Monoethylene Glycol Changes to a Global Commodity Christopher Tse Vice President, Commercial

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Monoethylene Glycol Changes to a Global
CommodityChristopher TseVice President,
Commercial
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The world of MEG is changing

• The product is the same but we are seeing
• Structural changes in demand patterns
• Structural changes in supply patterns
• What are the drivers behind these changes, and
• what are the implications for our industry?

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Regional Net Balance for MEG 1988-2013
Source PCI MEGlobal
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• What is causing the
• MEG production shift ?

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MEG Producers - Asia

• Role
• Local supply security and supplement imports
• Objectives
• Supply to local polyester industry
• Backward integration for some polyester producers
• Capitalize on logistics advantage

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MEG Producers Middle East / Canada

• Role
• Invest to support industry growth
• Objectives
• Supply export markets
• Add value to advantaged feedstocks
• Use scale and technology to enhance low-cost
  position

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MEG Producers US W. Europe

• Role
• Supply local market supplemented by imports(in
  transition)
• Objectives
• Prior to 1985, supply to large local polyester
  industry and be primary export supplier to world
• In late 1990s, lost feedstock (cost) advantage
• EO-EG producers focus on EO derivatives vs. MEG
• (Trend started earlier in Europe, but
• now firmly in place in US as well.)

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Change in the Polyesters Industry

• Asia has become the textile manufacturing center
  of the world
• economic growth and population driving domestic
  demand
• low labor cost driving export competitiveness
• As a result, Asia polyester industry will grow
  much faster than ROW

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Polyester Producing MarketsAsia vs. North
America Europe (1990-2000)
Source Mitsui Co.
Polyester demand includes Fiber / Resin / Film /
Chips
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Impact on Asian MEG Industry

• Most of Asian MEG production is not globally cost
  competitive, with exception of Malaysia
• New Asian MEG production inadequate to meet
  demand increase
• More MEG must be imported to support the growth
• MEG is a commodity product
• fungible product / JIT delivery / price
  volatility

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Impact on US/European MEG Industry

• No new investment foreseen
• Rationalization of less competitive facilities
  will continue
• Focus will be on higher-value (EOD) products
• Market switches to import (vs. export) pricing
  structures

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Global Commodity Business Model

• Low costs to each market served
• Multiple producing sites to retain operational
  flexibility
• Well integrated marketing / supply chain
  management
• Broad customer base with direct and good business
  rapport
• Good knowledge of world changes
• Balance of growth vs. value creation

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What MEG Industry can offer

• Supply security
• Mutual value creation proposition
• Investment to support the growth of polyester
  industry
• Flexibility in adopting to the structural changes
  of the industry

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• is a joint
  venture of Dow and PIC of Kuwait, and a leading
  global supplier of MEG and DEG to polyester,
  anti-freeze and industrial markets, with offices
  in Hong Kong Horgen, Switzerland London,
  England and Midland, Michigan (USA)

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Total Marketing Position
Terneuzen, Netherlands
Wilton, UK
Institute, West Virginia
Shuaiba, Kuwait
Seadrift,Texas
Taft, Louisiana Plaquemine, Louisiana
Kerteh, Malaysia
Equate and Optimal volumes included and
planned to be incorporated into MEGlobal
marketing arrangements by end of 2004
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• Thank you!