APIC Chemical Marketing Seminar - Platts - May 8

Asia Petrochemicals
Sustainable Footprint
Vanessa Ronsisvalle
S&P Global Platts Associate Content Director
Petrochemicals Asia
Essential Intelligence May 16, 2019

Benchmark price assessments
Essential DNA
High
Lead to the degree of
development transparency
Chain of a forward
formation high market
Adhere to degree of
international circulation
norms of
trading
Clearly
defined
Market assessment
acceptance methodology
Open to
industry
scrutiny
3
Producing the final assessment
The principles
Platts Price Assessment Methodology is built on two

fundamental principles:
PRICE
TIME
TRANSPARENCY
4
Hierarchy of information
• Published live through

Platts’ systems
• These take precedence Firm,

over other information as transparent &
value at a given time can detailed bids/offers.
be determined. Must have volume, • Communicated via
location, spec.,
IM, phone or email,
timing, price to
Platts seeks to verify
have priority
• Notional prices only give this information with
an indicative value market participants
throughout the day
• Can be disregarded in
the case of differing Trades, bids and offers verified • This information can
influencing factors such and corroborated by market be used alongside
as oil and gas price participants other influencing
movements or other factors, such as oil
supply and demand and gas prices, to
fundamentals determine the
assessment.
Notional prices, previous trades, tender
results
Private & Confidential

5
Benefits of Market on Close (MOC) methodology
Platts MOC is the most transparent and rigorous price reporting process in
the industry:
• All data must be verifiable
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• Yield a price that represents true market value
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Platts MOC operates on the principle that price is a function of time. The
end-of-day time stamps allows Platts assessments to be easily used for:
• Cross-commodity price comparisons
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Platts MOC is open to any company – including ones that are not customers,
that successfully undergo a review process
To change, turn on or off footer: Inset > Header & Footer > Enter / change text > Click Apply All. 6
Asia Petrochemicals Sustainable Footprint
Innovation & Sustainable Solutions
Some key measures to the development of sustainable, cost advantaged methods of petrochemical
production is through lower overall energy consumption, optimization of feeds, bio-plastics and fuel
conversion technologies to help the reduction of environmental emissions
Petrochemicals and the IMO 2020 mandate
The IMO will enforce its mandate to cap the sulfur content of marine fuels to 0.5% following heightening
environmental concerns on January 1st, 2020
7
Emerging Energy Trends – Dr. Kang Wu
Head of Analytics, Asia
S&P Global Platts
Increasing Interconnectivity
between Energy Sources May 16, 2019
and Implications for the

Petrochemical Sector
8
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Global Oil Demand,
Supply and Prices:
Over Supplied or Tighter
Market?
China and US continue to be important oil demand growth
engines, but less dominant as India, Middle East and
Latin America play increasing role
Source: S&P Global Platts Analytics

Global supply growth is slowing dramatically, on
deeper OPEC declines and slowing non-OPEC
crude and global NGLs
In OPEC, Iran sanctions are aggressive,
Venezuela remains in turmoil
Saudi Arabia include its portion of the Neutral Zone.
Non-OPEC supply has been dominated by U.S.
Platts Analytics sees oil balances tightening in
2019
Platts Analytics sees near-term upside for prices due to
geopolitical risks stemmed from Iran sanctions and IMO
2020
Iran Sanctions
$/Bbl Platts Dated Brent Begin, Waivers
Granted
What’s
85
U.S. Production Next?
11 MMB/D
80 The Saudi reaction
OPEC Agrees New following the end of
75 Quotas w/ Russia U.S. Production Saudi Iran waivers by the
10 MMB/D Production US?
70 New OPEC 11.3 MMB/D
Quotas Begin Libya conflicts
worsen?
65
U.S.
IMO 2020 shock?
Production
60 8.5 MMB/D U.S. Announces U.S.-China trade deal
New Iran soon?
55 Sanctions U.S. recognizes
Venezuelan Saudi Deepening crisis in
50 opposition Production Venezuela?
9.8 MMB/D
45 Future of Russia?
40
May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19 Jan-20
15
From Upstream to
Downstream:
NGLs and Feedstock
Flexibilities
16
The NGL’s produce “purity products” which do not need
to be processed in a refinery and balances Ethane
between oil and gas
Increased biofuels and NGLs production has resulted in a
lower call on refining and subsequently crude
Naphtha is important for petchem in Asia. Globally, after a
few years of declines, naphtha demand growth will
resume after 2020 while ethane demand growth flattens
Ethylene overcapacity in coming years leads to
lower prices and down cycle before a sustained
recovery starts in a few years
Propylene market dynamics are tighter than
ethylene but new on-purpose capacity in coming
years leads to lower prices and mild down cycle
before a sustained recovery starts again
Putting the Integrated
Energy Market into
Perspective:
Short-Term Development
and Long-Term Outlook
22
While Oil has staged a recovery and may test
$80/Bbl, Gas prices are testing coal switching
prices
Source: S&P Global Platts
Energy markets are becoming increasingly
interconnected across the entire supply chain
Fossil Fuels remain dominant through 2030 and
then renewables become more significant
MMBOE/D = Million Barrels Oil Equivalent per Day

Source: S&P Global Platts Analytics Scenario Planning Service Annual Guidebook
Innovative market
insights
Driven by analytics,
powered by fundamentals
26
Thank You
Contact:
Dr. Kang Wu
Head of Analytics, Asia
Kang.wu@spglobal.com
Eshwar Yennigalla
Game Changer in Senior Analyst, Petrochemicals
S&P Global Platts
Petrochemicals: May 16, 2019
Crude & Recycling

Future of oil is in chemicals as evident by looking
at the configuration of major new refinery builds
Chemical and car transport fuels converge

28%
26%
24%
22%
20%
18%
16%
14%
12%
10%
2013 2016 2019 2022 2025 2028 2031 2034 2037 2040
Chemicals Percent of Oil Supply Transport Percent of Oil Supply
Chemical feedstock demand will continue to grow and
lighter feeds will continue to penetrate the composition
Chemical Feedstock Composition

20
Millions BPD
18 Propane: PDH feeds

16
14
12 NGLS: Cracker feeds
10
8
6 Light naphtha:
4 Cracker feeds
2
Heavy naphtha:
0 Aromatics feeds
2014 2016 2018 2020 2022 2024 2026 2028 2030
Heavy Naphtha (aros) Light Naphtha (ethylene)
NGL (c2-c4) Propane (PDH)
Uncertainties in geopolitics and increasing petrochemical
appetite lead to necessary investments in feedstock-
flexibility
1,600 China Ethylene Production Costs ($/mt)
1,400
1,200
1,000
800
600
400
200
-
2013 2018 2023 2028
Naphtha Cracker PC Ethane Cracker PC LPG Cracker PC
Gas Oil Cracker PC CTO PC MTO PC
Global ethylene capacity additions focused in
Asia as well as low cost NGL feedstock hubs
Global Incremental Ethylene Ethylene Produced From -
Capacity Additions 2018
9 2% 1%
Million 3%
8 mt
7%
7
6
9%
40%
5
4
3
2
1 38%
0
2018 2020 2022 2024
Naphtha Ethane Propane
Middle East Europe Asia
Butane Gas Oil Coal
Americas Africa
Methanol Splitter
USGC ethane cracker projects has led to the emergence
of more on-purpose propylene production in Asia and the
Americas
Global Propylene Production PDH Capacity Breakdown
by Technology
160
Million 25 Million
140 mt mt
120 20
100
15
80
60 10
40
5
20
- 0
2014 2017 2020 2023 2014 2017 2020 2023
North America Middle East
PDH OCU MTP MTO
CTO FCC Cracker Asia Africa
Europe
PE demand in Asian economies continues to grow faster than GDP
growth as they strive to reach ‘Western’ per capita demand levels
along with increasing levels of urbanization.
10
Polyethylene Demand Per Capita (2018 – 2029)
Projected % CAGR (2018-2029)
9
8
7
6
5
4
3
2
1
0
0 5 10 15 20 25 30 35 40 45 50
Polyethylene consumption (2018), kg per capita
China Europe South America India Asia (Excluding China and India) USA
Recycling Trends
• Platts Analytics defines recycling as recovered plastics that displace virgin

demand
• Short term recycling has been suppressed by the Jan 2018 Chinese ban on
imported mixed plastics waste containers
• Platts forecast that PET bottles, PE & PP recycling will reach 40 million mt by
2030, displacing virgin demand
• The increase in recycling that is incorporated into our base case displaces
640,000 BPD of petchem feedstock demand
• PET bottles are the largest and most transparent recycled plastic and the
recovered PET goes back into new bottles (20%) and polyester fiber applications
(80%)
• Asia dominates plastics recycling due to the low cost of labor and imports of
mixed plastics wastes from Europe and N America
Environmental pressures and social media has led to the
adoption of ambitious PET recycling targets from leading
global F&B brands.
Announcements by brands: Announcements by Governments:
Target: 50% R.PET use by 2030 • Japan: 100% PET recycling ratio by 2030
Target: 50% R.PET use by 2030

• EU Package: 65% recycling by 2025 and
70% recycling by 2030
Target: 50% R.PET use by 2025

• Australia: 70% recycling by 2025 and all
packaging to include 30% average
recycled content by 2025
Target: 50% R.PET use for
waters and beverages; 100% for
selective products by 2025
Our base case for increasing plastics recycling from 7% to 12% of
demand reduces feedstock usage by 640,000 bpd relative to staying
at the 7% level.
PET, PE and PP recycling % Feedstock displaced from

60% of Virgin Bpd recycling
700,000
50%
600,000
40%
500,000
30% 400,000
20% 300,000
200,000
10%
100,000
0%
2013 2016 2019 2022 2025 2028 0
PET Recycled PE Recycled

PP Recycled PE PP PET
Major recycled polymer (PET, PE and PP) volumes will more than
double to 40 million mt by 2029, with PET taking the lead
Key recycled polymers displacing virgin demand

45,000 000 mt 14%
40,000
12%
35,000
10%
30,000
25,000 8%
20,000 6%
15,000
4%
10,000
2%
5,000
0 0%
2015 2017 2019 2021 2023 2025 2027 2029
PET PE PP Recycled % of Virgin Demand
Virgin PET bottle and polyester fibre demand and the
amount of recycled RPET bottles back into new bottles
and fibre production
000 mt PET Bottle and Polyester Fiber Demand 000 mt

80,000 130,000
70,000 120,000
110,000
60,000
100,000
50,000 90,000
40,000 80,000
30,000 70,000
60,000
20,000
50,000
10,000 40,000
0 30,000
2015 2017 2019 2021 2023 2025 2027 2029
Virgin Fibre/other RPET Fibre/other Virgin PET bottle
RPET bottle Total PET/Fibre (RHS)
Asia to dominate volumes of recycled polyethylene which increase to
14 million metric tons on a global basis by 2029.
Recycled Polyethylene Recycled Polyethylene

16 Million mt (% Total)
100%
14
90%
12 80%
10 70%
60%
8
50%
6 40%
30%
4
20%
2 10%
0 0%
2013 2016 2019 2022 2025 2028 2013 2016 2019 2022 2025 2028
Asia Europe Americas Asia Europe Americas

Mid East Africa Mid East Africa
Thank You
Contact:
Eshwar Yennigalla
Senior Analyst, Petrochemicals
Eshwar.yennigalla@spglobal.com
42
US-China trade dispute and the
shifts in global petrochemicals
trade flows
Serena Seng, Managing Editor, Asia Petrochemicals
43
Agenda
US-China Global economic impact and shifts in trade flows
Trade dispute Hypothetical scenarios of prolonged trade dispute impacts on
global poly-olefins markets
Chemical Are the US chemical projects at risk of delay?

projects Emergence of Latin America and Europe as next demand
expansions hubs
China’s Who will feed China’s burgeoning appetite for chemicals?

growing South East Asia as a new future supply center
demand
44
US-China trade dispute and the shifts in global petrochemicals trade flow
US-China Trade Flows (All Products)
$600
$400
$200 Deficit
$0
Imports
($200) 2012 2013 2014 2015 2016 2017 2018
Exports
($400)
Source: US Census Bureau
($600)
• China remains largest trade partner (volume) with US and is the single largest holder of US debt (S$1.12 trillion) as of December 2018
• 2018 US Trading deficit to China was $419 billion as U.S. exports to China were only $120 billion while imports from China were $540
billion
US Top trading partners 2018 US Top trade deficits 2018 Top 3 Chinese Exports to US
1. Electronics
17%
30%
23%
2. Clothing
Other
China 3. Machinery
Others
63%
26% Top 3 US Exports
12%
Mexico
27% Mexico China 1. Aircrafts
Canada 2. Computer chips
Source: US Census Bureau Source: US Census Bureau
3% 3. Soya beans
• Ex-China, US main trading partners are with Canada and Mexico, followed by Japan and South Korea, while US trade deficits with China
exceeds 50%, US trade deficits with Mexico and Canada stand at 12% and 3% respectively.
Hypothetical scenarios of the long term impact of Trade dispute on US-China and global GDP growth
Cumulative change in US-China GDP, Trade Cumulative change in regional GDP in 2021, Opportunity index by country in trade dispute
dispute scenario Trade dispute scenario scenario
South Korea
Indonesia
Australia
2019 2020 2021
Taiwan
Japan
China
0.0%
US
0.0%
-0.5% -0.5%
-1.0%
-1.0% -0.9%
-1.0% -1.5% -1.3%
-1.5% -1.3% -2.0% -1.7%
-1.5% -2.1%
-2.5%
-2.0%
-1.9% -3.0%
-2.1% -2.1% -2.7%
US China -3.0%
-2.5% -3.5%
-3.4%
-4.0%
Source: S&P Global Economics, It’s Hard To See Any Winners In A U.S. China Trade War, published on S&P Capital IQ 5 September 2018 Source: ESCAP (2018)
• The US-China trade dispute continues to affect not just US-China economies but impacts to regional economies, employment
rates, shifting production and manufacturing process as well as changes in regional global value chains (GVC) architectures.
• Snow balling negative effect of countries likely to be affected by the trade tensions include economies exporting raw
materials and intermediate products used in China’s exports (Mongolia, Taiwan, Australia, South Korea)
• However, positive implications from trade tensions include a shift in trade and investment flows with Vietnam and Indonesia
ideally positioned to serve as new regional assembly centers with high potential for labour-intensive manufacturing sectors
while Japan and South Korea could benefit from high-tech manufacturing. (Opportunity index)
*Opportunity index by United Nations Economic and Social Commission for Asia and the Pacific using data from Asian Development Bank’s MRIO database which identifies
economies taking up market opportunities amid the trade dispute based on the assumption that US limits its tariffs to only goods from China.
46
Hypothetical scenarios of the long term impact of Trade dispute on petrochemicals (polyolefins)
Cumulative global petrochemical demand (Trade dispute scenario) Cumulative China petrochemical demand (Trade dispute scenario)
2019 2020 2021 2019 2020 2021
0.0% 0.0%
-1.0%
-1.0%
-2.0%
-2.0% -3.0%
Global PP Global PE Global PET & Polyester -4.0%

-3.0% China PP China PE China PET & Polyester
• Hypothetical analysis (above) shows negative demand in global and Chinese PP, PE and PET polyester markets in the next 3 years should trade
dispute persist. Based on the assumption that US exports of polymers and plastics resins would fall and Chinese exports of finished plastics goods
will decrease.
Knee-Jerk effects following tariffs announcements saw actual US import volumes of Chinese PE and finished plastics
goods fall
After tariffs, US PE sacks and bags imports from China fall US Plastic clothing imports from China follows same trend
10,000 Volume, Year on year change (%) Volume, PE Sacks and Bags (mt) 150.0% Volume, Year on year change (%) Volume, Plastic apparel & clothing (HS 3926.20.90)
8,000 350 250.0%
100.0% 300 200.0%
6,000 250 150.0%
50.0% 200 100.0%
4,000
150 50.0%
2,000 0.0% 100 0.0%
mt 0 -50.0% TEU 50 -50.0%
0 -100.0%
10/1/2017
11/1/2017
12/1/2017
10/1/2018
11/1/2018
12/1/2018
1/1/2017
2/1/2017
3/1/2017
4/1/2017
5/1/2017
6/1/2017
7/1/2017
8/1/2017
9/1/2017
1/1/2018
2/1/2018
3/1/2018
4/1/2018
5/1/2018
6/1/2018
7/1/2018
8/1/2018
9/1/2018
1/1/2019
2/1/2019
Source: Panjiva, subsidiary of S&P Global Market Intelligence Source: Panjiva, subsidiary of S&P Global Market Intelligence
• Following trade dispute, US imports of Chinese PE bags fell sharply from March 2018 and saw short bouts of recovery before falling sharply by 90%, 30 days after
September 2018 tariffs. US imports of Chinese plastics clothing and apparel also fell over the same period
47
Are the new US Chemical projects at risk of delay?
………… Yes and No
Inter Pipeline Inter Pipeline Pembina PIC Speculated

Redwater Redwater (Canada) Addition(Canad
(Canada) (Canada) Propylene a)
Polypropylen Propylene 525 550KT, 2023 Polypropylene
e 500 KT, KT, 2022 550KT, 2026
2022
Enterprise Phase Nova Nova Chemicals Westlake Shell Appalachia Formosa Plastics Borealis
2 Propylene Chemicals Polyethylene LACC Ethane Cracker Point Comfort Polyethylene
750KT, no plans Ethylene 450 (HDPE/LLDPE) Ethylene 900 1500 KT, 2022 Ethylene 1200 KT, (HDPE) 313KT,
to build second KT, 2022 450KT, 2021 KT, Q4 2019 Q1 2019 2021
unit Formosa Plastics
Formosa
Formosa Formosa Phase 1- MEG Formosa Plastics Formosa Phase 1-
Plastics
Exxon Mobil Propylene 600 Polypropylen 800KT, 2020 Phase 2- MEG Polyethylene
Propylene 750
Polyethylene KT, 2024 e 250KT, 2020 900KT, 2022 (HDPE) 400KT
KT, 2020
(LLDPE) 650KT, (LLDPE ) 400KT,
Sasol (maybe) Lyondell Basell
Q2-3 2019 Sasol Louisiana Shell 2024
Polyethylene Sasol MEG Polyethylene
Lake Charles ChemicalPolyethylene
(LDPE) 420KT, 250KT, 2019 (HDPE) 549KT,
Ethylene 1500 (HDPE/ LDPE/LLDPE)
(LLDPE) Q2-3 2019
KT, 2019 PTTGC/Daelim 550 KT/550Kt/500KT,
470KTQ32019
MEGlobal MEG Polyethylene 2021-2022
Dow Chemical 750KT, 2019 (HDPE/LLDPE)
Polyethylene Shintech
Louisiana 700 KT/900KT
600KT 2020, 2021, pending
pending Braskem Plaquemine
(USA) Ethylene 500 KT,
Polypropylen Q12019
2019 Ethylene Balance 2019 PP Balance 2019 PE Balance e 450KT, 2021
100%
140000 US Ports Total investment dollars (in millions) 2016-2020
Lotte Chemical
MEG 700KT, 2019 120000
50%
100000
0% 80000
North America South America Europe China Asia Ex-China 60000
-50%
40000
-100% 20000
Source: S&P Global Platts, S&P Global Platts Analytics, Industry Sources 0
North South Gulf Coast Great North South
Atlantic Atlantic Lakes Pacific Pacific
Source: American Association of Port Authorities 48

Who will feed China’s burgeoning appetite for Chemicals?
…… Self-Sufficiency
Upcoming polyolefin Chinese capacities 2019-2023 Ethylene feedstock production costs 2019-2021
1400
Plant Capacity Product Type Date
China Coal Yulin 150 HDPE CTO/MTO 2020 1200
150 LLDPE
Hengli Petrochemicals 400 HDPE Naphtha 2020 1000
1500 Ethylene
Liaoning Bora Chemicals 350 HDPE Naphtha 2022 800
450 LLDPE
1000 Ethylene 600
Qinghai Mining 300 HDPE CTO/MTO 2022
400 2019
Sinopec-Wanbei Coal 175 HDPE CTO/MTO 2019
Electricity Group 175 LLDPE 2020
200
Zhejiang Rongsheng 300 HDPE Naphtha 2020 2021
$/mt
400 LLDPE
0
1400 Ethylene Naphtha Ethane Propane Butane CTO MTO Ethylene
Zhejiang Satellite No 1 500 HDPE Ethane 2021 Price
1250 Ethylene Source: S&P Global Platts Analytics
Zhejiang Satellite No 2 500 HDPE Ethane 2021
1250 Ethylene • China adds approximately 11.4 million mt of ethylene
Ningxia Baofeng No 2 150 LLDPE CTO/MTO 2019 capacities (downstream 2.675 million mt HDPE capacities
Qinghai Damei Coal 300 LLDPE CTO/MTO 2021 and 1.925million mt of LLDPE capacities) in the next 4
Sinopec Zhijin 300 LLDPE CTO/MTO 2022 years.
Sinochem Quanzhou 1000 Ethylene Naphtha 2021
Sinopec SK Wuhan 300 Ethylene Naphtha 2021
(expansion)
• Ethylene prices are forecasted to spike in 2020, following
Sinopec Gulei JV 800 Ethylene Naphtha 2022 higher naphtha costs due to IMO 2020 regulations which
Sinopec Zhongke 800 Ethylene Naphtha 2020 will tighten Naphtha supply.
CNOOC Hainan Ethylene 1000 Ethylene Propane 2023
Butane • Ethylene production costs from Ethane and CTO are
Shenghong Petrochemicals 1100 Ethylene Naphtha 2022 expected to decrease in from 2019-2020 , negating higher
Source: S&P Global Platts, Industry sources
production costs from naphtha.
49
Who will feed China’s burgeoning appetite for Chemicals?
…… Rest of the world LG Chemicals –
Expansion (South
Korea) Ethylene
Gazprom Cracker
300KT, 2019
(Russia) Ethylene Nizhnekamskneftekhi
420KT, 2020 m (NKNC) Ethylene
Hanwha Total –
INEOS Rafnes Complex (Russia)
Expansion (South
Cracker 2 (Norway) Kazakhstan 600KT, 2022
Korea) Ethylene
Ethylene 500KT, 2023 Petrochemical
330KT, 2019
Industries (PDH)
Propylene 500KT, Sibur
2022 ZapSibNeftekhim
Ethylene (Russia) Yeochun NCC
Grupa Azoty Police II 1500KT, 2020 (South Korea)
(Poland) PDH Ethylene 335KT,
Gachsaran
Propylene 400KT, 2021
Petrochemical (Iran)
2022
Ethylene 1000KT,
2022
PetroVietnam PTT
LG Chemicals –
Long Son
Salman-e-Farsi PC Expansion (South
Petrochemicals
PDH (Iran) Propylene Korea)
Complex (Vietnam)
450KT, 2022 Ethylene 800KT,
Ethylene 950KT,
2021
2023
Mehr Petrokimiya Co
PDH (Iran) Propylene JG Summit – Lotte Chemical
450KT, 2022 HMEL Refinery Expansion Hyundai (South
(India) Ethylene (Philippines) Korea) Ethylene,
1200KT, 2022 Ethylene 160KT, 750 KT, 2022
Orpic Sohar Liwa 2021
Plastic (Oman) Petronas Rapid
Ethylene 900KT, 2023 Petrochemical GS Caltex (South
Complex Ethane Korea) Ethylene
YPFB PDH (Bolivia) Cracker (Malaysia) 700KT, 2023
Lotte Chemical Titan
Propylene 300KT, Ethylene 1200KT, Merak Banten
2021 2019 Naphtha Cracker
(Indonesia) Ethylene
1000KT, 2023
SCG-Dow (MOC) –
Expansion (Thailand)
Ethylene 250KT, 2021
PTTGC Chandra Asri

PTTGC Map Ta Phut Expansion
Cracker 5 (Thailand), (Indonesia) Ethylene
Ethylene 500KT, 2020 40KT, Q1 2021
Source: S&P Global Platts, S&P Global Platts Analytics, Industry Sources
50
Summary and Key takeaways
Short term impacts of US-China trade tensions sees location swaps of cargoes, with
US cargoes shipped to SE Asia/India and SE Asia/Indian cargoes shipped to China
US-China
Trade dispute Medium-Long term impact affects GDPs of countries which relies on China as a major
GVC player but opens up opportunities for trade flows to shift to emerging
economies such as Vietnam and Indonesia
Delays in US Chemical projects expansions result mainly from lack of financing,

Chemical government permits etc, and poor port infrastructure that impedes exports of
projects chemical products.
expansions
South and central America emerges as new demand centers for US chemical exports
China’s goal of self-sufficiency sees mega petrochemical projects built domestically

China’s in the next 5years to feed growing local demand and to capitalize on low-cost coal
feedstocks.
growing
demand Abundance of South Korea, SE Asia and Middle east chemical projects expansions in
the next 5years also cater to China’s insatiable appetite for chemicals
51
Thank you!
Serena Seng, Managing Editor, S&P Global Platts,
serena.seng@spglobal.com
Eshwar Yennigalla, Senior Analyst, S&P Global Platts Analytics,

eshwar.yennigalla@spglobal.com
Yi-Jeng Huang, Senior Market Development Specialist,

yi.jeng.huang@spglobal.com
52
Gustav Holmvik
Preparing for an Asian Team Leader, Asia
Petrochemicals
dawn S&P Global Platts
May 16, 2019
• Changes in the supply landscape – China expansions and IMO 2020

• Can belts and roads continue to lead to China?
The Status Quo in Aromatics Markets:
- Volatility in PX, the benzene glut and lots of uncertainty
1400
Strong downstream margins,
tight PX supply drive PX prices
1300 Hengli started first of
up in Q3-4, 2018.
two new PX plants
around March 20.
1200
1100
1000
$/MT
900 TDP margins increasingly

poor due to low benzene
800 and firm gasoline blendstocks
700
600
500
4/2/2018 5/2/2018 6/2/2018 7/2/2018 8/2/2018 9/2/2018 10/2/2018 11/2/2018 12/2/2018 1/2/2019 2/2/2019 3/2/2019 4/2/2019
PX CFR T/C MX FOBK BZ FOBK TL FOBK
54
The Status Quo in Aromatics Markets:
- A look at key product margins
800
PX-naphtha y-t-d high Spread tumbles to
of $615/mt in Feb $331.7/mt late Apr
700
600
500
400 PX-naphtha spread hit more than 5-year

high Aug, 2018, at nearly $700/mt.
S/MT
300 Benzene margins remain weak

throughout 2019 and becomes
negative end Mar
200
100
0
8/30/2018 9/30/2018 10/31/2018 11/30/2018 12/31/2018 1/31/2019 2/28/2019 3/31/2019 4/30/2019
-100
PX Benzene
55
The Big Changes Ahead: China’s New aromatics
plants
Total start-up capacity (2015-2017) Total planned start-up capacity (2018-
14000 4.8 mil mt/year 2019+)
15.7 mil mt/year
12000
10000
Hengli 1
Hengyi Brunei
k 8000
t Sinochem Hongrun
/
Sinopec Hainan
y
r 6000
Hengli 2
4000 TPPI
Hanwha Total
Ningbo
Zhongjin Fuhaichuang
Zhejiang PC
2000 Jurong Aromatics
PetroRabigh
Reliance
Nghi Son
0
2015 2016 2017 2018 2019
Source: S&P Global Platts, market sources
56
The Big Changes Ahead: The IMO 2020 sulfur cap
Big impact for refineries,

shipowners, bunkertraders…
What about petrochemicals?
• Increasing fuel cost
• Impact on naphtha
• Impact gasoline
“The chemical tanker industry is

one of the segments with the
lowest scrubber uptake among
shipping peers”, according to
a chemical tanker operator.
57
How May Aromatics Trade Flows Change?
58
What will support Asia’s Petrochemical Markets
in the Future?
• Population growth and increased buying power: The UN projects Asia to

add 0.9 billion people by 2050 – second in population growth only to
Africa.
• Emerging markets: Vietnam, India, Indonesia, and more…
• Production capacity: China will also expand PTA capacity over the years
to come: Almost 30 million mt/year of new capacity expected by 2023, to
support additional PX consumption of over 19 mil. mt/year. Other
products to follow suit and keep CFR China markets alive?
59
Thank You
Contact:
Gustav Holmvik
Team Leader, Asia Petrochemicals
gustav.holmvik@spglobal.com
60
Platts special report on IMO 2020 impact
Platts at APIC - Committee Meetings
• Styrenics – Is demand losing steam, or catching it’s breath?

• Synthetic Rubber – The Electronic Vehicle revolution and the shift in
trade dynamics
• General Matters – Clean solutions for the petrochemical industry amidst
energy transitions
• Polyolefins – Trends in the polyolefins markets amid environmental and
US-China trade impacts
• PVC – Possibility of recycle PVC: Can recycle PVC ease current PVC
supply tightness
Thank You
Contact:
Vanessa Ronsisvalle
Associate Content Director, Petrochemicals Asia
Vanessa.ronsisvalle@spglobal.com
63

APIC Chemical Marketing Seminar - Platts - May 8

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Asia Petrochemicals

Essential Intelligence May 16, 2019

Platts Price Assessment Methodology is built on two

• Published live through

• These take precedence Firm,

Private & Confidential

Innovation & Sustainable Solutions

Petrochemicals and the IMO 2020 mandate

and Implications for the

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

Saudi Arabia include its portion of the Neutral Zone.

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

Source: S&P Global Platts Analytics

Source: S&P Global Platts

MMBOE/D = Million Barrels Oil Equivalent per Day

Petrochemicals: May 16, 2019

Crude & Recycling

Chemical and car transport fuels converge

Chemicals Percent of Oil Supply Transport Percent of Oil Supply

Chemical Feedstock Composition

18 Propane: PDH feeds

Source: S&P Global Platts Analytics

• Platts Analytics defines recycling as recovered plastics that displace virgin

Target: 50% R.PET use by 2030

Target: 50% R.PET use by 2025

PET, PE and PP recycling % Feedstock displaced from

PET Recycled PE Recycled

Source: S&P Global Platts Analytics

Key recycled polymers displacing virgin demand

PET PE PP Recycled % of Virgin Demand

Source: S&P Global Platts Analytics

000 mt PET Bottle and Polyester Fiber Demand 000 mt

Source: S&P Global Platts Analytics

Recycled Polyethylene Recycled Polyethylene

Asia Europe Americas Asia Europe Americas

Source: S&P Global Platts Analytics

Chemical Are the US chemical projects at risk of delay?

China’s Who will feed China’s burgeoning appetite for chemicals?

Global PP Global PE Global PET & Polyester -4.0%

Inter Pipeline Inter Pipeline Pembina PIC Speculated

Source: American Association of Port Authorities 48

PTTGC Chandra Asri

Delays in US Chemical projects expansions result mainly from lack of financing,

China’s goal of self-sufficiency sees mega petrochemical projects built domestically

Eshwar Yennigalla, Senior Analyst, S&P Global Platts Analytics,

Yi-Jeng Huang, Senior Market Development Specialist,

dawn S&P Global Platts

May 16, 2019

• Changes in the supply landscape – China expansions and IMO 2020

900 TDP margins increasingly

PX CFR T/C MX FOBK BZ FOBK TL FOBK

Source: S&P Global Platts

400 PX-naphtha spread hit more than 5-year

300 Benzene margins remain weak

Source: S&P Global Platts

Source: S&P Global Platts, market sources

Big impact for refineries,

“The chemical tanker industry is

• Population growth and increased buying power: The UN projects Asia to