© 2014 Platts, McGraw Hill Financial. All rights reserved.
Bull Run Or Bear Pit:Will Shale Gas Shorten The Global Aromatics Market?
Maria Tsay, Petrochemicals Editor
Europe In Its Global ContextUS-Europe link
Shale Gas Impact: The US, EuropeBenzene Case-Study
East Of Suez
Q&A
Key Takeaways
• European aromatics are intrinsically linked to the US aromatics markets
• Benzene Atlantic basin market set to tighten, but global capacity is likely to be sufficient to cover the shortfall
W. Europe Balanced->Short
BenzeneAsia
Long->LongerUS
Short->Shorter
EU Net Trade Of Aromatics
4
‐300,000
‐200,000
‐100,000
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Toluene Benzene PX MX Isomers OX BTX
2010 2011
2012 2013
mt
Net imports
Net exports
Source: Eurostat
EU Benzene Trade Flows 2013
267kt
Source: Eurostat
Imports fromIndia 155,128Israel 136,931Turkey 129,717US 83,777Total 706,009
Exports toUS 173,059Total 193,336
90%
12%
EU Toluene Trade Flows 2013
Source: Eurostat
55kt
36kt
Exports toUS 49,187Turkey 45,709Switzerland 31,630South Africa 16,071Total 225,671
Imports fromIsrael 6,446Serbia 1,749Total 9,815
6kt
22%
Source: Eurostat
EU Xylenes Trade Flows 2013
Source: Eurostat
8kt
20+61kt39+21kt
25%
9%55%
PX Exports PX ImportsUS 58,067 Israel 47,380Pakistan 10,009 Russia 21,382China 9,520 Turkey 13,197Total 105,172 Total 91,968
MX ExportsUS 27,904South Africa 14,117Total 113,761
OX Exports OX ImportsSouth Africa 11,853 Russia 38,513Brazil 6,144 Israel 15,611US 5,378 Turkey 4,190Total 58,050 Total 58,408
8
Profitability Of Benzene Production
5.40
5.60
5.80
6.00
6.20
6.40
6.60
6.80
7.00
7.20
7.40
‐
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
2009 2010 2011 2012 2013
Revenue from benzeneProfit from benzeneProduction
Bln $ Mln mt
Source: Eurostat, Platts
Shale Gas Impact: US
US Shifts To Light Feeds
10Source: Bentek, Platts Petrochemical Analytics0
10
20
30
40
50
60
70
80
90
100
Gasoil Full naphtha Natural gasoline Butane Propane Ethane
Other pygas
Mixed xylenes
Toluene
Benzene
Butylene
Butadiene
Propylene
Fuel gas
Ethylene
%
US Shifts To Light Feeds
Source: Bentek, Platts Petrochemical Analytics
• Pygas to decrease by 38%
8%
US Cracker Output Today
Ethylene
Propylene
Crude C4
Pygas
5%
US Cracker Output in 2023
US Benzene Dependence On Imports To Rise
12Source: Platts Petrochemical
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
000 mt US Benzene Supply/Demand Balance
Benzene Production Benzene Demand
Source: Platts Petrochemical Analytics
4400
1500
Shale Gas Impact: Europe
European Crackers Are Less Competitive
Source: Platts
Crackers Maximize Use of LPG
15Source: Platts
500
600
700
800
900
1000
1100
1200
1300
Jan‐20
12Feb‐20
12Mar‐201
2Ap
r‐20
12May‐201
2Jun‐20
12Jul‐2
012
Aug‐20
12Sep‐20
12Oct‐201
2Nov
‐2012
Dec‐20
12Jan‐20
13Feb‐20
13Mar‐201
3Ap
r‐20
13May‐201
3Jun‐20
13Jul‐2
013
Aug‐20
13Sep‐20
13Oct‐201
3Nov
‐2013
Dec‐20
13Jan‐20
14Feb‐20
14Mar‐201
4Ap
r‐20
14May‐201
4Jun‐20
14Jul‐2
014
Aug‐20
14Sep‐20
14
ARA Naphtha and Propane Spot Prices 2012‐2014
Propane
Naphtha
Source: Platts
Average Max Min2012 96.4% 114.8% 78.7%2013 90.1% 108.0% 78.9%2014 83.6% 97.2% 77.0%
$/mt
Production Margins Soar
16
0
200
400
600
800
1000
1200
1400
1600
1800
CIF ARA Benzene/Naphtha Spread 2012‐2014$/mt
Source: Platts
Average Max Min2012 355 632 942013 407 615 2192014 483 637 344
Incremental Production Restarts
17Source: Platts
900
1000
1100
1200
1300
1400
1500
1600
Jan‐20
12Feb‐20
12Mar‐201
2Ap
r‐20
12May‐201
2Jun‐20
12Jul‐2
012
Aug‐20
12Sep‐20
12Oct‐201
2Nov
‐2012
Dec‐20
12Jan‐20
13Feb‐20
13Mar‐201
3Ap
r‐20
13May‐201
3Jun‐20
13Jul‐2
013
Aug‐20
13Sep‐20
13Oct‐201
3Nov
‐2013
Dec‐20
13Jan‐20
14Feb‐20
14Mar‐201
4Ap
r‐20
14May‐201
4Jun‐20
14Jul‐2
014
Aug‐20
14Sep‐20
14
ARA Benzene/TDI Grade Toluene Spread 2012‐2014
Source: Platts
Average Max Min2012 54 263 ‐1812013 163 282 82014 278 401 163
$/mt
Europe Benzene Deficit To Rise
18
6000
6500
7000
7500
8000
8500
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
000 mt WE Benzene Supply/Demand Balance
Benzene Production Benzene Demand
1300
0
Source: Platts Petrochemical Analytics
Expansions East Of Suez
BZ/PX Expansions
20Source: Platts
Company Location Country BZ, kt PX, kt StartSATORP Jubail Saudi Arabia 140 750 2013
Yasref Yanbu Saudi Arabia 140 700 Sep‐14
Sinopec Zhenhai China 1600 2014ONGC Mangalore India 270 900 Aug‐14
SK Innovation Incheon South Korea 450 1300 Jul‐14Samsung Total Daesan South Korea 420 1000 Jul‐14
Jurong Aromatics Singapore Singapore 400 800 Aug‐14
SK Energy/JX Nippon Oil Ulsan South Korea 300 1000 Jun‐14
Sinopec Hainan China 600 2013‐2014PetroChina Yangzhou China 400 1000 2015
Saudi Aramco Ras Tanura Saudi Arabia 285 1200 2015Petro Rabigh Rabigh Saudi Arabia 170 1350 2015Reliance Dahej, Gujarat India 200 1500 2015
Indian Oil Group Vadodara, Gujarat India 370 2015PetroViet Vietnam 240 700 2015
GS Caltex/Taiyo Oil/Showa Shell Yeosu South Korea
400 1000 2016
Chemaweyaat Ruwais UAE 860 1370 2017Saudi Aramco Jazan Saudi Arabia 85 650 2017
Orpic Sohar Oman 46 2018Source: Platts
Global Benzene Projections
Source: Platts
The US W Europe Asia/MEAccumulated Global Net
2014 ‐283 ‐255 1,980 1,4412015 ‐352 ‐97 1,295 2,2872016 ‐367 ‐109 400 2,2112017 ‐339 ‐115 945 2,7032018 ‐278 ‐120 46 2,351
BZ: 2.1 mln mt
‐1000 ‐500 0 500 1000 1500 2000
2014
2015
2016
2017
2018 The US Europe Asia/ME
Conclusions
• Shale gas use will tighten supply of aromatics, esp. of benzene, on both sides of the Atlantic, BUT:
• Potential rationalization downstream and squeezed margins will cap regional demand AND
• Capacity additions east of Suez will cover the shortfall, depending on run rates
22
W. Europe Balanced->Short
BenzeneAsia
Long->LongerUS
Short->ShorterBenzene
© 2014 Platts, McGraw Hill Financial. All rights reserved.
Maria TsayEditor, PetrochemicalsPlatts
+44 (0)20 7176 [email protected]