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US AromaticsOverview on US Aromatics Feedstocks

Adhesives and Sealants Council, 2016

Zachary Moore

Markets Reporter

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Overview of Toluene & Mixed Xylenes

US Benzene

US Toluene & Mixed Xylenes

Overview

Production

Imports/Exports

Consumption

Summary

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US Benzene

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The Benzene Value Chain shows a host of products used in our daily lives.

The main driver of US benzene is ethylbenzene for styrene production.

Downstream products include tires, footwear and sealants from SBR and insulation and cups from PS

The second largest outlet is cumene for phenol production

Downstream products include coatings from epoxy resins and computer components from polycarbonate

The cyclohexane chain produces carpets and clothing from nylons

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The Benzene Value Chain shows a host of products used in our daily lives.

The main driver of US benzene is ethylbenzene for styrene production.

Downstream products include tires, footwear and sealants from SBR and insulation and cups from PS

The second largest outlet is cumene for phenol production

Downstream products include coatings from epoxy resins and computer components from polycarbonate

The cyclohexane chain produces carpets and clothing from nylons

The Benzene Value Chain shows a host of products used in our daily lives.

The main driver of US benzene is ethylbenzene for styrene production.

Downstream products include tires, footwear and sealants from SBR and insulation and cups from PS

The second largest outlet is cumene for phenol production

Downstream products include coatings from epoxy resins and computer components from polycarbonate

The cyclohexane chain produces carpets and clothing from nylons

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US Benzene vs upstream

Update on crude oil outlook/pricing

Benzene more volatile than crude

Toluene-benzene spread impacts benzene production economics

Source: ICIS Pricing

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US Benzene

Overview

Production

Imports/Exports

Consumption

Summary

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US Benzene Production 2015

Majority of US benzene supply in 2014 was produced in reformers

Ethylene unit co-product was another significant source of US benzene

On-purpose benzene production through toluene was the next largest source

Source: ICIS Consulting

Cracker

On-purpose

Other

Refinery

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Benzene Toluene

Benzene-Toluene Price Spread

On-purpose benzene production depends on the price spread between benzene and toluene

The spread has narrowed in the last year

Recent price spike encourages on-purpose

benzene

Source: ICIS Pricing

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US Benzene Consumption vs Production

Ethane cracking generates less benzene as co-product

Imports serve a vital role in the US benzene market

Source: ICIS Consulting

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US Benzene

Overview

Production

Imports/Exports

Consumption

Summary

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US Benzene Imports 2015

The US receives the majority of its benzene imports from South Korea

Source: US ITC

South Korea22%

Saudi Arabia11%

Venezuela18%

Brazil8%

All others41%

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US Benzene Imports 2015-2016

The US receives the majority of its benzene imports from South Korea

Overall, imports in early 2015 were down from early 2014

Volumes from South Korea made up a larger percentage of total US imports in early 2015

Source: US ITC

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US Benzene vs South Korea benzene spot prices

The spread between US and South Korea benzene prices has narrowed as petrochemical prices have declined, resulting in narrower and less frequent arbitrage windows in 2015

Source: ICIS Pricing

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US South Korea

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US Benzene

Overview

Production

Imports/Exports

Consumption

Summary

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US Benzene Consumption 2015

Ethylbenzene is mostly used to make styrene

Cumene is nearly all consumed in phenol/acetone production

Cyclohexane is primarily used in the nylon chain

Source: ICIS Consulting

Nitrobenzenes

Alkylbenzene

Cyclohexane

Cumene (Phenol)

Ethylbenzene (Styrene)

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Downstream: North American Styrene Exports

Source: ITC

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Styrene and Ethylbenzene exports

Source: ITC

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US Benzene vs US Styrene

Styrene-benzene spread narrowing as more SM plants resume production

Source: ICIS Pricing

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Benzene Styrene

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Styrene and Cumene Production

Source: AFPM survey

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US Benzene

Overview

Production

Imports/Exports

Consumption

Summary

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US Spot Benzene vs Contract

Main impacts on benzene pricing:

Imports/exports

Styrene demand

Crude oil prices

Asia and Europe prices

Source: ICIS Pricing

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US Benzene Supply & Demand

Annual growth of real consumption is forecast to average 1.2% through 2017, and 0.7% 2017-2025

Production is expected to increase by 4.5% by 2025

Source: ICIS Consulting

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Overview of Toluene & Mixed Xylenes

US Benzene

US Toluene & Mixed Xylenes

Overview

Production

Imports/Exports

Consumption

Summary

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US Toluene & Mixed Xylenes

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US Toluene & Mixed Xylenes vs WTI

Toluene and MX spread vs WTI remain wide

MX and toluene prices have remained firm so far in Q4 on tight supply

Source: ICIS Pricing

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WTI (Friday close) Toluene MX

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US Toluene & MX Consumption vs Production 2015

The US is a net importer of toluene

For MX, the US is a net exporter

Source: ICIS Consulting

Consumption2,128

Consumption3,449

Production1,896

Production3,385

Toluene MX000s of tonnes

Consumption Production

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US Toluene & MX 2015 trade balance

Net toluene imports rose in 2015

Net MX exports softer in 2015

Source: ICIS Consulting

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US Gasoline production

Strong gasoline production prevented a summer price spike in 2016

Source: EIA

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2016 2015 2014

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US Toluene & MX consumption 2015

The largest chemical outlet in 2015 for toluene was benzene and for MX was PX

Source: ICIS Consulting

Benzene/PX

TDISolvent

Nitrotoluenes

Phenol

Misclaneous

TOLUENE CONSUMPTION 2015

Paraxylene

Orthoxylene

Solvents

Miscellaneous

MX CONSUMPTION 2015

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US Toluene vs downstream

Economics for benzene production have been unattractive most of 2015

Economics for PX production have been unattractive for much of 2015

Source: ICIS Pricing

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Benzene Toluene PX

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US MX vs downstream

An explosion at an Asian aromatics facility shortened PX supply and widened the PX-MX spread in April and May

Source: ICIS Pricing

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MX PX

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US Toluene Supply & Demand

Annual growth of real consumption is forecast to average 1.3% through 2017 and 1.1% 2017-2025

Production is expected to increase by 11% by 2025

Source: ICIS Consulting

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US MX Supply & Demand

Source: ICIS Consulting

Annual growth of real consumption is forecast to average 8.5% through 2017 and 3.1% 2017-2025

Production is expected to increase by 30% by 2025

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Contact

Zachary Moore

Markets Reporter, AmericasZachary.Moore@icis.com

Questions & Answers

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