C,D and E Rooms Suites
Oiltanking MRC Suite
Olin Chlor Alkali Products MRC Suite
Oswaldo Cruz Quimica MRC Suite
OXEA MRC Room 544 Conf. Room 4
MRC Salon E (25/3 pm only)
Oxiteno MRC Suite
Potash Sales (PCS Corp.) WES Lantana Room
Peter Cremer North America MRC Suite
PetroLogistics GHS Suite
Praxair GHS Suite
Procter & Gamble Chemicals MRC Suite
QuantiQ-IQ Solucoes & Quimica MRC Suite
SABIC MRC Suites SAM Bonham and Crockett Rooms
Samsung C&T MRC Suites
Sasol North America GHS Suite
Sekisui Specialty Chemicals America GHS Bonham
E (3/26 only)
SI Group MRC Suites
SK GC Americas SAM Salon F
Sojitz Corporation of America MRC Suite
South Hampton Resources GHS Suite
Southern Chemical HPR Suite
Stepan Company MRC Suite
Sumitomo Corporation of America MRC Salon A and B
Summit Petrochemical Trading GHS Suite
Total Petrochemicals GHS Suites
Toyota Tsusho America GHS Presidio B
TPC Group MRC Suite
Trammochem, a division of Transammonia GHS Travis A
Tricon Energy MRC Suite
UBE Industries MRC Suite
UOP, A Honeywell Company MRC Suite
Vopak SAM River Terrace Room
Williams Olefns GHS Suite
Meeting and hospitality directory
Many companies hold meetings or
host hospitality suites in conjunction
with the IPC. This directory lists those
companies that have requested to be
included as of 14 February 2013.
Since the rooms and suites are used
for many purposes, we have listed the
companies according to function.
Check the daily event boards at the
individual hotels for specic locations,
dates and hours of operation.
Hotel directory
GHS
Grand Hyatt San Antonio
600 E Market Street
210 224 1234
HPR
Hilton Palacio del Rio
200 S Alamo
210 222 1400
MRC
Marriott Rivercenter
101 Bowie
210 223 1000
SAM
Marriott Riverwalk
889 E Market Street
210 224 4555
WES
Westin Riverwalk
420 W Market Street
210 224 6500
Hospitality open to all
Argus DeWitt SAM Salon E
GTM/Panachem MRC Suite
ICIS SAM Salon C
IHS Chemical MRC Salon D
Odfjell MRC Salon E
Petrochem Wire/CME MRC Atrium
Platts MRC Conf. Room 7
SABIC MRC Salon I (25/3 pm only)
Tecnon OrbiChem MRC Suite
ECS_250313_034 34 14/3/13 13:17:17
Be a part of these important
industry events.
Security Conference
San Antonio, TX
April 15 - 17
National Occupational &
Process Safety Conference
The Woodlands, TX
May 14 - 15
Reliability & Maintenance
Conference and Exhibition
Orlando, FL
May 21 - 24
Labor Relations /
Human Resources Conference
Orlando, FL
May 22 - 23
EXTEND
YOUR REACH
ATTEND 2013 AFPM MEETINGS
Board of Directors Meeting
Cle Elum, WA
September 8 - 10
Q&A and Technology Forum
Dallas, TX
October 7 - 9
Environmental Conference
New Orleans, LA
October 20 - 22
International Lubricants
and Waxes Meeting
Houston, TX
November 14 - 15
Register at www.afpm.org
www.afpm.org
3365_AFPM_2013_IPC_ICIS_PRINTER.indd 1 2/19/13 4:57 PM
ECS_250313_303 303 15/3/13 12:18:57
ICIS price forecast reports
Supply, demand and price trends at a glance
ICIS provides a clear view of prices, margins, capacity, supply and demand for
the next 12 months all in a single report. Packed with useful information,
this concise report includes everything you need to quickly understand exactly
where the market is heading and maximise opportunities straight away.
How the price forecast reports can help you
Negotiating contracts
Use the forecasts to help settle prices for the short- to medium-term with
increased condence
Buying and selling
The concise market information enables you to quickly review your market
positioning and decide the best time to trade
Budgeting and planning
Whether you are calculating how much you will be spending in the short- to
medium-term or making production or commercial decisions, the report can
help you assess the latest price, supply, demand and changes in capacity
Asia-Pacic, Middle East
Tel: +65 6789 8828
Europe, Africa
Tel: +44 20 8652 3335
The Americas
Tel: +1 713 525 2600 or
Toll free: +1 888 525 3255 (US and Canada only)
Polypropylene (PP) Europe price forecast report (available now)
PP US price forecast report (coming soon)
PP Asia price forecast report (coming soon)
Polyethylene (PE) Europe price forecast report (coming soon)
PE US price forecast report (coming soon)
PE Asia price forecast report (coming soon)
ICIS publishes price forecast reports
for the following commodities and regions:
Find out how ICIS can help you.
Request a free sample ICIS price forecast report.
www.icis.com/samplepriceforecast Email: enquiry@icis.com
ICIS Price Forecast Report Flyer 197mmx267mm_14Mar.indd 1 3/15/13 11:20:29 AM
ICB_250313_018 18 21/3/13 11:51:05
EDITORIAL, ADVERTISING, PRODUCTION & READER CONTACTS EVENTS
READER SERVICES
|
|
35 www.icis.com
WHATS ON
Online at
icis.com/subscribe
Shanghai
Beijing
Guangzhou
Tokyo
Brisbane
Melbourne
Dusseldorf
Milan
Perth
Singapore
London
New York
Washington
Houston
Mumbai
Medellin
ICIS CHEMICAL
BUSINESS DRAWS
UPON THE EXPERTISE
OF MORE THAN 250
EDITORIAL STAFF
WORLDWIDE COVERING
MORE THAN 120
COMMODITY MARKETS
SUBSCRIPTION RATES
USA/CANADA/
MEXICO REST OF WORLD
1 year $225 $799/560/419
2 years* $360 $1,278/896/670
3 years** $472 $1,678/1,176/880
*Save 20%, **save 30%
Only paid subscriptions available.
Cheques payable to ICIS Chemical Business
2013 and Database Rights by Reed Business
Information. All rights reserved. No part of this
publication may be reprinted, or reproduced or
utilized in any form or by electronic, mechanical or
other means, now known or hereafter invented,
including photocopying and record or in any
information storage and retrieval system without
prior permission in writing from the publisher.
ICIS Chemical Business incorporating Asian
Chemical News, Asia-Pacifc Chemicals, Chemical
Market Reporter, European Chemical News and
Performance Chemicals Europe. Vol 283, No 11,
25 March-7 April 2013 . Published weekly except
for combined issues during the last week of
January/frst week of February, the last week of
March/frst week of April, the last week of April/
frst week of May, the frst two weeks of July, the
third and fourth weeks of July, the last week of
July/frst week of August, the second and third
weeks of August, the last two weeks of September,
the last week of October/frst week of November
and the last three weeks of December by Reed
Business Information, Quadrant House, The
Quadrant, Sutton, Surrey SM2 5AS, UK.
Printed by William Gibbons & Sons Ltd, Willenhall,
West Midlands, UK.
ISSN 1937-5786
All currency exchange rates published in ICIS
Chemical Business are provided as a guide only.
EDITORIAL +1 212 791 4224
360 Park Avenue South, New York,
NY 10010, USA
Email joseph.chang@icis.com
Web www.icis.com/chemicalbusiness
AMERICAS
Global Editor Joseph Chang
+1 212 791 4224
joseph.chang@icis.com
EUROPE AND MIDDLE EAST
Deputy Editor/Bureau Chief Will Beacham
+44 20 8652 8683
will.beacham@icis.com
ASIA PACIFIC
Director, ICIS Insight Asia John Richardson
+61 8 6213 2106
john.richardson@icis.com
Country Manager, India Malini Hariharan
+91 22 6573 7440
malini.hariharan@icis.com
CUSTOM PUBLISHING
Global Editor John Baker
+44 20 8652 3153
john.baker@icis.com
Custom Publishing Editor Andy Brice
+44 20 8652 8140
andy.brice@icis.com
EDITORIAL PRODUCTION
Head of Design & Production Alexis Rendell
+44 20 8652 8127
alexis.rendell@icis.com
Global Chief Copy-Editor Lewis Harper
+44 20 8652 4958
lewis.harper@icis.com
Chief Copy-Editor, Europe Dan Bloch
+44 20 8652 8146
dan.bloch@icis.com
Copy-Editors Martin Cooper, Rob Evers,
Joseph Gyure, Andy Hemphill, Monica Lugo,
George Norton, Rob Miles
Global Production Editor Louise Murrell
+44 20 8652 8139
louise.murrell@rbi.co.uk
Deputy Global Production Editor Rachel Kemp
Production Assistant Lizabeth Davis
Designers Lauren Mills, Lin Ning
DISPLAY ADVERTISEMENT SALES
Web www.icis.com/advertise
AMERICAS
Sales Manager Bernard Petersen
+1 646 961 0708
bernard.petersen@icis.com
Sales Executive Karen Yaniro
+1 212 791 4251
karen.yaniro@icis.com
EUROPE, MIDDLE EAST, ASIA
Sales Manager John Hill
+44 20 8652 3893
john.hill@icis.com
Sales Executive Tom Iredale
+44 20 8652 3812
tom.iredale@icis.com
JAPAN
Sales Representative Tomoyuki Kaneko
The Chemical Daily
+81 3 3663 7933
t_kaneko@chemicaldaily.co.jp
ADVERTISEMENT PRODUCTION
Production Manager Brian Chapman
+44 20 8652 8501
brian.chapman@rbi.co.uk
MARKETING
Marketing Director Justine Gillen
+44 20 8652 8031
justine.gillen@icis.com
PUBLISHING MANAGEMENT
Managing Director, RBI Jim Muttram
Managing Director, ICIS Christopher Flook
Product Director David Stanworth
Editorial Director, Americas and Europe
Stephen Burns
Editorial Director, Asia Steve Tan
READER SERVICES
ICIS customer support +44 20 8652 3335
Toll free 888 525 3255 (US and Canada only)
csc@icis.com
Subscriptions ICIS Chemical Business,
International Subscriptions Offce, PO Box 302,
Haywards Heath, West Sussex, RH16 3DH, UK
SUBSCRIPTION ENQUIRIES
+44 845 077 7766
Toll free 888 525 3255 (US and Canada only)
Fax +44 845 676 0030
icis.subs@quadrantsubs.com
What developments
are in store for the
global synthetic
rubber market?
For an outlook on
the latest trends and
developments in the
global synthetic rub-
ber industry, download
this free insight article
produced by the mar-
ket experts at ICIS.
It reviews the sup-
ply challenges faced
by industry players
as well as demand
opportunities in the
medium to long term.
It will also help you
answer the follow-
ing questions:
Where will the
increase in demand
come from?
How is the market
in China developing?
What is the
outlook for synthetic
rubber products?
To read more,
download the outlook
article from our
website at:
www.icis.com/
world_elastomers
ICB_250313_035 35 21/3/13 16:05:07
DATES FOR YOUR DIARY
www.icis.com 36
|
|
WHATS ON
FORTHCOMING ICIS EVENTS WORLDWIDE
For more information:
icis.com/conferences and
icis.com/training
icis.com/about/news
Conferences
GPCA PlastCon 2013
7-9 April
InterContinental Dubai Festival City, Dubai, UAE
Tel +44 20 8652 8350
Email nazan.ali@icis.com
www.gpcaplastics.com
The 3rd ICIS European Chemical
Purchasing Conference
16 April
Crowne Plaza Le Palace, Brussels, Belgium
Tel +44 20 8652 4736
Email kate.czech@icis.com
www.icisconference.com/europeanpurchasing
The 1st ICIS Indian Base Oils &
Lubricants Conference
23-24 April
Hyatt Regency Mumbai, Mumbai, India
Tel +44 20 8652 4795
Email emiley.partington@rbi.co.uk
www.icisconference.com/indianbaseoils
Trading LNG 2013
9 May
London, UK
Tel +44 20 8652 4736
Email kate.czech@icis.com
www.icisconference.com/lng
Training
Petrochemicals I: An In-Depth Introduction
Petrochemicals II: Markets, Costs and
Proftability
Surfactants: An In-Depth Introduction
8-11 April
London, UK
Email rolandkester.cher@icis.com
www.icis.com/training/calendar/all-courses
Proftability
22-24 April
Johannesburg, South Africa
Polymers: An In-Depth Introduction
7-8 May
Singapore
Proftability
Petrochemicals III: Refnery &
Petrochemicals Interface Processes,
Economics and Integration
China Petrochemical Market: Preparing for
a New Future
13-17 May
Bangkok, Thailand
Surfactants: An In-Depth Introduction
15 May
New Jersey, US
CONFERENCES & EVENTS
ASIA PETROCHEMICALS
INDUSTRY CONFERENCE
9-10 May 2013
Taipei International Convention
Center, Taiwan
The annual Asian
petrochemicals event moves to
Taiwan this year.
For more details, contact the
conference secretariat
Tel: +886 2 8502 7087, ext 29
Email: apic2013@elitepco.com.tw
Website:
www.apic2013.tw/AboutAPIC.html
FECC ANNUAL CONGRESS
17-19 June 2013
Hamburg, Germany
Europes annual chemical
distribution conference covers
a range of issues, with leading
speakers from chemical
producers and distributors,
legal and trade experts and
EU regulators.
For more details contact FECC.
Tel: +32 2 679 02 60
Email: cdi@fecc.org
Website: www.fecc.org/fecc/
ADHESIVE AND SEALANT
SPRING CONVENTION
AND EXPO
21-23 April 2013
Hyatt Regency, Atlanta, Georgia, US
This event includes technical
sessions focusing on business
development and market
trends, government relations
issues and new technology. The
EXPO will be held on Monday,
22 April and will feature over
70 supplier exhibitors.
For more details contact
Malinda Armstrong at ASC.
Tel: +1 301 986 9700
Email:
malinda.armstrong@ascouncil.org
Website:
www.ascouncil.org/events
EUROPEAN
PETROCHEMICAL
ASSOCIATION 47TH
ANNUAL MEETING
5-9 October 2013
Berlin, Germany
The EPCAs Annual Meeting
returns to Berlin again this
year, offering delegates a
platform to meet in Europe
with their industry peers
from all over the world
and attend a thought-
provoking business session
programme with well-known
international speakers.
For more details, contact EPCA.
Tel: +32 2 741 86 60
Email: meetings@epca.eu
Website: www.epca.eu
EPCA
ICB_250313_036 36 21/3/13 16:08:30
www.icis.com
AMERICAS: karen.yaniro@icis.com
REST OF WORLD: tom.iredale@icis.com
MARKETPLACE
25 March - 7 April, 2013
|
|
37
CHEMICALS WANTED
CASH FOR OFFGRADE, SURPLUS

Morgan Materials, Inc.
GEO Specialty Chemicals will be expanding their
current production capabilities at their Deer Park,
TX manufacturing plant to produce aluminum sulfate,
enhanced coagulants and specialty blends. This
expansion will allow GEO to better service their
growing market in Texas and the surrounding states.
9213 ARCH STREET PIKE, LITTLE ROCK,
AR 72206
Office: 501-888-1211
Customer Service: 800-453-2586
MANUFACTURING
Keep in touch
with ICIS
Sign up to receive FREE ICIS
updates by email, tailored to the
markets you are interested in.
Insightful analysis on price drivers
News articles on the latest developments
Thought-provoking white papers
Market outlooks for different industries
Sign up by completing the short
form www.icis.com/keep-in-touch
Copyright 2012 Reed Business Information Ltd. ICIS is a member of the Reed Elsevier plc group.
ICIS accepts no liability for commercial decisions based on the content of this report
MARKET UPDATE:
Global polymers to face
heightened competition
The global commodity polymers market
continues to be under severe pressure
from challenges such as the European
debt crisis, slowing emerging market
growth and increased competition.
Despite these challenges, overall polymers
consumption is poised to grow at a
compounded annual growth rate (CAGR)
of 4.7%/year through 2015.
After the plunge in global consumption during the 2008-
2009 economic crisis, demand started to recover in the
following years. Yet, a full recovery to pre-crisis levels is
still far off in mature economies, and the industry entered
another diffcult period during 2011.
The worsening of the European debt crisis, volatility of
the capital markets and a faltering economy have all
destabilized confdence at a global level.
The cumulative global consumption of polyethylene
(PE), polypropylene (PP), polyvinyl chloride (PVC) and
polystyrene (PS) excluding expandable PS - in 2011 is
estimated at 178m tonnes or 4.5% over 2010 levels. The
largest increases were recorded by PVC at 6.2% and
linear low density PE (LLDPE) at 5.8%.
However, growth was hampered considerably on the
widespread slowdown of key end-markets, also in some
of the fastest-growing economies.
China Impact
China is the largest world market for each of these
polymers, accounting for 49m tonnes in 2011 or 27% of
global demand. Chinas market recovered quickly after
2008, thanks to government economic stimulus measures
and incentives to boost consumption.
PE and PVC demand recorded consecutive double-digit
annual increases in 2009 and 2010. Overall Chinese
demand growth in 2011 is estimated at 5.6%, 5.4
percentage points lower than the 11.0% growth in 2010.
The governments efforts to curb infation through
restrictive monetary policy resulted in a tight credit
market, which hurt investment and demand. Furthermore,
Chinas exports of fnished and semi-fnished plastic
products had to cope with lower demand from recipient
markets, and with some loss of competitiveness due to
the stronger yuan.
The electronic and household appliances sectors in
China slowed down notably during the second and third
quarters of 2011 on weak domestic sales and exports
to traditional markets in the West. Later in the year,
shipments to fast-growing countries such as India and
Brazil also decelerated.
PS demand grew less in the manufacture of TVs,
computers and electronic accessories, which resulted
in a weak peak demand season. PE and PP performed
relatively better thanks particularly to the packaging
sector and agriculture applications.
But Chinas automotive industry worsened overall with a
slight increase in the production of passenger cars, and a
decline in commercial vehicles, which principally impacted
PP consumption.
The domestic PVC market recorded another year of
substantial growth, but at a reduced pace. Government
policies aimed at limiting speculation in the housing
market and preventing a bubble, such as restrictions on
mortgages and pre-sales of homes, have cooled down the
property sector. This has impacted demand for PVC, and
high density PE (HDPE) to a lesser extent.
Remarkably, the proftability of the polymers sector in
China worsened on the mounting costs of energy and raw
materials and volatile downstream demand.
Major PP producers chose to reduce operations in mid-
2011 due to tight margins.
Many PVC operators reported small profits or losses
during most of the year. Also, margins over the
ln the frst quarter of 2012, the CFR (cost &
freightj Japan naphtha price has risen to its
highest level since May 2011 supported by
strong demand, tight supplies and strong
crude values.
ln recent months the naphtha market has moved into a
steeper backwardated structure, which underlines demand
for prompt naphtha supplies from the petrochemical sector in
Asia amid increased operating rates at crackers in Taiwan and
full operating rates at crackers in China and South Korea.
Supply for regional cargoes loading and arriving in the frst
half of April continue to be tight, with record premiums
paid by cracker operators such as South Korea's Honam
Petrochemical, LG Chem and Malaysia's Titan Chemicals.
Copyright 2012 Reed Business lnformation Ltd. lClS is a member of the Reed Elsevier plc group.
lClS accepts no liability for commercial decisions based on the content of this report
The backwardated structure could ease moving into the next
few weeks amid reports of an increase in arbitrage cargoes
into Asia from the West. There were reports that some
650,000 tonnes of naphtha were expected to arrive in Asia
during April. Crack spreads between April naphtha and lCE
Brent crude futures were strong, but have moved off highs
as market players digested news of possible increased
spot availability.
The European naphtha cargo market is subdued. With low
levels of business taking place, the market has lengthened
slightly, rendering it balanced too long. The arbitrage to Asia
remains closed, although some believe it viable for heavy
grades of naphtha to head east.
The arbitrage to the US is also shut. Demand from the
gasoline sector is described as mediocre, while interest from
the petrochemical industry is also minimal, despite naphtha
having a fnancial advantage over rival feedstock propane.
A lack of near-term buyers in the US Gulf heavy naphtha
market has pushed differentials to a deeper discount to
US Gulf spot gasoline in both the gasoline sector and the
petrochemical industry.
Energy and feedstocks:
Asia crackers ramp
up production,
boosting naphtha
Natural gas prices, front month
Source: lClS
M||||ons
US Henry Hub, S/MMBtu
Feb 2012
Feb 2011

50
2
100
7
70
4
80
5
90
6
60
3
UK NBP
US Henry Hub
Global Naphtha prices
Source: lClS
$/tonne
$/bb|
Feb 2012
Mar 2011

800
70
1,200
130
1,000
100
1,100
115
900
85
Naphtha As|a
Naphtha US
Naphtha Europe
O|| - West Texas
Intermed|ate
To book advertising in
marketplace or for more
information contact:
Americas:
Karen Yaniro on
+1 212 791 4251
email: karen.yaniro@icis.com
Rest of the World:
Thomas Iredale on
+44 20 8652 3812
email: tom.iredale@icis.com
ICB_5x1 filler.indd 1 19/9/12 15:26:05
ICB_250313_037.indd 37 21/03/2013 15:04
www.icis.com 38
|
|
ASIA CHEMICAL PROFILE
ASIA TIO
2
PRICES
2,500
3,000
3,500
4,000
4,500
Mar
2013
Mar
2012
$/tonne, spot CFR Asia
Read all the latest news concerning titanium
dioxide and a wide range of other commodity
chemicals at icis.com/news
CHRISTINA SIANTAR FIRST ASIA CHEMICAL PROFILE
USES
Titanium dioxide (TiO2) is mainly used as a
white powder pigment because of its bright-
ness and high refractive index. It is used in
paints and coatings, including glazes and
enamels, plastics, paper, inks, bres, foods,
pharmaceuticals and cosmetics.
As TiO2 is resistant to discolouration under
ultraviolet light, it is often used in plastics and
sunscreens. Another growing outlet is in photo
catalysts, where it is used in applications such
as light-emitting diodes, liquid crystal displays
and electrodes for plasma displays.
SUPPLY/DEMAND
The TiO2 market in Asia has been oversup-
plied since 2012 because of capacity expan-
sions in the major China market and weak
demand from downstream sectors.
Chinas total import volume for 2012 is es-
timated to be around 160,340 tonnes, down
by about 30% from 228,600 tonnes in 2011.
The decrease in import volume is attributed
to capacity expansions in the country, which
provided competitively priced local product
for Chinese buyers to purchase instead.
From March 2012, prices in Asia plunged
by approximately 28% year on year, accord-
ing to ICIS data. Regional suppliers are trying
to implement price hikes for the second quar-
ter of 2013 but buyers are resistant. Demand
for TiO2 in Asia was said to be slow as a result
of the weak global economic situation.
Market sentiment in Asias TiO2 market is
expected to remain bearish in the near term,
Titanium dioxide
Company Location Capacity
Ishihara Sangyo
Kaisha
Yokkaichi, Japan 155
DuPont Taiwan Kuan Yin, Taiwan 140
Henan Billions
Chemicals
Jiaozuo, China 100
Luohe Xingmao
Titanium Industry
Luohe, China 90
Sichuan Lomon
Titanium Industry
Chengdu, China 80
Huntsman Tioxide Teluk Kalung, Malaysia 60
Sakai Chemical
Industry
Osaka, Japan 60
Tayca Corp Okayama, Japan 60
Ishihara Sangyo
Kaisha
Jurong, Singapore 54
Guangxi Jinlong
Titanium Industry
Nanning, China 50
Huayuan Titanium
Dioxide
Lanzhou, China 50
Shandong Dongjia
Group
Zibo, China 45
Panzhihua
Dongfang Titanium
Industry
Panzhihua, China 40
The Kerala Miner-
als and Metals
Sankaramangalam,
India
40
NOTE:
*
Top 14 plants listed by capacity
ASIA TITANIUM DIOXIDE CAPACITY
*

000 TONNES/YEAR
market participants said. Domestic prices in
the major China market are softening as local
producers lower their offers amid inventory
pressures. This was despite the typical season-
al demand peak period in downstream paints
and coatings industry in March and April.
PRICES
Asian TiO2 prices in the second quarter of
2013 are expected to be largely stable, accord-
ing to most market participants. Some regional
producers have announced price increases for
the next quarter because of squeezed margins.
However, some sellers concede it may be dif-
cult to raise prices given the slow demand and
lower prices in Chinas domestic market. Com-
petitively priced Chinese exports to other Asian
regions are likely to weigh down on TiO2 prices.
Buying ideas are mostly at a rollover or a
slight decrease from previous deals. Some
buyers felt that TiO2 prices may have bot-
tomed out following declines in TiO2 prices
since the second quarter of the previous year.
In March 2013, Asian TiO2 prices are as-
sessed at $2,700-3,150/tonne (2,100-2,320/
tonne) CFR Asia. China-origin material was
available at $2,450-2,650/tonne CFR Asia.
TECHNOLOGY
TiO2 is produced from either ilmenite, rutile or
titanium slag. Titanium pigment is extracted by
using either sulphuric acid (sulphate process) or
chlorine (chloride route). The sulphate process
employs simpler technology than the chloride
route and can use lower-grade, cheaper ores.
However, it generally has higher production
costs and with acid treatment is more expensive
to build than a chloride plant. But the latter may
require the construction of a chlor-alkali unit.
The chloride route produces a purer product
with a tighter range of particle size, but anatase
pigments can only be produced by the sul-
phate route.
OUTLOOK
TiO2 prices in Asia have not increased since
last year and prices may have nally hit the
bottom, according to some market sources.
Some sellers have already announced their
intention of implementing price increments
effective from the months of March and April.
Most sellers expect prices to recover in the
near term, supported by improved demand in
March and April from the paints and coatings
sector. Meanwhile, some market participants
remain pessimistic, believing the bleak out-
look for Chinas TiO2 market may affect prices
in other parts of Asia.
Prices in Chinas domestic market are likely
to soften in the coming months because of in-
ventory pressures faced by some local produc-
ers. Should prices in Chinas domestic market
come down, regional sellers would have dif-
culty implementing price hikes for their ex-
ports into China, sources said.
In Japan, domestic prices are likely to remain
relatively at in coming months as demand is
slow and buyers would not agree to price hikes,
sources said. At the same time, local sellers are
not willing to compromise on lower prices be-
cause of their already squeezed margins.
ICB_250313_038-303 38 21/3/13 16:12:35
|
|
39 www.icis.com
EUROPE CHEMICAL PROFILE
EUROPE CAPRO PRICES
1,900
2,000
2,100
2,200
2,300
Feb
2013
Mar
2012
/tonne, contract FD NWE
MARK VICTORY PROFILE LAST PUBLISHED 22 NOVEMBER 2010
To keep track of the latest movements in
chemical markets across the globe, subscribe
to ICIS pricing reports at icis.com/pricing
USES
Caprolactam (capro) is mainly used to make
nylon 6 bres and engineering plastics, which
account for about 68% and 32% of global de-
mand, respectively. Nylon 6 bres are used
extensively in textiles, carpets and industrial
yarns, with tire-cord a large and growing mar-
ket, especially in China.
Nylon resins are the basis of engineering
plastics, used in electronic and electrical com-
ponents and automobiles, and oriented polya-
mide lms used widely in food packaging.
TECHNOLOGY
Most capro is produced from cyclohexane
(CX), but it can also be made from phenol or
toluene. CX is oxidised to cyclohexanone, then
reacted with hydroxylamine sulphate to
cyclohexanone oxime, followed by a Beckman
rearrangement to yield capro. But this route
also produces large volumes of ammonium
sulphate (AS) and work is focused on reducing
or eliminating the AS co-product.
PRICES
From July 2011 to February 2013, capro contract
prices fell by 230-290/tonne. In the same peri-
od, the feedstock benzene contract price rose by
286/tonne, resulting in squeezed margins.
At the time of publication, March contract
negotiations were ongoing. Several contract
partners have already settled March prices at
between a rollover and an increase of 14/
tonne, with rises of 7-10/tonne frequently
mentioned as representative.
Caprolactam
Company Location Capacity
BASF Antwerp, Belgium 290
DSM Geleen, Netherlands 250
LANXESS Antwerp, Belgium 200
Kuibyshevazot Togliatti, Russia 180
BASF Ludwigshafen,
Germany
170
Domo Caproleuna Leuna, Germany 160
Grodno Azot Grodno, Belarus 160
Kemerovo JSC Azot Kemerovo, Russia 160
Ube Engineering
Plastics
Castellon, Spain 160
Zaklady Azotowe w
Tarnowie-Moscicach
(ZAT)
Tarnow, Poland 160
Electrkimyosanoat Chirchik, Uzbekistan 160
Zaklady Azotowe
Pulawy (ZAP)
Pulawy, Poland 160
Azot Cherkassy Cherkassy, Ukraine 160
Shchekinoazot Shchekino, Russia 160
Spolana Neratovice, Czech
Republic
160
NOTE:
*
Top 15 plants listed by capacity
EUROPE CAPRO CAPACITY
*

000 TONNES/YEAR
Price rises were attributed to a 14/tonne
increase in the March upstream benzene con-
tract price. Poor downstream margins and an
inability to pass capro price rises into the
downstream nylon 6 market have so far limit-
ed March capro contract price increases.
SUPPLY/DEMAND
Consumption in the rst quarter of 2013 has
been estimated at 15% lower than in the same
period in 2012. Although capro players said
the rst quarter in 2012 was a particularly
strong year and not a good base for compari-
son, they estimated Q1 2013 demand at up to
10% below average Q1 volumes.
Weak demand is the result of poor macroeco-
nomic conditions, which have limited con-
sumer purchasing power. However, demand
differs sharply depending on end-use industry.
Premium automotive demand is approxi-
mately 2-3% lower than in the same period in
2012. Premium auto consumption is being
buoyed by exports to Asia resulting from up-
ward social mobility.
On the other hand, non-premium automotive
demand is up to 40% lower in 2013 year-to-date
than for the same period in 2012. This is be-
cause fewer non-premium autos are exported
and poor macroeconomic conditions have re-
duced consumer purchasing power in Europe.
Demand in the European polyamide chain is
not expected to improve in the rst half of 2013,
and there may not be a peak season this year,
many sources say. March typically sees the start
of the bre season and the approach of the peak
season in automotives, but negative economic
sentiment has meant consumption is showing
no signs of an increase in these sectors.
OUTLOOK
The long-term outlook for European capro is un-
certain. There is underlying growth in end-use
markets from global megatrends such as light-
weighting in automotive and upward social mo-
bility in developing regions. However, major
additional capacity in Asia may lead to material
previously earmarked for export remaining in
Europe potentially causing oversupply.
One producer said demand in Europe is
only enough to cover 30% of merchant mar-
ket production in the region, and that, as a re-
sult, additional capacity in Asia will require a
large amount of consolidation in Europe.
There is uncertainty as to the impact of
Asian capacity expansion on Europe because
this will be limited until producers in the re-
gion are able to manufacture capro for high-
speed spinning applications. Opinion is di-
vided on when this will happen, but some
sources expect Asian producers to begin man-
ufacturing capro for high-end applications
within the next 1-2 years.
With a burgeoning middle class in develop-
ing regions increasingly purchasing premium
autos as status symbols, several sources ex-
pect the gap between premium and non-pre-
mium auto demand to grow in the next few
years, leading to nylon 6 innovation being tar-
geted at performance-specic polymers serv-
ing the automotive industry.
Sources said it is becoming increasingly
important to serve the right customers in
the right region with the right end-use to
weather the poor macroeconomic condi-
tions in Europe.
ICB_250313_038-303 39 21/3/13 16:12:56

ICB_250313_304 304 21/3/13 11:11:45
Subscribe today
Your trusted weekly
chemical markets
www.icis.com

Icis Chemical Business 2013

Загружено:

Сведения о документе

Исходное описание:

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Icis Chemical Business 2013

Загружено:

Авторское право:

Доступные форматы

EUROPE PHENOL

Market remains stagnant

Hindered Amine Light Stabilizers

Вам также может понравиться