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illuminating the markets
Condensates and aromatics growth
Will it move in sync ?
Anu Agarwal, VP Chemicals
Tokyo October 2014
Executive Summary
•
•
•
•
Condensate splitter-linked petchem capacities
Condensate prices and splitter economics
PX and benzene market update
Outlook for aromatics
Recent growth in aromatics capacity led by
condensate splitters
PETROCHEMICALS CAPACITY ('000 TONNES)
ORTHOXYLE
BENZENE
PARAXYLENE
NE
COUNTRY
LOCATION
COMPANY
START-UP YEAR
SPLITTER CAPACITY
(KB/D)
JAPAN
KASHIMA
JX NIPPON OIL
PRE-2009
63.5
220
600
-
KOREA
DAESAN
SAMSUNG TOTAL
PRE-2009
80
470
650
-
KOREA
DAESAN
SAMSUNG TOTAL
2014
140
450
1000
-
KOREA
INCHON
SK GLOBAL CHEMICAL
2014
140
292
1300
-
KOREA
ONSAN
S-OIL
2011
89
300
900
-
CHINA
TIANJIN
SINOPEC
2011
50
145
350
-
CHINA
SHANGHAI
SINOPEC
PRE-2009
65
360
800
-
CHINA
ZHANGZHOU
DRAGON AROMATICS
2013
90
240
1600
240
THAILAND
RAYONG
PTT GLOBAL CHEMICAL
PRE-2009
65
THAILAND
RAYONG
PTT GLOBAL CHEMICAL
PRE-2009
75
355
560
66
INDONESIA
TUBAN
PT TPPI
PRE-2009
100
360
550
100
SINGAPORE
JURONG
ISLAND
JURONG AROMATICS
2014
100
438
800
200
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
Some more being planned
• But the bulk of aromatics production still remains at
refineries with CDUs
PETROCHEMICALS CAPACITY ('000
TONNES)
ORTHOXYLE
BENZENE PARAXYLENE
NE
COUNTRY
LOCATION
COMPANY
START-UP YEAR
SPLITTER
CAPACITY
(KB/D)
Brunei
Muara Besar
Henyi/Qatar Petroleum
2015-2016
70
500
1500
S Korea
Daesan
Lotte Hyundai
2016
140
120
800
Qatar
Ras Laffan
Qatar Petroleum
2018
146
500
1300
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
-
Asian splitter based PX, benzene capacity grows
illuminating the markets
So what is condensate and why the excitement
• Natural Gas Liquids (NGLs, C5+), by-product of gas
production, development
• Light-API 50 and above, low sulphur
• Liquids and can use the infrastructure for crude
• Usually have 50% or more naphtha content
• Traditionally lower cost - used to mix with crude for
increasing light output/reduce sulphur
• But high naphtha content makes it valuable for petchem
producers in Asia
Petchems increasingly value condensate more in this part of
the world
illuminating the markets
Typical condensate specs and use
Dubai
DFC
LPG
2
6
Naphtha
16
49 (L 19, H 30)
Jet/Kero
16
27
Gasoil
25
12
Heavy
Gasoil
26
6
Residue
15
0
illuminating the markets
• Heavy naphtha of interest to
petchem producers
• Heavy naphtha can be reformed
for making gasoline or aromatics
• In Asia, more than 60% of
reforming capacity used for
producing aromatics
• Asian condensate splitters
primarily depend on aromatics
margins and to some extent on
gasoline, middle distillates
A typical chemical linked condensate splitter
LPG
Condy
Splitter
Gasoline
FR Naphtha Naphtha
Splitter
Light Naphtha
Heavy Naphtha Reformer Reformate
Condy
Jet Kero
Gasoil
Heavy Gasoil
illuminating the markets
Hydrotreater
Diesel
Bz
BTX
Extraction PX
Traditionally condensate prices below crude
•
•
•
•
•
illuminating the markets
South Pars (Iran), NWS
(Australia), DFC (Qatar) well
known condensates
DFC most liquid and largest
volumes
Large gas development plans
in Mideast Gulf fuelled
condensate supply
Asian chemical producers
wanted alternate to naphtha
as feed
PX demand growth and good
economics spurred
investment in splitters to
produce mainly chemicals like
PX, benzene
Huge petchem investment pushes up condensate prices, making it
unattractive to crude refiners and
…putting splitter economics in jeopardy
illuminating the markets
Little correlation in PX and condensate
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
Will US Condensates come to the rescue
US condensate production
• Consensus that current 2014 condensate production is about 700800 kbd
• Most see that rising to 1.3mn -1.6mn b/d by 2020
EIA -- May 29, 2014
illuminating the markets
Research courtesy of Darren Horowitz of
Raymond James
Copyright © 2014 Argus Media Ltd. All rights reserved.
So, US Exports of C5+ and naphtha are rising rapidly
•
•
•
C5+ condensate going to Canada as diluent for heavy crude production
More cargoes are leaving the USGC headed to customers in Asia
But US condensates have higher residue and not used by Asian splitters yet
Source: EIA and Argus DeWitt forecast
illuminating the markets
Copyright © 2012 Argus Media Ltd. All rights reserved.
PX and Benzene market outlook
PX capacity update
PTA cap
illuminating the markets
5400
Copyright © 2013 Argus Media Ltd. All
rights reserved.
10700
6500
A review of the 2014 PX/PTA markets
•
•
PX has been structurally long in 2014 – new capacity startup of 6.7
mnt and closures/rationalisation of around 2.3 mnt
However, non-integrated PX makers have been quick to react to
oversupply by actively cutting utilisation rates since March
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
Asia PX Capacity Outages 2014
Feedstock base
MX
MX
crude/ reformate
reformer
reformer
reformer
reformer
reformer
reformer
reformer
reformer
reformer
reformer
MX
MX
MX
reformer
Condensate
reformer
reformer
reformer
reformer
reformer
Producer
Location PX Capacity '000/yr
Comments
Cosmo Oil / Hyundai Oil Bank
Daesan
800
Idled indefinitely June 2014
Lotte Chemicals
Ulsan
250
Idled since Aug 2013
S-Oil
Onsan
Operating at 60-65pc capacity since March
900
JX Nippon Oil & Energy (naphtha)
Chita (2 lines)
400
One line idled indefinitely 21st May 2014
JX Nippon Oil & Energy (crude)
Kashima
180
Refinery shutdown 40-45 days from 11th May
JX Nippon Oil & Energy (condensate)
Kashima
420
JX Nippon Oil & Energy (Kyushu Oil) Oita, Kyushu
420
Indefinitely idled May 2013
Idemitsu Kosan
Chiba
265
Aromatics' shutdown 77 days starts June
Idemitsu Kosan
Tokuyama
225
Aromatics' shutdown 50 days from late Sept
Zhenhai
Zhenhai Refining & Chemical
(Ningbo)
530
Planned outage 4 weeks September
Qingdao Lidong (GS Caltex)
Qingdao
800-1000
restarted mid-Feb - rinning 70pc dur to weak margins
Shanghai Petrochemical
Shanghai
220
Idled indefinitely end-March 2014
Fujia Dahua (Dalian)
Dalian
700
Output reduced to 70pc in May
CPC Corp
Kaohsiung 3
200
Indefinitely idled since Dec 2012
CPC Corp
Kaohsiung 4
250
Indefinitely idled Feb 2014
CPC Corp
Kaohsiung 6
250
Indefinitely idled June 2013
Formosa (FCFC)
Mai Liao 3
870
planned shutdown Sept 40 days
TPPI
Tuban
550
Idled indefinitely end-May 2014
Kerteh,
Aromatics Malaysia (Petronas)
Malaysia
550
2 month planned shutdown May/June
Cilacap,
Pertamina
Indonesia
270
50 day refinery shutdown Sept
Exxon Mobil
Sri Racha
500
planned shutdown Sept
Thai PX
Sri Racha
527
reduced rates 25-30pc Apr; planned shutdown 45 days June
Aromatics Thailand (PTT)
Map Ta Phut
560
planned shutdown 30 days Nov
illuminating the markets
Copyright © 2012 Argus Media Ltd. All rights reserved.
Record year of “non-settlements” for PX ACP
• “Record” five
months of no
ACP in 2013.
• 8 out of 10
months with no
ACP in 2014
• SKGC entry
factor in 2015?
Strengthen
system or
already too late?
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
The difficulty in ACP settlements was also because of severe
PTA losses!
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
Chinese PX imports have dropped
•
•
•
•
PX imports have dropped from Jan’14 on lower PTA utilisations/ capacity
rationalisations
Dalian & Ningbo remains top 2 destinations
Korea remains top exporter and will continue to be in the years to come
Japan in decline & will continue so on refinery rationalisation leading to
lower competitiveness
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
The 2014/2015 Outlook for PX/PTA
•
The PX market is seeing a supply glut in H2 2014 following the start-up of
big projects in South Korea/Singapore/ India
•
Stand-alone PX units’ production margins will continue to get squeezed.
Condensate-based/ stand-alone reformer producers will also be squeezed
•
Refinery operating rates dictated more by gasoil margins, if those
deteriorate, some cut in PX production could happen
•
The glut in PTA supply will continue well into 2015. But will PTA makers
practice more discipline in controlling utilisation rates
•
There could be pockets of supply tightness in 2015 for PX on more than
6mn t/yr of new PTA capacity and limited new PX capacity addition. But
weakness in the downstream sector will continue to weigh on PX
production margins
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
Paraxylene and Benzene Growth rates
World Paraxylene & Benzene Demand
•
•
•
Growth Rates for PX have been
almost double those for
Benzene for 30 years
There is no reason to think this
will change
Benzene Pricing has always
reflected its Status as a co- or
byproduct – volatile and often
weak
50000
PX
Bz
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
2008
illuminating the markets
2009
Copyright © 2012 Argus Media Ltd. All
rights reserved.
2010
2011
2012
2013
2014
2015
Numerous Impacts on Benzene
Supply/Price
Gasoline
Quality /
Feed Slate
Toluene BV
Benzene Demand
Reformate
Pygas
HDA
Coal
TDP
PX Isom
Toluene BV
PX Demand
illuminating the markets
Olefin
Demand/Feed
Slate
Copyright © 2013 Argus Media Ltd. All
rights reserved.
Coke/Steel
Demand
2012 World Benzene Trade
180
130 300
1120
460
160
115
650
455 155
175
160
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
2014 World Benzene Trade
10
6
750
1566
328
189
48
105
6
59
3
15
0
•
•
•
US benzene production dropping on lighter feed but derivatives good
Europe benzene production dropping on refinery rationalisation, higher LPG in
crackers
Asia benzene production growing – refinery expansions, PX capacity growth,
naphtha based production
illuminating the markets
Copyright © 2014 Argus Media Ltd. All
rights reserved.
US Benzene Imports
'000t
1600
1400
EE
1200
1000
MEA
800
WE
600
Asia
400
SA
200
NA
0
illuminating the markets
Copyright © 2012 Argus Media Ltd. All
rights reserved.
Chinese imports in H2 2014 expected
to stay low
illuminating the markets
Copyright © 2012 Argus Media Ltd. All
rights reserved.
Conclusions
• Significant Asian PX capacity now based on condensate splitters
• Feedstock options to Asian splitters still limited. US condensates
expected to be used by refiners
• PX to remain structurally long in 2015 although pockets of
tightness may develop on limited new PX capacity additions
• On a shorter term - need to monitor PX production margins and
subsequent output changes which have big impact on short term
PX supply
• Benzene supply growing in Asia, reducing in the US and Europe
• Asian benzene depending on US and Europe deficits. China swing
market
illuminating the markets
Thank you
Anu Agarwal
[email protected]
Weakening gasoil cracks could limit PX o/r
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
Weakening gasoil cracks on PX production
• There has been more than 6mn t/yr of new PX capacities in
2014. More than half of these new PX capacities also has
significant gasoil exposure
• There was a recovery seen in gasoil cracks during Q3. But
cracks are once again under pressure due to long supply and
slowing demand.
• PX production rates could once again be limited due to poor
gasoil cracks
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
How big is the Mid-Distillates market as
compared to PX?
• In 2013, South Korea produced a total of 39.93m t/yr of
diesel & 19.97m t/yr of jet/kero
• In the same period, South Korea produced 5.822m t/yr of PX
• Middle Distillate margins are at its worst since 2010
• Refinery operators have reduced runs since early-June and
this could limited Parex utilisation even though new
capacities would be added through August
illuminating the markets
Copyright © 2013 Argus Media Ltd. All
rights reserved.
Asia Benzene
Consumption
Production
'000t
30000
'000t
30000
25000
Coal
25000
20000
HDA
20000
Aniline
15000
Cyclohexane
10000
Cumene
5000
Ethyl
Benzene
Others
TDP
15000
10000
5000
0
illuminating the markets
MSTDP &
MPX
Reformate
Pygas
0
Copyright © 2012 Argus Media Ltd. All
rights reserved.
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