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www.icis.com 1
US AromaticsOverview on US Aromatics Feedstocks
Adhesives and Sealants Council, 2016
Zachary Moore
Markets Reporter
www.icis.com 2www.icis.com 2
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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3.00
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Benzene WTI (Friday close) Toluene
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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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1.50
1.70
1.90
2.10
2.30
2.50
2.70
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Nov2015
Dec2015
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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
73% 78% 84% 83% 85%
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2015 2014 2013 2012 2011
Mill
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s o
f to
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es
Total consumption Total production
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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
0
250
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-15
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-15
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-15
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r-1
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-15
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-15
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g-1
5
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-15
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-15
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v-1
5
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-15
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-16
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-16
Mar
-16
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r-1
6
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-16
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-16
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16
Mill
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s o
f lit
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South Korea Venzuela Saudi Arabia Brazil All other sources
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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
1.50
1.75
2.00
2.25
2.50
2.75
Jan Feb Mar Apr May Jun Jul Aug Sep Oct
Spot Contract
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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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2000 2005 2010 2011 2012 2013 2014 2015 2016 2017 2020 2025
00
0s
ton
ne
s
Production Consumption Utilization
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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
2014
2014
2015
2015
-600
-400
-200
0
200
400
Toluene MX000s of tones
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US Gasoline production
Strong gasoline production prevented a summer price spike in 2016
Source: EIA
8000
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9000
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10000
10500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
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
1.50
1.70
1.90
2.10
2.30
2.50
2.70
2.90
Oct2015
Nov2015
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Jan2016
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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
1.50
1.70
1.90
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2.30
2.50
2.70
2.90
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Aug2016
Sep2016
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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100%
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2000 2005 2010 2011 2012 2013 2014 2015 2016 2017 2020 2025
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Production Consumption Utilization
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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
0%
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Production Consumption Utilization
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