CHANGING PE TRADE FLOWS IN AN UNCERTAIN MARKET The European polyethylene (PE) industry is in a state of flux in 2019, affected by many external influences, which are also impacting other regions. New shale-based ethylene and PE from the US needs to find its place in the market, and this is being made increasingly difficult with tariffs on US PE into China. This infographic examines the changes to the global markets amid extensive new US capacity, the potential impact of a US/China trade war, upcoming cracker outages in Europe, and the impact on PE pricing. By Linda Naylor and Katherine Sale

NEW PLANT EXPANSIONS (kt/year) WORLD OLEFINS & POLYOLEFIN CAPACITY ADDITIONS BY REGION 2017-2022 (million tonnes) NOVA PTT GLOBAL SHELL North America PE expansions CHEMICALS CHEMICALS 1,600 2nd wave of new US cracker projects 430 LLDPE 700 HDPE/LLDPE (2x 550), 2022 HDPE (2x350) HDPE (500) 19.3 Sarnia, Belmont County Early 2020s Canada Monaca 19.7 FORMOSA CHEVRON 12.8 PLASTICS PHILLIPS PTTGC/DAELIM SHELL 800 CHEMICAL 1,000 1,500 10.2 HDPE (400), 1,000 HDPE (700), HDPE/LLDPE (2x 550), LDPE (400) Bimodal HDPE (500), LYONDELLBASELL MEG (500), EO (100) HDPE (500) 3.1 3.2 14 H2 2019 mLLDPE (500) 2021 Early 2020s 1.8 500 HDPE 1.6 10.2 Point Q3 2017 Q3 2019 Belmont County Monaca Comfort Old Ocean La Porte 0.9 2.1 0.3 0.2 EXXONMOBIL INEOS/SASOL TOTAL/ 1.3 0 CHEMICAL 470 HDPE BOREALIS/ FORMER USSR 650 LLDPE Q4 2017 NOVA 2019 La Porte 625 Borstar PE EUROPE 2.7 Beaumont 2021 FORMOSA 2.2 2.5 PETROCHEMICALS 1,300 SABIC/ Bayport UNITED STATES NORTH 0.6 mLLDPE plus EXXONMOBIL* 1,200 AMERICA LLDPE (2 x 650) PE unspec (2 units) SASOL LLDPE (400), Q4 2017 H1 2022 890 HDPE (400), EG (900) NORTH EAST ASIA Mont Belvieu Corpus Christi LLDPE (470), 2022 MIDDLE EAST LDPE (420) St James Parish TOTAL/BOREALIS/ SABIC/ Q1 2019 / Q3 2019 DOW CHEMICAL NOVA EXXONMOBIL Lake Charles 0 0.1 0.1 0 1,000 1,800 125 Bimodal HDPE Borstar PE (625) + PE (2 units), CHEVRON Q4 2018 3.8 3.6 St Charles 3.3 2.9 existing PE (400) MEG PHILLIPS 0.1 End 2020 H1 2022 CHEMICAL 00 0 AFRICA Port Arthur Corpus Christi US Gulf Coast SOUTH & CENTRAL DOW CHEMICAL DOW CHEMICAL AMERICA ASIA PACIFIC 400 ELITE PE 600 PE (unspec) Q3 2017 2021-2023 Freeport US Gulf Coast 350 LDPE 350 PE (unspec) Q4 2017 2021-2023 Plaquemine US Global Debottlenecks

* Assuming 1,300kt PE for SABIC/ExxonMobil Contributing editor– Joseph Chang Contributing analyst - Lorenzo Meazza and Fabrizio Galie Ethylene PE Propylene PP

Ethylene: New US crackers complete, under construction through 2019 Expansions of existing US crackers, plus 1 restart

Capacity Start- Capacity Start- Company Capacity Location Status/Start-Up Company (kt/year) Downstream (kt/year) Location Up Company (kt/year) Downstream (kt/year) Location Up (kt/year) OxyChem/ Ingleside, Q1 Lotte/ MEG (760) by Lotte, feed into St Charles, H1 LyondellBasell 363 Corpus Christi, Texas Fully started up Q2 Mexichem 544 Feed existing VCM plant of 1,050 Texas 2017 Westlake 1,000 existing PVC for Westlake Louisiana 2019 2017 Westlake Chemical 32 Calvert City, Kentucky Started up Apr 2017 Dow ELITE PE (400); LDPE (350) – Freeport, Q3 Shintech 500 VCM (400), PVC (290), caustic soda Plaquemine, H1 Chemical 1,500 Plaquemine, Louisiana; EPDM (200); Texas 2017 (270) Louisiana 2019 Indorama (restart) 440 Lake Charles, Louisiana Dec-18 elastomers (320) Point Chevron Formosa H2 Dow 91 Orange, Texas H1 2019 Bimodal HDPE (500), mLLDPE (500) Cedar Q1 Plastics 1,200 HDPE (400), LDPE (400), EG (800) Comfort, 2019 Phillips 1,725 Bayou, Texas Dow 500 Freeport, Texas 2020 Chemical both at Old Ocean Texas 2018 LLDPE (470), LDPE (420), EO/EG Lake INEOS 270 Chocolate Bayou, Texas 2020 ExxonMobil mLLDPE plus LLDPE (650 x2) at Baytown, Q3 Sasol 1,500 (300), ethoxylates, detergent alcohols Charles, H2 Chemical 1,500 Mont Belvieu Texas 2018 (300) Louisiana 2019 LyondellBasell 250 Channelview, Texas Evaluating for 2020s US/CHINA TRADE WAR TURKEY POLYOLEFIN SHIFTS LLDPE net importers excluding China 2019-2020 Economic contraction has had a significant effect on Turkish import levels of PE and PP in 2018. Import levels for nearly all polyolefins were significantly down from the previous year, contracting what had previously been a growing market. 3,075 kt Trade flows also shifted significantly due to political tensions and new production capacities, resulting in a major transitional year for the Turkish plastics market. 3,500 Turkey imports 2016-2018 (kilo tonnes) 3,000 kt kt 81 81 1,307 982 79 2,500 36 kt kt 9 1,371 1,252 5 2,000 UZBEKISTAN 2018 2018 495 kt 2017 2017 1,500 2016 2016 kilo tonnes 190 kt US 1,000 TURKEY 500 121 129 103 0 134 EUROPE INDIA TURKEY VIETNAM INDONESIA PAKISTAN PHILIPPINES 133 INDIA 126 104 98 92 70 2018 79 58 If the US cannot export to China, but it still runs plants as hard as we expect: 2017 ■ Scenario 1: Naphtha cracker operators forced to cut back operating rates - possibly consolidate 2016 54 33 ■ Scenario 2: Naphtha players win trade protection and US forced to cut back 240 221 9 200 2018 2018 2018 Contributing consultant – John Richardson 2017 2017 2017 613 2016 2016 2016 2018 2017 IRAN 2016 551 SINGAPORE EUROPEAN CRACKER OUTAGES 44 536 Cracker maintenance 2019 36 5 EGYPT INEOS BPRP 2018 2018 2017 2017 H2 2019 6 weeks 2016 2016 4-6 weeks end Aug-mid Oct SAUDI ARABIA Grangemouth Gelsenkirchen 3

SHELL DOW 251 8 weeks 6 weeks 148 212 176 140 16 April - 21 June May-June 146 Moerdijk Boehlen 153 118 125 80 60 89 19 HDPE 29 24 LLDPE 2018 2018 2018 DOW PP 2017 2017 2017 6 weeks 2018 2018 2018 2016 2016 2016 Source: Turkstat 2017 2017 2017 Sep-Oct LYONDELLBASELL Contributing editor – Ben Lake 2016 2016 2016 SOUTH KOREA Terneuzen 1 Sep-Oct Wesseling 4 BE READY TO MOVE AS FAST AS YOUR ICIS SUPPLY AND DEMAND DATA FOR THE MARKETS WITH NEW INTERACTIVE POLYOLEFINS MARKET BASF 5 weeks ANALYTICS TOOLS FROM ICIS Covering over 100 petrochemical BASF 18 Aug-30 Sep Drawing on the knowledge, expertise and reach of a global network commodities, across 160 countries, with Ludwigshafen 1 historical data from 1978 and forecast 6-8 weeks of reporters, our coverage of the petrochemical industry spans more KATHERINE SALE 1 May-16 June than 180 chemicals including; PE, PP, Ethylene and Propylene. available up to 2040, this powerful data SENIOR EDITOR Antwerp and analytics service from ICIS helps MANAGER Benchmark your position with ICIS data alongside new tools senior management, strategists, business [email protected] including: planners, analysts and risk managers to:

n *New* Live Disruption Tracker: Impact View n Identify, evaluate and optimise Experience your new opportunities ICIS.com platform REPSOL SABIC VERSALIS HIP PETROHEMIJA n Live Disruption Tracker: Supply View on your mobile 6-7 weeks 6 weeks 6 weeks 5 weeks n *New* Price Optimisation Analytics n Identify and manage financial or Oct-Nov Sep-Oct Sep-Oct 20 March-25 April n Price Drivers Analytics investment risks Tarragona Geleen 4 Priolo Pancevo n *New* Margin Analytics n Validate commercial and growth LINDA NAYLOR n Supply & Demand Outlooks strategies SENIOR EDITOR Note: This information is according to sources and may not be confirmed by the companies involved. [email protected] Contributing editor – Nel Weddle Request a demo Find out more