CARE Conference 2016 Oil and Natural Gas: Impact on Synthetic Fibers Alasdair Carmichael, May 2016 [email protected] Trusted commercial intelligence www.woodmac.com Agenda 1. Introduction 2. Oil & Gas 3. Impact on Fibers 4. Total FibersMarket 5. Recycling Issues 2 Trusted commercial intelligence www.woodmac.com PCI Update Verisk Analytics, Inc., Acquires The PCI Group -Nov 20 2015 Acquisition of PCI will create an industry-leading chemicals business at Verisk’s Wood Mackenzie. Verisk Analytics, is a New Jersey based company providing risk assessment and data analytics services to a variety of industries. 2014 revenues of $1.75 billion and over 6,000 full time people. In Q1 2015 Verisk bought Wood Mackenzie, an Edinburgh, Scotland company est. in 1844. Wood Mackenzie developed an oil and energy business in 1973 and have built on that to become a global leader in commercial intelligence for the energy, metals and mining industries. The PCI Group and its associates are now a part of Wood Mackenzie in an additive and complimentary function bringing downstream expertise through the supply chain across petrochemicals, xylenes and polyesters, resins, nylons and fibres, and films. 3 Trusted commercial intelligence www.woodmac.com 3 Product Coverage PCI Research Wood Mackenzie Future Research Oil Refinery / Gas Field Petrochemical Complex Downstream Products Basic Intermediate Feedstocks Petrochemicals Petrochemicals EndProducts Methane Processing Methanol Natural Gas Reforming Fertilisers Natural Gas Syngas Ammonia Explosives g Ethane Urea Processing Resins LPG Polyethylenes Plastics and Films Ethylene EDC/VCM/PVC EOD’s/Detergents Olefins Ethylene Antifreeze Plant Oxide Polyester Fibers Ethylene Glycol Naphtha Propylene Plastics Gas Oil Polypropylene Acrylic Fibers Crude Oil Olefa Acrylonitrile Plastic Coatings Petroleum Crude C4s Oxo-alcohols nt Synth Rubbers Refining Butadiene Tyres/Nylon66 Reformate Benzene Plastics & Foams Aromatics Styrene Nylons Ar Cyclohexane Separation Nylons, PC Resins Cumene/Phenol/ o-Xylene Acetone Plasticizers/Resins Oma Polyester Fibers & Phthalic Anhydride Resins p-Xylene tics DMT/PTA Urethane Foams Gasoline Jet Lube Asphalt TDI Fuel Oils Toluene Benzene / MDI Kerosene Diesel Fuel Oil 4 Trusted commercial intelligence www.woodmac.com 4 Oil Prices $/barrel 140 120 100 80 60 40 20 WTI Brent Oil Prices are Global. Brent & WTI expected to remain close. 5 Trusted commercial intelligence www.woodmac.com Daily WTI Oil Prices –April -May 2016, $/barrel Highest 50 since Nov 15 12 months 48 ago -$60 46 44 42 40 38 36 Oil up 26%, over 6 weeks. 34 PTA/MEG in 32 China down 6.8%! 30 6 Trusted commercial intelligence www.woodmac.com Unlikely to see significant price appreciation until market sentiment finds a positive price catalyst Brent price outlook (US$/bbl) 140 Forecast 120 100 80 60 40 20 0 2013 2014 2015 2016 2017 Source: History -Argus; Forecast -Wood Mackenzie 7 Trusted commercial intelligence www.woodmac.com Need about 5 million b/d of new supply by 2020 to meet demand Prices of at least $60-$70/bblneeded to support necessary supply Potential 2020 supply by breakeven 2020 supply gap (mb/d) tranche & asset type (mb/d) 100 9 * Planned Pre-FID projects + 98 8 New US L48 Drilling 7 96 6 94 5 Oil Sands Tight Oil 4 92 Ultra-Deepwater 3 Deepwater 90 2 Shallow Water 88 1 Onshore 0 86 2015 Demand Demand Growth Onstream Decline Under elopment Other upply Gap SupplyGap <$40* 40-$60* 60-$70* 70-$80* >$80* chnicalsnd YTF v S $ $ $ ea e T D 8 Trusted commercial intelligence www.woodmac.com Natural Gas Prices –USA $/mm bthus 14 12 10 8 6 4 2 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Jan Natural Gas prices are Regional. US to keep significant advantage. 9 Trusted commercial intelligence www.woodmac.com Natural Gas Prices $/mm Btus 18 16 Japan 14 Germany 12 UK US 10 8 6 4 22001155 UUSS avg. 2 $2.67 0 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 9 9 9 9 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 Source: BP 10 Trusted commercial intelligence www.woodmac.com