analyst briefing presentation fy11 ... - ptt global...
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INVESTORS PRESENTATION Thailand Conference 2013 Hosted by JP Morgan Sukhothai Hotel Bangkok Jan 29, 2013
Disclaimer
This presentation includes forward-looking statements that are subject to risks and uncertainties, including those pertaining to the anticipated benefits to be realized from the proposals described herein. This presentation contains a number of forward-looking statements including, in particular, statements about future events, future financial performance, plans, strategies, expectations, prospects, competitive environment, regulation and supply and demand.
PTTGC has based these forward-looking statements on its views with respect to future events and financial performance. Actual financial performance of the entities described herein could differ materially from that projected in the forward-looking statements due to the inherent uncertainty of estimates, forecasts and projections, and financial performance may be better or worse than anticipated. Given these uncertainties, readers should not put undue reliance on any forward-looking statements.
Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and PTTGC does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable laws and regulations.
2
Agenda
Business Profile Strategy and Growth Target Market Outlook Financial Status Appendices
3
4
PTTGC at a GlanceA Chemical Flagship of PTT Group
Incorporated on October 19, 2011 from the
amalgamation of PTTAR and PTTCH
Foreign Limit <= 37%
Dividend Policy >=30%
F i Li it 37%
Registered capital 45,129 million baht
Paid-up capital 45,088 million baht as of Oct 2012
Strategic location of each plant in Map Ta Phut Industrial Complex creates proximity to suppliers and customers
5
Organization Chart and Business Units
6
Flexible Feedstock and Highly Competitive Cost Structure
7
Flexible Feedstock and By-Product Enhancement
PTTGC's refinery business is able to process a variety of crude oil at a competitive cost due to high complexity Availability of feedstock along the whole carbon chain enhances the value of PTTGC by offering increased flexibility for better optimization, resulting in further cost advantages – Olefins can be produced from naphtha or ethane directly
from the Gulf of Thailand – Aromatics can be produced from condensate or reformate
from the Refinery Value enhancement from by-product exchange among Olefins, Aromatics and Refinery units for upgrading at the other unit highlights operational integration and efficiency, for instance – Refinery unit can use condensate residue and hydrogen
from Aromatics unit – Aromatics unit can use pygas from Olefins unit – Olefins unit can use offgas and C3, C4 from Refinery and
Aromatics units, respectively
Feedstock Supply Product Marketing
Refinery
Aromatics
Olefins / Polymers
Others
Condensate
Crude Oil
Others
Ethane, Propane, LPG
C5-C9
C10-C25
C2-C4
Olefins
100% Polymers (1)
47% (2)
53% (2)
Feedstock Supply Commercial Agreements Product Marketing Commercial Agreements
Customers
Others
71% (2)
29% (2)
103
318
799 824 830 883
951 967 1,006
-
200
400
600
800
1,000
1,200
MDEEthane
NAMEthane
NEA LPG NAMNaphtha
MDE LPG MDENaphtha
NEANaphtha
SEANaphtha
WEPNaphtha
Global Ethylene Cash Cost by Region
USD/Ton
2012E (4)
1. PTT owns 50%, PTTGC and IRPC each owns 25% in PTTPM. 2. Six month period ended 30 June 2012.
MDh h
NN
DE(5)
Source: IHS (formerly CMAI) as of July 2012. Note: MDE = Middle East, NAM = North America, NEA = Northeast Asia, SEA = Southeast Asia, WEP = Western Europe.
3. PTTGC ethylene cash cost is based on Company estimate and ethane cracker only. 2012E PTTGC cash cost takes into account the effect of the renewal of gas price agreement. 4. MDE cash costs are average values of Iran and Saudi Arabia.
MDDE LPG(5)
D NEth
DE N(5)
Natural Gas
Crude Palm Oil
Crude
Condensate
Cracker
Aromatics Plants
Refinery
Ethylene
HDPE
LLDPE
LDPE
MEG
Propylene
Oleochemicals
Paraxylene
Benzene
PTAPET Fiber/Resin
EO
Ethanolamine
Ethoxylate
Cyclohexane
CumenePhenol
Acetone
EB/SM
PS
BPA
Methyl Ester(B-100)
PC
Caprolactam Nylon 6
Fatty Alcohol
MMA PMMA
Epoxy Resins
ABS
SBR
PP
PTT Phenol
Petroleum Products- LPG- Reformate- Light Naptha- Jet Fuel- Diesel- Fuel Oil
Reformate, Heavy
Naphtha
Pygas
Condensate Residue,
Hydrogen
Light Naphtha
C3,C4
OffGas Mixed C4 Butadiene
PO
PUTDI/HDI
Toluene
Polyols
Orthoxylene
Cracker Bottom,
Hydrogen
PA Plasticizer
1. PTTGC does not currently produce these products.
REFINERY & SHARED FACILITIES AROMATICS OLEFINS POLYMERS EO-BASED
PERFORMANCE GREEN CHEMICALS HIGH VOLUME SPECIALTIES
Feedstock Upstream Intermediates Downstream Proximity to Suppliers and Customers
Exchange Stream Products By-Products
Potential Product Opportunities (1)
Petroleum Products - LPG - Reformate - Light Naphtha - Jet Fuel - Diesel - Fuel Oil
Fully Integrated Petrochemical and Refinery Operations with Diversified Product Portfolio
8
Diversified Product Portfolio and End Markets
9
Full range of product offering reduces business volatility and provides future opportunities to expand to High Volume Specialties and other new products
Potential Product Opportunities (1)
PMMA
Nylon 6
ABS
SBR
PP
PC
Epoxy Resins
Polyester Fiber
PET Resin
Automotives, Electronic and Electrical Appliances, Packaging, Construction, Paints
Automotives, Textiles, Agriculture
Textiles, Packaging, Furniture,
Isocyanates, PU
New Investments
PLA
Foams, Coatings, Elastomers
Films/Cards, Durables, Beverages, Non-Wovens/Fibers
Current Downstream Products New and Potential Downstream Product Opportunities
Packaging, Films, Toys, Furniture, Construction
Health and Personal Care Products, Pharmaceutical
Packaging, Electronic and Electrical Appliances, Automotives
Biodiesel
HDPE
LDPE
LLDPE
PS
Biodiesel
Ethoxylate
Ethanolamine
1. PTTGC does not currently produce these products.
Agenda
Business Profile Strategy and Growth Target Market Outlook Financial Status Appendices
10
Strategic Directions
“In 2012, we achieved EBITDA uplift of USD 87 million from operational excellence, marketing excellence, and synergy projects”
11
1. Operational Excellence
12
------- LAGGARDS-------- -------- LEADERS ---------
To achieve 1st quartile of energy efficiency and reliability
Refinery
- Alternative feedstock - Opportunity crude and
condensate - Processed high tan crude
- Reliability Improvement - Catalyst improvement - Yield improvement - Plant flexibility improvement
- New feedstock sourcing (Condensate)
- Yield Improvement - Shutdown I-4/1 in Nov for
Quench Tower Modification - Variable cost improvement
- Energy saving program for HDPE I-1
- Hexane/nitrogen recovery unit installation
Aromatics Olefin and Olefins Derivatives Major Activities in 2012
By 2017 Benefit Uplift CAPEX
~91 MUSD ~150 MUSD
2012 Achievement
EBITDA uplift 53 MUSD
2. Marketing Excellence
13
By 2017 Benefit Uplift CAPEX
~85 MUSD ~10 MUSD
2012 Achievement
EBITDA uplift 25.1 MUSD
- Expanded domestic sales portion of - LLDPE product 30% (2012 target = 27%) - LDPE product 33% (2012 target = 30%) - Total PE product: 33% (2012 target = 32%)
- Increased portion of high value products (HVP) from 7% to 10% of total polymers revenue, and expanded 7 grades of HVP
Major Activities for Polymers BU in 2012
Natural Gas
Crude
Condensate
Cracker
Aromatics Plants
Refinery
Reformate, Heavy
Naphtha
Pygas
Condensate Residue,
Hydrogen
Light Naphtha
C3,C4
OffGas
Cracker Bottom,
Hydrogen
3. Synergy Projects from Amalgamation
14
Exchange Stream Products By-Products
2012 Achievement
EBITDA uplift 9.07 MUSD Synergy Projects
Expected Investment
(M. USD)
Expected Benefit per
year (M. USD)
Target Completion
Progress
1.Product upgrade
1.1 Offgas 177.7 76.7 4Q/14
- BoD approved additional budget for enclosed ground flare, pipe-rack and pipeline around 35.7 MUSD.
- Tie-in works in each plant are on going.
1.2 C3/C4 Stream 5.5 35.1 End of 2012
- Completed. - Benefit capture depends on economic
and supply availability of each feed type. (subject to HDPE spread)
1.3 Heavy Aromatics 0.0 1.3 Jan. 1, 2012
- Completed.
1.4
Heavy Gasoline, Light Cracker Bottoms and Cracker Bottom
5.7 28.8 End of 2012
- Completed. - 1st batch of 3-stream was transferred
to refinery on Dec 20th, 2012.
1.5 Pure H2 via New PSA 19.8 6.6 2Q/14
- Construction is 24%- on schedule - Completed commercial negotiation for
PSA package. - BOI approved PSA project to get investment promotion.
2. Cost Saving from share tanks and jetty 0.0 0.6 2Q/12
- Signed contract with Thai Tank Terminal to maximize utilization of existing idle facility – completed.
3. Stream cost reduction
Under Study
Under Study
4Q/14
- Construction permit for box culvert is on going to discuss with external related parties, plan to get permit within Q1/2013.
Total 208.7 149.2
15
Opportunities for Debottlenecking • Debottleneck - PTTPE Cracker
Under study of plant configurations Subject to gas availability
• Debottleneck - Polymer Plants In accordance with additional feedstock from PTTPE cracker debottlenecking
• I4-1 Liquid Vapor To reduce minimum liquid portion used in I4-1 (mixed feed cracker)
• Debottlenecking - PX capacity Enhance reformate value to produce more PX Expected volume increase by 10 – 15%
• C4 Value Enhancement ST: Export mixed C4 to maximize value LT: To complete BV Project (C4 upgrading to Butadiene/Butene-1) by end of 2013
4. Debottleneck / By-Product Value Enhancement
5. CAPEX Excellence
16
2011 Target2017
Target2022
Operational Excellence, Marketing Excellence, Capital Expenditure Excellence
Endeavour for Strong Profitable Growth
17
Synergy Project Excellence Debottleneck
~ 550 - 600
500
~ 700 - 800
HVS Green
Sales in THB Bn
Phase 1: Foundation for Growth Phase 2: The Growth Mode
We aim to grow ~5 percent p.a. in the next ten years
HVS
Green
New Global Hub
Expected EBITDA Benefit Uplift 15-30%
Business Platform
18
Agenda
Business Profile Strategy and Growth Target Market Outlook Financial Status Appendices
19
Key Trends for Petrochemical Industry in 2013 Oil prices slightly depressed by oversupply
Global oil demand 90.5 MBD (+0.865 MBD) with high growth from Asia Global oil supply 90.6 MBD from Non OPEC (US, UK, Brazil)
PX and MEG market strongly supported by outpacing derivatives demand of new PTA and polyester capacity, mainly from China
PX demand growth of 10% as against supply growth of 9.8% MEG demand growth of 7% against 5% supply growth
BZ supply remains pressured by feedstock shortage Demand growth 3.2% outpacing supply growth of 2.6% Pygas and reformate are the main source of supply for BZ
Olefins market will be driven by derivatives demand mainly from PE Ethylene demand growth of 4% higher than supply growth of 3% Propylene market slightly oversupply from new units startup
PE market expected to recover with average global operating rates of 85%
Total PE demand growth 3.8 Mton Total PE new capacity 3.5 Mton from ME and China
20
Agenda
Business Profile Strategy and Growth Target Market Outlook Financial Status Appendices
21
A Highly Competitive Cost Structure Revenue Breakdown, Adj. EBITDA breakdown, and EBITDA Margin
3Q/12 3Q/11 2Q/12
Refinery 4% 3% 3%
Aromatics 8% 3% 4%
Olefins and Derivatives 27% 28% 27%
3Q/12 Revenue Breakdown 3Q/12 Adjusted EBITDA* Breakdown
Adjusted EBITDA* Margin by Group Performance Center
Refinery 47%
Aromatics 20%
Olefins and Derivative
21%
Phenol 3%
Green 2%
Others 7%
Refinery 20%
Aromatics 16%
Olefins and Derivative
55%
Phenol 2%
Green 1%
Others 6%
Note* Exclude impact of inventory value 22
35.3
237.5
226.7
105.7 140.1
46.2 57.8
Strong Financial Position
23
• Free Cash Flow for Investment
• Key Financial Ratios
• Dividend – Solid Payout Ratio
32.4
235.3
208.5
82.6
120.2
22.6 44.3
As of 31 Dec. 2011 As of 30 Sep. 2012
THB 425 Billion THB 373 Billion
Cash
CA
PPE
Non CA
Share holders’ Equity
Loan
Liab.
• Balance Sheet
3Q/12 2Q/12
ROA 6.51% 5.33%
ROE 12.20% 9.54%
Net IBD / Equity 0.41 0.46
Net IBD / EBITDA 1.94 2.38
FY2011 6M/12
EPS (Baht/Share) 6.66 2.37
Dividend (Baht/Share) 2.98 0.98
Payout Ratio (%) 45% 41%
FCF for Inv. 7,428
FCF for Inv. 9,908 FCF for Inv.
5,992
2,003
8,146
26,795
9,431
18,054
32,787
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
1Q/12 2Q/12 3Q/12
FCF for Inv. Debt Service and Dividend
Cash from OperationMTHB
38.0
2.5
13.6 15.4
9.3 11.1
20.5
12.3 9.1
13.1
1.5
31.6
Cash 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
PTTGC PPCL PTTUT Others
2011 3Q/12
PTTGC Debts ~ THB 140 Billion
Unit : THB Billion
120
29 (24%)
91 (76%)
140
As of 30 Sep. 12 - Debt Structure & Cost Cost of long term debts ~ 5.0% (Include W/H Tax) % Total fixed-rate long term debt ~ 62%
(THB fixed-rate debt ~ 44%, Int. ~ 5.4%, USD fixed-rate debt ~88%, Int. ~ 5.0%)
Average loan life after refinancing - 5.5 Years
THB USD & Foreign
56 (40%)
84 (60%)
PTTGC Repayment Schedule (after Refinancing)
24
Loan 46%
By Type By Currency By Rate
Bond 54%
Thai Baht 60%
Foreign Currency 40%
Variable Rate 38%
Fixed Rate 62%
Liquidity Headroom Maturity of Financial Debt Unit : THB Billion
As of 31 Dec. 2011 As of 30 Sep. 2012
PTTGC has a five-year (2012-2016) uncommitted capital expenditure plan of up to USD 4.5bn – If fully funded, USD 2.5bn will come from operational
cashflow and the remaining USD 2.0bn from debt
Capital Expenditure Plan
Treasury policy Net IBD to Equity ratio of ≤ 0.7x Net IBD to EBITDA ratio of ≤ 2.4x
Debt Structure
FY12 Business Operations at a Glance
25
Dubai price remains high throughout the year, with FY12 averaged at 109 USD/bbl, and 4Q12 averaged at 107 USD/bbl
Better gas flow from GSP – 3.1 Mton, increased 10% from year 2011 at 2.81 Mton
Volume driven thus higher utilization rates
CDU 100%, BTX 86%, Olefins 88%, HDPE 102%, MEG 88%
Price/spread in mixed performance compared to previous year HDPE 1,380 USD/ton +1% YoY PX-Condensate 553 USD/ton - 11% YoY BZ- Condensate 263 USD/ton + 45% YoY Gasoil- Dubai 17 USD/bbl - 6% YoY
26
Agenda
Business Profile Strategy and Growth Target Market Outlook Financial Status Appendices
27
2012 Target Sales by Business Unit
28 * Sold within AEC
Refinery Business GRM improved from better middle distillates
29
• Refinery : Domestic / Export
• Adjusted EBITDA
• Margin
• Intake and CDU Utilization Rate
1,999 2,226 2,921
3Q/11 2Q/12 3Q/12
Export
Domestic
Factors Sales Volume Spread
3Q/12 vs. 3Q/11 +6% +19%
32%
68%
• Price and Spread
Unit: THB Million
146 142 147
35 58 55
101% 98% 101%
79%
84%
89%
94%
99%
104%
0
50
100
150
200
250
3Q/11 2Q/12 3Q/12
Crude Condensate Residue CDU Rate
USD/BBL 3Q/12 3Q/11 2Q/12 % YoY % QoQ
Market GRM 5.94 4.98 4.32 19% 38%
Hedging Gain/(Loss)
0.02 0.05 0.58 (64%) (97%)
Stock Gain/(Loss) Net NRV
3.74 0.18 (8.79) 1980% 143%
Accounting GRM 9.71 5.21 (3.89) 86% 349%
USD/BBL 3Q/12 3Q/11 2Q/12 % YoY % QoQ
Dubai crude 106 107 106 (0.7%) 0.0% Jet/Kero 20.21 18.78 15.96 8% 27%
Diesel 19.27 17.62 15.39 9% 25%
Fuel Oil (2.48) (3.23) (1.34) 23% (85%)
% KBD
Aromatics Business The return of Benzene
30
• Adjusted EBITDA
• Margin
• Intake, Production and CDU Utilization Rate
• Aromatics : Domestic / Export
1.45 1.52 1.57
0.53 0.52 0.53
91% 90% 90%
75%77%79%81%83%85%87%89%91%93%
00.20.40.60.8
11.21.41.61.8
3Q/11 2Q/12 3Q/12
Condensate + Other feedstock BTX Products BTX Rate
1,080 1,263
2,334
3Q/11 2Q/12 3Q/12
Export
Domestic
Factors Sales Volume Spread
3Q/12 vs. 3Q/11 3% +37%
35%
65%
• Price and Spread
Unit: THB Million
USD/Ton 3Q/12 3Q/11 2Q/12 % YoY % QoQ
Market P2F 243 178 191 37% 28%
Hedging Gain/(Loss)
0 0 (2) 0 100%
Stock Gain/(Loss) Net NRV
64 (6) (72) 1,227% 189%
Accounting GRM 308 172 116 79% 164%
USD/Ton 3Q/12 3Q/11 2Q/12 % YoY % QoQ
PX - Condensate 430 590 568 (27%) (24%)
BZ - Condensate 263 184 178 43% 48%
Nap - Condensate 0.9 15.0 (36) (94%) 102%
MTon %
USD/Ton
Olefins and Olefins Derivatives Business Better Utilization Rate
31
• Performances
• Price and Spread • Olefins Intake
409 Kton 55%
531 Kton 60%
534 Kton 57%
34% 28% 29% 11%
12% 14%
0100200300400500600700800900
1000
3Q/2011 2Q/2012 3Q/2012
Ethane Other Gas Naphtha
3Q/12 3Q/11 2Q/12 Sales Volume
Sales Volume (K.Ton)
Utilization Rate
Sales Volume (K.Ton)
Utilization Rate
Sales Volume (K.Ton)
Utilization Rate
% YoY % QoQ
Olefins1 188 91% 190 72% 217 89% (1%) (13%) HDPE 198 92% 175 90% 197 101% 13% 0% LLDPE 111 113% 81 95% 70 77% 37% 60% LDPE 96 113% 37 12% 54 98% 157% 76%
Total Polyethylene 404 102% 294 76% 320 94% 38% 26% MEG2 91 93% 64 60% 90 85% 41% 1%
Note: 1. Sales of olefins are net sales to external entities 2. MEG utilization calculated from capacity of 395 KTA
USD/Ton 3Q/12 3Q/11 2Q/12 %YoY %QoQ
Ethylene 1,200 1,160 1,146 3% 5% Naphtha 915 956 894 (4%) 2% HDPE 1,343 1,399 1,376 (4%) (2%) HDPE-Naphtha 428 443 482 (3%) (11%) LLDPE 1,341 1,338 1,342 0% 0% LDPE 1,327 1,586 1,349 (16%) (2%) MEG 1,065 1,343 1,149 (21%) (7%) MEG-0.65 Ethylene 285 589 404 (52%) (29%)
KTon
32
66%
34%
30%
70%
3%
97%
• Olefins : Domestic / Export Export
Domestic
• Polymer : Domestic / Export
Domestic
Export
• EO/EG : Domestic / Export
Export
Domestic
• Olefins and Derivatives Adjusted EBITDA
6,996
7,662
8,318
3Q/11 2Q/12 3Q/12
Factors PE Sales Volume HDPE Price
3Q/12 vs. 3Q/11 38% -4%
• Driven Factors
Olefins and Olefins Derivatives Business (cont.)
Unit: THB Million
Phenol Business
33
• Phenol : Domestic / Export
Export
Domestic
• Intake, Production and Utilization Rate
31,592 31,081 34,407
29,105 29,160 32,880
114% 122% 128%
72% 82%
102%
0%
20%
40%
60%
80%
100%
120%
140%
-
20,000
40,000
60,000
80,000
100,000
3Q/2011 2Q/2012 3Q/2012
Phenol Sales Volume BPA Sales Volume
Phenol Urate BPA Urate
3Q/12 3Q/11 2Q/12 YoY QoQPhenol-BZ 264 571 335 -54% -21%BPA-Phenol 212 344 211 -38% 0%
USD/TonPeriod % + / (-)
• Adjusted EBITDA
• Price and Spread
1,110
241 294
3Q/11 2Q/12 3Q/12
84%
16%
Unit: THB Million
Ton %
851
12,910
23,614
2,983
1,117 1,066 531
7,240
2,222
2,027 1,102 831
-
5,000
10,000
15,000
20,000
25,000
Net Profit2Q/12
Volume Spread VC FC StockGain
NRV FX CIT Others Net Profit3Q/12
Net Profit9M/2012
2,222
34
23,614
Net Profit9M/2012/
2012 Analysts Consensus NP THB 28,000 million*
2011 Net Profit THB 30,033 million 4Q/11 : Flood impacted gas feed volume and domestic sales
Outstanding Business Performance 9M12 is within a reach to beat FY consensus
2 983
1,117
2Q/12 Stock loss of 5,073 MB 3Q/12 Stock gain of 2,167 MB
Overall u-rate increased
2,027 ,1,,2
2Q/12 NRV loss 1,114 MB 3Q/12 NRV gain 1,108 MB
4,386MB
* Bloomberg Consensus
Operating Performance
35
MB % MB % MB % MB % MB % MB %
1 Sales Revenue 145,309 100 137,289 100 139,241 100 8,020 6 6,068 4 418,216 100
2 Feedstock Cost -120,046 83 -118,310 86 -118,078 85 1,736 1 1,968 2 -352,674 84
3 Product to Feed Margin 25,263 17 18,979 14 21,163 15 6,284 33 4,100 19 65,541 16
4 Variable Cost -4,892 3 -2,890 2 -3,826 3 2,002 69 1,066 28 -11,744 3
5 Fixed Cost -4,039 3 -2,634 2 -3,508 3 1,405 53 531 15 -10,806 3
6 Stock Gain/(Loss) & NRV 3,275 2 81 0 -6,187 4 3,194 3,943 9,462 153 498 0
7 Gain/(Loss) Hedging Commodity -30 0 24 0 302 0 -54 -225 -332 -110 368 0
8 Other Income 1,311 1 680 0 1,283 1 631 93 28 2 3,347 1
9 SG&A -2,606 2 -2,057 1 -2,522 2 549 27 84 3 -7,605 2
10 EBITDA 18,282 13 12,183 9 6,705 5 6,099 50 11,577 173 39,598 9
11 Depreciation & Amortization -3,982 3 -3,515 3 -3,697 3 467 13 285 8 -11,206 3
12 EBIT 14,300 10 8,668 6 3,008 2 5,632 65 11,292 375 28,392 7
13 Financing Expenses -1,438 1 -1,422 1 -1,373 1 16 1 65 5 -4,136 1
14 FX Gain/(Loss) 746 1 -245 0 -1,281 1 991 404 2,027 158 502 0
15 Shares of gain/(loss) from investments 25 0 185 0 101 0 -160 -86 -76 -75 84 0
16 Corporate Income Tax -570 0 -671 0 532 0 101 15 -1,102 -207 -722 0
17 Net Profit After Income Tax 13,063 9 6,515 5 987 1 6,548 101 12,076 1,224 24,120 6
18 Minorities -153 0 -475 0 -136 0 322 -68 17 13 -506 0
19 Net Profit 12,910 9 6,040 4 851 1 6,889 114 12,078 1,417 23,614 6
20 Adjusted EBITDA 15,007 10 12,102 9 12,892 9 2,905 24 2,115 16 39,100 9
9M/123Q/12 3Q/11 2Q/12 YoY QoQ
Key Trends for Economy in 2013 2013 The Year of Recovery
36
4.1
2.72.3
3.0
1.6 1.3
7.4
5.9
5.1
2.4 3.1
1.3
2.0
5.5 5.7
-
1
2
3
4
5
6
7
8
2010 2011 2012 2013 2014
Gross domestic product (% change YoY)
Source: World Bank, Jan.13 Report
The global economy in 2013 is expected to recover slowly in the first half and the expansion will become more materialized in the later half of the year
The US growth will be limited and the EU crisis remains a threat to the world economy
China growth continues to track higher supported by government stimulus policy to boost domestic consumption and increasing of export volume supported by the recovery of US and EU
Asian economies have robust domestic demand growth while exports growth is gradually improving
8586878889909192939495
-1,000
-500
0
500
1,000
1,500
2,000
2,500
2010 2011 2012 2013 2014 2015 2016
kbd Expected crude distillation expansion Africa
Middle East
Asia
FSU East
Europe
C&S America
North America
Net Addition
World Demand
Refining Capacity Additions 2013-2016
37
2010 2011 2012 2013 2014 2015 2016North America -359 75 19 0 70 50 20C&S America 70 0 -225 0 150 230 250Europe -402 -45 -586 -170 40 60 214FSU East 210 30 332 115 50 50 148Asia 853 841 1,315 1,121 742 521 965Middle East 20 261 0 145 817 510 146Africa 0 20 93 36 48 0 0World 393 1,182 948 1,247 1917.10 1421.00 1743.00Net Addition 393 1,182 948 1,247 1,917 1,421 1,743World Demand 88.33 89.15 89.77 90.88 91.94 92.89 93.75
MBD
398 408 287 300 349
414 357 335
933 872 843 842
1,331 1,280 1,130 1,142
1,282 1,287 1,200 1,177
0
200
400
600
800
1,000
1,200
1,400
1,600
1Q/13F 2Q/13F 3Q/13F 4Q/13F
Olefins Improved derivatives demand will affect Olefins market
USD/Ton
1 287
Short-term Price Forecast Short-Term • Olefins prices were expected to remain high in 1H13
due to improving derivatives demand mainly from PE, PP and MEG market - in line with the global economic recovery
• However the market will be pressured from
1) Additional new supply in Middle East and Asia (especially in China and Singapore) in the second half of the year
2) Lighter turnaround plan at Asia cracker in 2013
Long-term Supply/Demand
38
Additional (2012-2017) (Unit : MMT)
Supply Demand 36.13 32.67
America16%
Middle East20%
Europe2%
China40%
Other Asia22%
Source: CMAI January 2013
-2,0000
2,0004,0006,0008,000
10,00012,000
2012 2013 2014 2015 2016 2017America Europe Middle East China Other Asia Additional demand
Unit : KMT
Saudi Polymers Saudi 1,200 KMT Q3-11 to Q3-12
Reliance India 1,350 KMT Q1-16 to Q3-16
SINOPEC Wuhan CH 800 KMT Q1-11 to Q3-13
SINOPEC W h C
ExxonMobil SG 1,000 KMT Q3-11 to Q2-13
Shanghai PC China 600 KMT Q3-12 to Q1-14
Saudi Polymers Sau
Daqing PC China 600 KMT Q1-11 to Q3-12
Daqing PC China
Fushun PC China 800 KMT Q1-10 to Q3-12
ExxonMobil SG
Sichuan PC China 1,000 KMT Q3-11 to Q4-13
Ilam Iran 458 KMT Q1-15 to Q1-16
Kavyan PC Iran 1,000 KMT Q1-13 to Q3-15
CNOOC & Shell China 1,000 KMT Q1-16 to Q1-17
-5000
5001,0001,5002,0002,5003,000
2012 2013 2014 2015 2016 2017 America Europe Middle East China Other Asia Additional demand
519 519456
525 507 449 441 497 489 496 439 485
933 872 843 842
1,452 1,392 1,298
1,367 1,440 1,377
1,283 1,339
1,422 1,368 1,281 1,327
0
200
400
600
800
1,000
1,200
1,400
1,600
1Q/13F 2Q/13F 3Q/13F 4Q/13F
1,392298377
11111 393939393922222Short-term Price Forecast USD/Ton
Short-Term • PE prices will show the sign of recovery
according to the global economic
• However, new PE supply in Asia (Mainly from China) and strong buying resistance from end-use producers due to squeezed margin will weigh on PE markets especially in the second half of the year
Polyethylene The market will be recovered in the short term
HDPE Long-term Supply/Demand
39
Additional (2012-2017) (Unit : MMT)
Supply Demand 11.81 11.39
America19%
Middle East24%
Europe1%
China42%
Other Asia14%
Source: CMAI January 2013
Saudi Polymers Saudi 550 KMT Q3-11 to Q3-12
Ilam Iran 300 KMT Q1-14 to Q1-15 SINOPEC Wuhan CH
300 KMT Q1-11 to Q3-13
SINOPEC W h CH
Saudi Polymers Saudi 550 KMT Q3-11 to Q1-13
BPCL India 110 KMT Q3-13 to Q4-14
udi Polymers Saudi
Daqing PC China 400 KMT Q1-11 to Q3-12
d
OPAL India 350 KMT Q1-13 to Q3-14
Fushun PC China 575 KMT Q1-10 to Q3-12
Saudi Polymers Saud
Sichuan PC China 300 KMT Q3-11 to Q4-13
Il I
Sinopec Yanchang China 250 KMT Q3-14 to Q1-16
Unit : KMT
LLDPE & LDPE New Capacities and Closures
40 Source: CMAI January 2013
LDPE Long-term Supply/Demand
LLDPE Long-term Supply/Demand
Additional (2012-2017) (Unit : MMT)
Supply Demand 10.81 8.27
Additional (2012-2017) (Unit : MMT)
Supply Demand 5.03 3.38
America19%
Middle East30%Europe
0%
China40%
Other Asia33%
America12%
Middle East30%Europe
13%
China36%
Other Asia8%
-500
0
500
1,000
1,500
2,000
2,500
2012 2013 2014 2015 2016 2017 America Europe Middle East China Other Asia Additional demand
Unit : KMT
SINOPEC Wuhan China 300 KMT Q1-11 to Q3-13
ExxonMobil Sing. 1,300 KMT Q1-11 to Q4-12
Fushun PC China 225 KMT Q2-10 to Q3-12
Sichuan PC China 300 KMT Q3-12 to Q4-13
OPAL India 350 KMT Q1-13 to Q3-14
Yulin Energy China 300 KMT Q2-13 to Q1-14
CNOOC & Shell China 300 KMT Q1-16 to Q1-17
-500
0
500
1,000
1,500
2,000
2012 2013 2014 2015 2016 2017 America Europe Middle East China Other Asia Additional demand
Unit : KMT QAPCO Qatar 300 KTA Q1-12 to Q3-12
Borouge UAE. 350 KTA Q1-14 to Q3-14
Reliance India 400 KTA Q1-15 to Q3-16
Short-term Price Forecast USD/Ton Short-Term • Buying sentiment is expected to be driven up
from stronger demand in the downstream textiles and fabrics sectors in China due to more new Polyester supply will start up in year 2013
• However, more additional new MEG supply in the second half of the year will affect the market
432 501 542 548
933 872 843 842
1,331 1,280 1,130 1,142
1,297 1,333 1,277 1,290
0
200
400
600
800
1,000
1,200
1,400
1,600
1Q/13F 2Q/13F 3Q/13F 4Q/12F
MEG The market will be robust due to strong derivative demand
MEG Long-term Supply/Demand
Additional (2012-2017) (Unit : MMT)
Supply Demand 13.61 9.03
America7% Europe
8%Middle
East7%
India6%
China65%
Other Asia7%
41 Source: CMAI January 2013
01,0002,0003,0004,0005,0006,0007,000
2012 2013 2014 2015 2016 2017 America Europe India Middle East
China Other Asia Additional demand
PetroChina China 380 KTA Q1-12 to postpone
Tongliao Jinmei China 400 KTA Q1-13 to Q3-13
Tongliao Jinmei China 400 KTA Q1-13 to Q4-12
Qianxi Coal Chem China 400 KTAQ3-13 to Q1-14 Heyuan Chem China
500 KTA Q4-12 to Q2-13
Unit : KMT
Short-term Price Forecast Short-Term • PX demand in year 2013 will be supported
from new PTA plants in Asia (especially in China) will start up in and high manufacturing season in textile and fabric sectors in China
• However, additional new supply in Asia and squeezed PTA margins and high inventory levels among downstream Polyester market will affect the PX market
USD/Ton
716 748 714 708
933 872 843 842
1,648 1,620 1,557 1,550
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1Q/13F 2Q/13F 3Q/13F 4Q/13F
Paraxylene Tight supply will affect PX market
PX Long-term Supply/Demand
42
Additional (2012-2017) (Unit : MMT)
Supply Demand 21.43 13.93
Source: CMAI January 2013
America2% Europe
4%
Middle East30%
India15%
China17%
Other Asia32%
01,0002,0003,0004,0005,0006,000
2012 2013 2014 2015 2016 2017 America Europe India Middle East China Other Asia Additional demand
PetroRabigh Saudi. 1,400 KTA Q3-15 to Q3-16
Sinopec Hainan Ref. China 600 KTA Q1-15 to Q4-14
Unit : KMT
Tenglong Aromatics1 China 800 KTA Q2-12 to Q3-12
Tenglong Aromatics2 China 800 KTA Q3-12 to Q2-13
Short-term Price Forecast USD/Ton Short-Term • Supply continue to be short due to many
refineries and Aromatics plants in Asia will shutdown for maintenance
• In addition, Benzene market will be depend on volatile crude and feedstock prices and derivatives demand 505 553 580 549
933 872 843 842
1,438 1,425 1,423 1,391
0
200
400
600
800
1,000
1,200
1,400
1,600
1Q/13F 2Q/13F 3Q/13F 4Q/13F
Benzene the market will still be driven by the main products
Additional (2012-2017) (Unit : MMT)
Supply Demand 8.61 8.28
BZ Long-term Supply/Demand
America1%
Middle East6% Europe
2%
China35%
Other Asia55%
43 Source: CMAI January 2013
-500
0
500
1,000
1,500
2,000
2,500
2012 2013 2014 2015 2016 2017
America Europe Middle East China Other Asia Additional demand
Daqing PC China 150 KTA Q1-13 to Q3-12
Anqing PC China 54 KTA Q3-12 to Q1-13
Samsung Total PC S. Korea 422 KTA Q4-14 to Q1-15
Nghi Son Vietnam 246 KTAQ1-15 to Q1-16 Anqing PC Chinah
ExxonMobil Sing. 340 KTA Q1-13 to Q2-13 Unit : KMT
Short-term Price Forecast USD/Ton
Short-Term • Phenol market would continue to face
rising cost and weak supply/demand balances
• Additionally, Phenol market will be pressured from new additional supply in Asia, mainly from China and S. Korea in 2013
219 188 189 316
1,438 1,425 1,423 1,377
1,484 1,442 1,441 1,527
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1Q/13F 2Q/13F 3Q/13F 4Q/13F
Phenol Will be pressured from high feedstock prices and new additional supply
Additional (2012-2017) (Unit : MMT)
Supply Demand 3.14 1.91
Phenol Long-term Supply/Demand
America1%
Europe2%
China68%
Other Asia55%
44 Source: CMAI January 2013
-500
0
500
1,000
1,500
2012 2013 2014 2015 2016 2017
America Europe Middle East China Other Asia Additional demand
Unit : KMT Lihuayi Group Taiwan 217 KTA Q1-13 to Q4-12
SSMC China 300 KTA Q2-13 to Q4-13
SSMC Chinah
Changchun PC China 400 KTA Q3-13 to Q4-13
INEOS/Yangzi PC China 400 KTAQ3-14 to Q1-15
INEOS/Yangzi PC China
CEPSA Quimica China 250 KTAQ3-14 to Q1-15
PX and MEG market strongly supported by tight supply mainly from China
45
PX and MEG Capacity Additions in 2013
1,587 1,625
3,124
4,022
0500
1,0001,5002,0002,5003,0003,5004,0004,500
2012 2013
PX PTA
Unit : KTA
New (Effective) Capacity
Conversion 0.66*PX to 1 PTA
355 760
4,203
6,024
01,0002,0003,0004,0005,0006,0007,000
2012 2013
MEG Polyester
New (Effective) Capacity
Conversion 0.86*PTA and 0.34*MEG to 1 Polyester
Unit : KTA
46