CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E
Connecting high quality analytics with commercial decision making Commercial Advice Consulting Market Insights Multiclient Products Retainer Agreements NGLS Expertise LPG Ethane Olefins and their feedstocks Global petchem gases trade Training/Workshops www.nglstrategy.com CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 2
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LPG: One Product, Two Different Stories (Propane vs Butane) LPG Demand: Petchems Influence LPG Pricing Linked More to Other Products Economics Retail Market: Present & Potential CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Sep-17 4
CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E
Global Influences A.G. Influences N. America Influences N. Europe Influences Far East Influences CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 6
Global Influences A.G. Influences N. America Influences N. Europe Influences Far East Influences CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 7
CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E
West of Suez East of Suez 3 3 Incremental Propane Production since 21 212 214 216 217 212 214 216 217 3 3 Incremental Butane Production since 21 212 214 216 217 212 214 216 217 CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 9
West of Suez 3 East of Suez 35 Incremental Propane Demand since 21 Incremental Butane Demand since 21 3 212 214 216 217 212 214 216 217 3 212 214 216 217 212 214 216 217 CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 1
West of Suez East of Suez 3 Import / Export Seaborne Trade Balance Per Region Propane 21 212 214 216 217 22-3 21 212 214 216 217 22 3 3 Import / Export Seaborne Trade Balance Per Region Butane -3 21 212 214 216 217 22-3 21 212 214 216 217 22 CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 11
West of Suez East of Suez 3 Import / Export Seaborne Trade Balance Per Region Propane 21 212 214 216 217 22-3 21 212 214 216 217 22 3 3 Import / Export Seaborne Trade Balance Per Region Butane -3 21 212 214 216 217 22-3 21 212 214 216 217 22 CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 12
CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E
Cumulative Increase % Retail vs Petchem Demand 21-22 Cumulative Increase (%) 21-22 2 8% 1 4% 21 212 215 217 22 % 21 212 215 217 22 Retail Petchem Retail Petchem CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 14
Propane Petchem Demand East Propane Petchem Demand West PDH - seaborne imports PDH - local source 217 216 PDH much more significant in East PDH - seaborne imports PDH - local sources 217 216 Cracking - seaborne imports Cracking - seaborne imports Seaborne imports for cracking more significant in West Cracking - local source Cracking - local sources 1 2 1 2 Globally, PDH demand up, cracking demand down CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 15
Butane Demand in Petchems & Refinery Applications 2 West of Suez Cracking demand & PO/ETBE/TBA dominates 1 East of Suez gasoline components more significant than cracking demand 216 217 216 217 West East Steam Cracking nbdh MA/BDO PO/TBA/ETBE ibdh/mtbe Alkylation Aromatics Globally gasoline component demand up cracking demand down CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 16
Mont Belvieu especially complex Cracking more influential in West PDH influence greater East, but occasional CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E
% of vol vs Crude % of vol vs Crude Propane Butane 8% 1% 7% 9% 6% 8% 7% 5% 6% 4% 5% 3% 4% 2% Mt. Belvieu (Propane)/WTI 3% 2% Mt. Belvieu (Butane)/WTI 1% % CFR N. Europe (Propane)/Brent CFR Far East (Propane)/Brent 21 211 212 213 214 215 216 217 1% % CFR N. Europe (Butane)/Brent CFR Far East (Butane)/Brent 21 211 212 213 214 215 216 217 CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 18
$/t Domestic Supply/Demand Dynamics 1,2 M. Belvieu Price Determinants Inventory Levels/Changes Export Cancellations 6 Trading Decisions Terminalling fees Jan-1 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 External Events MB Propane Cracking Value Fuel Value Far East Netback (based on long-term contracts) Retail Estimate vs WTI PDH Value N.Europe Netback (based on long-term contracts) CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 19
Oct-217 2 $/t $/t Cracker Incremental Cash Margins Advantage N. Europe Cracker Incremental Cash Margins Advantage Far East 6 1 LPG Cracking NW Europe 6 1 LPG Cracking Far East 4 214 215 216 217 4 2 214 215 216 217 2 LPG Advantage Naphtha Advantage -2-4 -2 Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17-6 Jan-14 Jun-14 Nov-14 Apr-15 Sep-15 Feb-16 Jul-16 Dec-16 May-17 Naphtha vs Propane Advantage Naphtha vs Butane Advantage Naphtha vs Propane Advantage Naphtha vs Butane Advantage CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 2
Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 $/t Far East Propylene Price versus Costs 1,2 MTP Uneconomic 1.7 Key variables: 1, 8 PDH Uneconomic 1.5 1.3 Methanol price Propane price Ethylene price 6 1.1 4 2.9.7 High PDH plant operating rates favoured by: High Methanol price (MTP uneconomic).5 High Ethylene price (metathesis uneconomic) Low propane prices Propylene price PDH Metathesis MTP P/E ratio CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 21
CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E
Actual vs Theoretical Retail Demand Growth in Some Key Countries 12. 6. Price Changes Government Intervention High Potential Limited Growth Population Growth: Theoretical growth based on population growth and stable consumption per capita (basis 212). 212 216 22 212 216 22 212 216 22 212 216 22 Thailand Indonesia Turkey Nigeria Actual Theoretical Kg/Capita Growth Theoretical Population Growth Kg/Capita Growth: Theoretical growth based on per capita assumptions according to market potential (basis 212) CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 23
General Factors Market Factors Weather Population GDP/Inflation Price Elasticity Consumption per Capita Stable to Decreasing Stable to Decreasing Some Growth Stable to Decreasing Government intervention Competition with other products Anticipating Changes Infrastructure Funding Availability Retail Growth West High Growth Marketing/Penetration Retail Growth East 2 Some Growth High Potential 5-2 212 214 216 217 22 212 214 216 217 22 CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 24
CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E
Period of Change Maturity Production Dynamics Stabilization Gas Related Production Shale Gas/Tight Oil Trading Patterns Contractual Changes Competition / Margins Finding Market Balance Change of Trading Structure Adjustment of the Demand Dynamics Increase of Large Bulk Demand Slower increase in Retail Demand Government/Market Reaction New Demand Creation Competition with other Fuels Change of Market Structure Rebalancing of Pricing Mechanisms Large Price Fluctuations New Price Dynamics (i.e. US) Opportunities Creation CMT 12th LPG Trade Summit - 23-25 Oct, 217 - Dubai, U A E Oct-217 26