Canadian Plastics
Resin Outlook Conference
Toronto, October 6, 2011
Polycarbonate & Nylon Resins -
Global Outlook
Paul Blanchard, Senior Consultant, Engineering Resins
1
Engineering Resins Global Outlook
Polycarbonate
• Feedstock impact
• Structural changes in
supply / demand
• Outlook
Nylon 6 & Nylon 6,6
Copyright © 2011 IHS Inc. All Rights Reserved.
Polycarbonate Chain
Phenolic Resins
Phenol Nylon Intermediates
46%
Benzene
Epoxy Resins
Cumene Bisphenol A
Propylene Polycarbonate
Chlorine
Caustic Soda
Carbon Monoxide
23%
Acetone MMA
Solvents
Copyright © 2011 IHS Inc. All Rights Reserved.
Polycarbonate Chain
Phenolic Resins
Phenol Nylon Intermediates
46%
Benzene
Epoxy Resins
Cumene Bisphenol A
Propylene Polycarbonate
Chlorine
Caustic Soda
Carbon Monoxide
23%
Acetone MMA
Solvents
Copyright © 2011 IHS Inc. All Rights Reserved.
Crude - Expensive Relatively And Absolutely
Gas as % of Crude
Dollars Per MM Btu BTU Basis
20 100%
18 90%
16 80%
14 70%
12 60%
10 50%
8 40%
6 30%
4 20%
2 10%
0 0%
05 06 07 08 09 10 11 12 13 14 15
Crude (WTI) Natural Gas Gas as % of Crude
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North America
Benzene Production by Feedstock Forecast
Million Metric Tons Operating Rate
10.0 100%
9.0 95%
8.0 90%
7.0 85%
6.0 80%
5.0 75%
4.0 70%
3.0 65%
2.0 60%
1.0 55%
0.0 50%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Reformate Pygas
HDA Toluene Disproportionation
Selective TDP Toluene Transalkylation
PXE Co-prod Coke Oven
Operating Rate
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Global Benzene Prices Still Very High
Cents Per Gallon Dollars Per Metric Ton
450 1,400
400
1,200
350
1,000
300
250 800
200 600
150
400
100
200
50
0 0
Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
Delta Benzene Spot Naphtha cif
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Phenol Follows Benzene’s Lead
Cents per Pound Dollars Per Metric Ton
90 2000
80 1800
70 1600
1400
60
1200
50
1000
40
800
30
600
20 400
10 200
0 0
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Delta Phenol Avg Acquisition Benzene contract
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Engineering Resins Global Outlook
Polycarbonate
• Feedstock impact
• Structural changes in
supply / demand
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World Polycarbonate Demand
Cons./Sports/
Rec. PackagingOther
3% 4% 8%
Medical
3%
Sheet/Film
Electronics 18%
21%
Auto (Non-
Window)
Housewares 12%
12%
Auto (Window)
Optical Media 2%
17%
2011 Polycarbonate Demand = 3.6 Million Metric Tons
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Optical Media Demand – Already Past Its Peak
Million Units
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
CD-A (Audio) CD-ROM CD-R (Recordable)
Blu-ray DVD DVD-R (Recordable)
Blu-ray (Recordable) CD RW
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Polycarbonate Growth Trend Continues
Million Metric Tons
5.0
4.5 Forecast
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Sheet/Film Auto (Non-Window) Auto (Window)
Optical Media Housewares Electronics
Medical Cons./Sports/Rec. Packaging
Other
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Polycarbonate Global Capacity Additions
Thousand Metric Tons
300
250
200
150
100
50
0
2010 2011 2012 2013 2014 2015 2016
Northeast Asia Middle East CIS & Baltic States West Europe
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New Polycarbonate Projects
Kazanorgsintez 65KT 2009
Kazan, Russia
MCC/MEP/SINOPEC 60KT 2011
Yanshan, Beijing
Mitsubishi 60KT 2010
Kurosaki, Japan
Bayer 100KT 2010
Bayer 300KT 2014-2016
Caojing, Shanghai
Zhenjiang ChiMei 75KT 2012
Jiangsu
LingYou Engineering Plastics
Kayan 260KT 2011 80KT 2012, 80KT 2016
Al Jubail, Saudi Shanghai
Arabia
Copyright © 2011 IHS Inc. All Rights Reserved.
Global Polycarbonate Trade Flows
400
0
300 200
-200
200
0
100 200 -400
0 100
0 -600
0
-100
-100
-200 400
0 -200
-300
-100 200
-200
0
Units in Thousand Metric Tons
2009 2010 2012 2015
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Engineering Resins Global Outlook
Polycarbonate
• Feedstock impact
• Structural changes in
supply / demand
• Outlook
Copyright © 2011 IHS Inc. All Rights Reserved.
Polycarbonate Operating Rates Improving
Million Metric Tons Operating Rate
6.0 100%
5.0 90%
4.0 80%
3.0 70%
2.0 60%
1.0 50%
0.0 40%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Production Total Capacity Forecast
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PC Prices Weakening Slightly In Short Term
Cents Per Pound Dollars Per Metric Ton
200 4,500
180 4,000
160 3,500
140 3,000
120
2,500
100
2,000
80
60 1,500
40 1,000
20 500
0 0
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Phenol Contribution Acetone Contribution
ECU Contribution Conversion Costs (Var. + Fixed)
PCB General Purpose Market Price PCB General Purpose Margin
~
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Polycarbonate Conclusions
• Industry continues to invest in product
application development for long term growth
of the business
• Good demand, supply issues and rising raw
material costs led to a tight market and rising
prices in H1 2011. Markets now easing
• Outlook dependent on strength of demand
growth from China and India, and rate of
increase in new production capacity
Copyright © 2011 IHS Inc. All Rights Reserved.
Engineering Resins Global Outlook
Polycarbonate
• Feedstock impact
• Structural changes in
supply / demand
•Regional demand effects
•Global feedstock impact
• Outlook
•Price and margin outlook
Nylon 6 & Nylon 6,6
• Regional demand effects
• Global feedstock impact
• Outlook
Copyright © 2011 IHS Inc. All Rights Reserved.
In the beginning……
• Nylon’s first
application was in
fibers
• Fibers continue to be
nylon’s largest
market
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2011 Global Nylon Demand
Staple Fiber BCF
2% 10%
Engineering
Resin (ETP) Textile Filament
41% Yarn
30%
Industrial
Filament Yarn
17%
2011 Global Demand = 6.0 Million Metric Tons
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2011 Global Nylon ETP Demand
Industrial/
Machinery Others
Consumer 13%
10% 5%
Wire & Cable
1%
Film & Coating
15% Automotive &
Truck
37%
Appliances
8%
Electrical &
Electronic
11%
2011 Global Demand 2.5 Million Metric Tons
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2011 Global Nylon ETP Demand
Thousand Tons
1000
900
800
700
600
500
400
300
200
100
0
Nylon 6 Nylon 6,6
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Nylon 6 Economics
Nylon 6 Chain Overview
Benzene Cyclohexane Caprolactam Nylon 6
Benzene
Cyclo-
Cumene Phenol
hexanone
Propylene
BASF, DSM, Honeywell
Nylon 6 Producers: UBE, Univex,
Baling PC,
Mitsubishi
Copyright © 2011 IHS Inc. All Rights Reserved.
Caprolactam Economics North America
Cents Per Pound
150
130 Forecast
110
90
70
50
30
10
-10
-30
-50
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Cyclohexane Contribution Hydrogen Contribution
Ammonia Contribution Ammonium Sulfate Credit ~
Sulfuric Acid Contribution Caprolactam Total Cash Cost
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North America Nylon 6 Resins Cash Cost and ETP
Market Price
Cents Per Pound
180
160
Forecast
140
120
100
80
60
40
20
0
-20
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Nylon 6 Cash Cost Nylon 6 Pre-tax Margin N6 Market Price
~
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Nylon 6 Capacity
Formosa Group
DSM 3% Honeywell CIS & Baltics
8% Indian
Li Peng 5% 3% DOMO Group Europe Subcontinent
6%
3% 22% 3%
BASF SE S. America
9% Zig Sheng 1%
3%
Top Producers N. America Capacity by Region
12%
SE Asia NE Asia
3% 51%
Others
68%
Global Capacity = 6.0 Million Metric Tons
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Global Demand for Nylon 6 Resin
Million Metric Tons Operating Rate
8.0 100%
7.0 90%
6.0 80%
5.0 70%
4.0 60%
3.0 50%
2.0 40%
1.0 30%
0.0 20%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Engineering Plastic Demand Fiber Demand
Total Capacity Caprolactum Operating Rate
Forecast
Copyright © 2011 IHS Inc. All Rights Reserved.
North America Nylon 6 Demand
Million Metric Tons Operating Rate
1.0 100%
0.9 Forecast 90%
0.8 80%
0.7 70%
0.6 60%
0.5 50%
0.4 40%
0.3 30%
0.2 20%
0.1 10%
0.0 0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Nylon Resin Production ETP & Fiber Demand
Total Capacity Forecast
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Nylon Resin Capacity Changes
Nylon 6
Thousand Metric Tons
600
Forecast
500
400
300
200
100
-100
2010 2011 2012 2013 2014 2015
Europe CIS & Baltic States Indian Subcontinent China Rest of Asia
Copyright © 2011 IHS Inc. All Rights Reserved.
Caprolactam Capacity Changes
Thousand Metric Tons
600
500 Forecast
400
300
200
100
0
-100
-200
2010 2011 2012 2013 2014 2015
South America Europe CIS & Baltic States
Indian Subcontinent China Rest of Asia
Copyright © 2011 IHS Inc. All Rights Reserved.
North America Nylon 6 Resins Cash Cost and ETP Market
Price
Cents Per Pound
180
160
Forecast
140
120
100
80
60
40
20
0
-20
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Nylon 6 Cash Cost Nylon 6 Pre-tax Margin N6 Market Price
~
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Nylon 6 ETP Prices
Dollars Per Metric Ton
4,500
4,000 Forecast
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
NAM Market Price WEP Market Price NEA Market Price
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Nylon 66 Economics
Nylon 6,6 Chain Overview
Benzene Cyclohexane Adipic Acid
Nylon 6,6
Adipo-
Crude C4 Butadiene HMDA
nitrile
Propylene
Acrylonitrile
Ammonia
Invista, DuPont Ascend
Nylon 6,6 Producers: Rhodia, Shenma Asahi
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Global Adiponitrile Capacity
Butachimie
32%
Invista
45%
Ascend
18%
Asahi Kasei
5%
ADN Capacity = 1.6 Million Metric Tons
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U.S. Butadiene/Ethylene Ratio
Percent
6.0
5.5
5.0
4.5
4.0
3.5
3.0
10 Q2 Q3 Q4 11 Q2 Q3 Q4 12 Q2 Q3 Q4
Copyright © 2011 IHS Inc. All Rights Reserved.
Nylon 6,6 Capacity
Koch
Industries Rhodia Africa/Middle
SK Capital II 14% 14% CIS & Baltics East
17% 1% 3% NE Asia
BASF SE
18%
6%
Europe
SE Asia
33%
3%
RadiciGroup
4%
Top Producers Asahi Kasei Capacity by Region
Corp.
4%
DuPont
17% Others
24% S. America N. America
6% 36%
Global Capacity = 2.0 Million Metric Tons
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Global Nylon 6,6 Demand
Million Metric Tons Operating Rate
3.0 100%
2.5 Forecast 90%
2.0 80%
1.5 70%
1.0 60%
0.5 50%
0.0 40%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Engineering Plastic Demand Fiber Demand
Total Capacity Forecast
Copyright © 2011 IHS Inc. All Rights Reserved.
North America Nylon 6,6 Resin Cash Cost
And Market Price
Cents Per Pound
200
180
Forecast
160
140
120
100
80
60
40
20
0
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
Nylon 6,6 Cash Cost Nylon 6,6 Pre-tax Margin N66 Market Price
~
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Nylon 6,6 ETP Regional Prices
Dollars Per Metric Ton
5,000
4,500 Forecast
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12
NAM Market Price WEP Market Price NEA Market Price
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Global Nylon Resin Trade
Million Metric Tons
600
Net Exports
400
200
-200
-400
Net Imports
-600
2006 2007 2008 2009 2010 2011
N. America S. America Europe
CIS & Baltics Africa/Middle East Indian Subc.
NE Asia SE Asia
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Nylon Summary
• Nylon 6 growth in Asia has tightened
caprolactam supply pressuring polymer prices
upward globally
• New capacity will provide relief but not soon
• Nylon 6,6 intermediates face constrained supply
of adiponitrile that supports price levels
• Ascend not constrained, has capacity to grow
• Invista’s Shanghai capacity comes on 2014-2015
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A Final Thought:
Copyright © 2011 IHS Inc. All Rights Reserved.
Thank You
47
Copyright © 2011 IHS Inc. All Rights Reserved.
