The document discusses trends in the European propylene and polypropylene industry from 2012-2016. It notes that 2012 prices experienced volatility and margins were weak. European production rates were adjusted based on downstream demand. Looking forward, shale gas is expected to bring opportunities for the European propylene industry through diversified cracker portfolios, robust C3 production chains, arbitrage opportunities, and integration. The long term outlook is positive despite currently fragile end user markets.

1. European Propylene and Polypropylene
Monicca Egoy
Editor, Europe Propylene & Polypropylene

2. Agenda
• 2012 price trends: A rollercoaster ride for the industry
• Issues and challenges
• Opportunities
• What shale gas means to the European propylene industry?
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3. NWE propylene and naphtha prices
Source: Platts On The Net

4. European propylene and polypropylene prices
Source: Platts On The Net

5. European propylene production 2005-2011
Source : APPE

6. NWE propylene quarterly production 2007-2012
Source: APPE

7. European polypropylene contract, spot prices
Source: Platts On The Net

8. Inherent features of European propylene market:
The incredible balancing act
• Credible revival of downstream demand
yet to materialize
• Tight control of working capital
• Cautious inventory management
• Utilization rates adjusted based on downstream demand
• Self-sufficiency, self-preservation mode at all times
• Industry remains vigilant

9. Global propylene demand 2010-2016
2016
2015
2014
2013
2012
2011
2010
0 20,000 40,000 60,000 80,000 100,000 120,000
US Western Europe, includng Turkey Total Asia TOTAL DEMAND
Source: Japan METI

10. Global polypropylene demand 2010-2016
2016
2015
2014
2013
2012
2011
2010
0 10000 20000 30000 40000 50000 60000 70000
US Western Europe, includng Turkey Total Asia TOTAL PP Demand
Source: Japan METI

11. Global propylene production 2010-2016
2016
2015
2014
2013
2012
2011
2010
0 20,000 40,000 60,000 80,000 100,000 120,000
US Western Europe, includng Turkey Total Asia TOTAL PRODUCTION
Source: Japan METI

12. European polypropylene production/demand
2010-2016
10,500
10,000
9,500
9,000
8,500
8,000
7,500
2010 2011 2012 2013 2014 2015 2016
production Demand
Source: Japan METI

13. Opportunities: What Europe will capitalize on
• Europe’s diversified cracker portfolio to benefit in times of global C3
shortages, as new US investments favour C2 production
• Europe to capitalize on robustness in C3 production chains
• Nimble infrastructure in Europe to aid arbitrage opportunities
• Strength of feedstock/downstream integration to aid efficiency
• Close proximity to customers to continue strengthening integration on a
larger scale

14. Summary
•Volatile feedstock to remain a key feature, margins weak
•End-user markets fragile
•Production rates adjusted based on demand
•Long term outlook positive
•Shale gas brings opportunities for European propylene industry
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