North American AcetylsA Time of Change

Jennifer Jewson
Marketing Manager, Acetyls Americas

Agenda
LyondellBasell Overview
Shale Gas
Acetyls Market Overview

lyondellbasell.com

LyondellBasell is
One of the worlds largest olefins, polyolefins, chemicals and refining
companies with revenues of $51 billion.

58 plants in 18 countries, more than 14,000 employees worldwide, sales in

more than 100 countries.
The global leader in polyolefins technology, production and marketing.

A pioneer in propylene oxide and derivatives. A producer of fuels and refined

products, including biofuels.
Dedicated to ongoing research and development programs
that meet the ever-changing requirements of our customers, including the
creation of new catalysts, processes and products.
A publicly traded company listed on the New York Stock Exchange (NYSE),
ticker symbol: LYB.

lyondellbasell.com

Fast facts
Third-largest independent chemical company in the world*
Olefins and Polyolefins Americas

Five business
segments

Olefins and Polyolefins Europe, Asia

and International
Intermediates and Derivatives
Refining and Oxyfuels
Technology

Delivers exceptional
customer value across
the petrochemical chain

Vertically integrated facilities

Broad product portfolio
Manufacturing flexibility
Superior technology base

Operational excellence
*Measured by revenue
lyondellbasell.com

Diversified and vertically integrated portfolio

Wellhead

Natural Gas
Liquids

Crude

Capturing
value along
the chain

Refining
Refining

Aromatics

Olefin
Derivatives

Oxy Fuels

2nd Level
Derivatives

Olefins & Polyolefins

Americas

lyondellbasell.com

Olefins
Crackers

Fuels

Polyethylene

Polypropylene

PP
PP
Compounding
Compounding

Polybutene-1

Catalloy
Process
Resins

Olefins & Polyolefins

Europe Asia & International

Olefins

Propylene
Oxide

Acetyls

Glycols
Glycol Ethers
Butanediol

Intermediates
& Derivatives

Ethylene
Oxide

Technology
Technology

Olefins

Styrene

Glycols
Glycol Ethers

Refining &
OxyFuels

Technology

Natural Gas from Shale

Supply
90% of the natural gas consumed in the US in 2010 was produced domestically
The US possesses 2,214 trillion cubic feet (Tcf) of potential natural gas
resources, enough to supply 90 years of use at the current consumption rates
Natural gas from proven and unproven shale resources accounts for 542 Tcf of
this resource estimate

Demand
New opportunities for the petrochemical industry, driving announcements for
debottlenecks, restarts, and new construction

Potential Concerns
Fracking requires large amounts of water, which could reduce water supply
Discussions around the hydraulic fracturing fluid if it is released
Fracking produces large amounts of wastewater, which may contain dissolved
chemicals and other contaminants
While concerns must be addressed, we believe shale gas presents a multitude
of opportunities for the Petrochemical industry and LYB
lyondellbasell.com

Sources: CMAI/IHS and EIA

US Natural Gas Supply

US NaturalOutlook
Gas Supply Outlook
30

Trillion Cubic Feet / Year

25

Shale Gas

20

15

Tight Gas
10
Lower 48 Onshore Conventional
5
Alaska

Lower 48 Offshore Conventional

Coalbed Methane

19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
20
20
20
22
20
24
20
26
20
28
20
30
20
32
20
34

Source: EIA, 2011 Annual Energy Outlook

Supply growth from shale is expected to more than offset declines from
traditional supply sources
lyondellbasell.com

Sources: CMAI/IHS and EIA

Henry Hub Natural Gas Price

dollars per million Btu
10
Historical spot price
STEO price forecast
NYMEX futures price

95% NYMEX futures price upper confidence interval

95% NYMEX futures price lower confidence interval

0
Ene 2011

Jul 2011

Ene 2012

Jul 2012

Ene 2013

Jul 2013

Note: Confidence interval derived from options market information for the 5 trading days ending March 1, 2012
Intervals
not EIA
calculated for months with sparse trading in "near-the-money" options contracts
Source:

Source: Short-Term Energy Outlook, March 2012

lyondellbasell.com

Source: EIA

Natural Gas Pricing Outlook

Natural Gas Pricing, $/MMBTUs

10
9
8
7
6
5

4
3
2
1
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035

As a result of supply growth, gas prices are expected to remain muted in

the medium term
lyondellbasell.com

Source: EIA

Natural Gas and the Acetyls Process

Methanol restarts

Methanex Medicine Hat

OCI Beaumont
LyondellBasell Channelview

CO / H2
Methanol

Oxygen
Syngas

Natural Gas

Ethylene expansions
Westlake
Ineos
CP Chem
Dow Chemical
LyondellBasell / Equistar
OxyChem
Shell Chemical
Nova
Braskem / Idesa

lyondellbasell.com

CO

Acetic Acid

Ethylene
Oxygen

Source: CMAI/IHS

Vinyl
Acetate
10

North American Methanol

MTBE phase-out program resulted in a loss of approximately
1.8 million MT of methanol consumption
Escalating natural gas prices in US (7-8 $/MMBTUs) made
methanol production uneconomical
One large methanol unit remained in operation in 2010- LMC
which is a 85/15 JV of LyondellBasell/Linde
Natural Gas from shale has now changed the domestic
production landscape with the announcements of restarts and
the relocation of existing plants

lyondellbasell.com

11

North American Supply/Demand Balance

Demand growth
2011-2016 3.4%

Methanex
1,000 KT 2H

Methanex
1,000 KT

Beaumont
850 KT 1Q

Channelview
780 KT 4Q

Based on demand needs one would assume local production would run at full
rates and imports would move to other locations
lyondellbasell.com

Source: CMAI/IHS

12

Demand by Region/End Use

55.4 Million MT 2011

2006-2011 Growth Rate = 7.7%

2011-2016 Forecast Growth Rate = 13.2 %
China accounts for 85% of the growth

CIS BALTIC
4%

Solvents
5%

MEAF
6%

Chloromethanes
Methylamines 1%
4%
MTO/MTP
2%

EU
15%

SAM
3%

DMT/Other
8%

NEA
55%

Formaldehyde
34%

Gasoline/Fuel
12%
MMA
2%

NAM
11%
ISC
2%

DME
12%
Almost nonexistent
a few years ago

SEA
4%

MTBE/TAME
10%

Acetic Acid
10%

Almost 60% of the methanol demand is in Asia which also has the two fastest
growing applications: MTO/MTP and Fuel Blending
lyondellbasell.com

Source: CMAI/IHS

13

Acetic Acid: 2012 Industry Cost Curve

2012 Acetic Acid Industry Cost Curve (KTA)
2012 Demand

$ per ton

Asia / EU
High Cost
Technology

China

EU / Asia (Non-China)
Americas

Middle East

Capacity

As a result of shale gas, North American Acetic Acid producers will have a cost
advantage over other regions
lyondellbasell.com

Source: Internal

14

Acetic Acid - Fundamentals

2011 Capacity: 16.9 MM MT
Growth Outlook: 5% AAGR

2011 Capacity Share

ZJC

Sopo

Sterling

Sinopec

LB Acetyls

Industry Trends:
Limited number of technologies with leading
technology being methanol carbonylation
High degree of downstream integration
Future capacity growth in NE Asia and US
Europe increases net import position
China oversupplied
Customer / competitor consolidation

BP

Other
Celanese

2011 Capacity by Region

India
MEAF
NE Asia

CIS & Baltics

Merchant Markets:
VAM
PET bottles
Solvents and Coatings

Europe
S. America

N. America
SE Asia

lyondellbasell.com

Source: CMAI/IHS

15

Acetic Acid applications

Purified Teraphtalic Acid
Precursor for PET, Textiles and Films

Acetic Anhydride
Cellulose Acetate

22%

14%

Acetic Acid

33%

Vinyl Acetate
Monomer

18%
Peracetic Acid
(disinfectant)

Others
Agrochemicals

Acetate Esters
Inks and Coatings

Source: Tecnon
lyondellbasell.com

Household food applications

(special foodgrade)

Source: CMAI/IHS

16

World Acetic Acid Supply/Demand

100%
28,000
90%

24,000

80%

70%
20,000

Volume, KT

16,000
50%

12,000

40%

30%
8,000

Effective Operating Rate (96%)

60%

20%
4,000
10%

0%
2006

2007

New Capacity

2008

2009

Base Capacity

2010

2011
Total Demand

2012

2013
Virgin Demand

2014

2015

2016

Effective Operating Rate

Capacity growth in Asia drives their operating rates into the low 60s for 2012 and 2013
lyondellbasell.com

Source: CMAI/IHS

Acetic Acid Trade Balances

2010 2011 2016

800
600
400
200
0

0
-200
-400
-600
-800
2010 2011 2016

800
600
400
200
0

800
600
400
200
0

2010 2011 2016

2010 2011 2016

2010 2011 2016

2010 2011 2016
0
-200
-400
-600
-800

0
-200
-400
-600
-800

2010 2011 2016

0
-200
-400
-600
-800

2010 2011 2016

800
600
400
200
0
-200
lyondellbasell.com

Source: CMAI/IHS

800
600
400
200
0

NE Asia

2010 2011 2016

800
600
400
200
0

SE Asia

2010 2011 2016

Acetic Acid Demand Development By Application

16.0

Annual acetic acid capacity

growth
2006-2011
8%
2011-2016
3%

Consumption by Region
Americas
20%
EU
12%
MEAF
3%
SEA
5%
NEA
54%
India
5%

2011-2016 estimated
demand AAGR:
VAM
4%
Anhydride
3%
Ethyl Acetate 7%
PTA
6%
Butyl Acetate 4%

Forecast

14.0

Million MT

12.0
10.0
8.0
6.0
4.0
2.0
0.0
2006

2007

2008

Vinyl Acetate
Ethyl Acetate

2009

2010

2011

2012

PTA
Butyl Acetate

2013

2014

2015

Acetic Anhydride
Others

2016

Acetic Acid has strong growth potential, with a diverse mix of downstream end-uses
lyondellbasell.com

Source: CMAI/IHS

19

VAM: 2012 Industry Cost Curve

2012 VAM Industry Cost Curve (KTA)
2012 Demand

$ per ton

Europe / China (Acetylene)

Asia (Non-China)
China
Americas

Middle East

Capacity

VAM also has the added benefit of low-cost ethylene

lyondellbasell.com

Source: Internal

20

Vinyl Acetate - Fundamentals

2011 Capacity: 6.9 MM MT
Growth Outlook: 4% AAGR

Industry Trends:

2011 Capacity Share

SINOPEC

Chang Chung
DuPont
Nan Pao

LB Acetyls

Moderate technology entry barrier

Ethylene based technology is growing faster than
acetylene route
China is major growth region from 2011 to 2016
Most producers have downstream integration
VAM capacity expansions will be where surplus acetic acid
is available
Derivative consolidation

Dow

Celanese

Other

2011 Capacity by Region

India

CIS & Baltics

Merchant Markets:
Coatings
Adhesives
Textiles
Film/molding
Packaging

Europe
NE Asia

SE Asia

lyondellbasell.com

MEAF

Source: CMAI/IHS

N. America

21

Vinyl Acetate Monomer Applications

Binders for Coatings
Polyvinyl Acetate

48%

Adhesives
41%

VAM

Polyvinyl Alcohol
6%
2%

3%

Other

EVA
Film, Moldings

Polyvinyl butyral
Safety Glass

EVOH
Barrier Resin

Floor Heating Tubes Food Packaging

lyondellbasell.com

Source: CMAI/IHS

Source: Tecnon

World VAM Supply/Demand

14,000

100%

90%

12,000
80%

10,000

70%

Volume, KT

50%
6,000
40%

Effective Operating Rate (96%)

60%
8,000

30%

4,000

20%
2,000
10%

0%
2006

2007

2008

2009

New Capacity

lyondellbasell.com

Source: CMAI/IHS

2010
Base Capacity

2011

2012
Demand

2013

2014

2015

2016

Effective Operating Rate

23

VAM Trade Balances

2010 2011 2016

0
-100
-200
-300
-400
-500
-600

400
300
200
100
0
2010 2011 2016

200
100
0
-100
-200

400
300
200
100
0

2010 2011 2016

2010 2011 2016

2010 2011 2016
2010 2011 2016
0
-100
-200
-300
-400

0
-100
-200
-300
-400

2010 2011 2016

200
100
0
-100 2010 2011 2016
-200

0
-100
-200
-300
-400

200

NE Asia

0
-200
lyondellbasell.com

Source: CMAI/IHS

SE Asia

100

100
-100

200

2010 2011 2016

-100
-200

2010 2011 2016

VAM Demand Development by Application

8.0

Annual VAM capacity growth

2006-2011
3%
2011-2016
6%

Consumption by Region
Americas
20%
EU
17%
MEAF
3%
SEA
5%
NEA
52%
India
2%

2011-2016 estimated demand

AAGR:
PVAc
4%
PVOH
5%
EVA
5%
EVOH
4%
Other
4%

Forecast

7.0
6.0

Million MT

5.0
4.0
3.0

2.0
1.0
0.0
2006

2007

2008

Polyvinyl Acetate

2009

2010

2011

Polyvinyl Alcohol

2012

2013

EVA

2014

EVOH

2015

2016

Others

VAM has strong growth potential in developing regions, particularly in construction

and automotive segments
lyondellbasell.com

Source: CMAI/IHS

25

Conclusions
Natural gas from shale is abundant in North America
Restarts, debottlenecks and new construction have been announced
North America has become the second lowest cost region for Acetyls

Acetic Acid has strong growth potential, with a diverse mix of

downstream end-uses
VAM has strong growth potential in the developing world,
particularly in construction and automotive segments
As a fully integrated acetyls player with global reach, LYB is well
positioned to leverage North Americas cost position and the shale gas
advantage
lyondellbasell.com

26