Polyolefin Catalysts and Processes: Technological ...

The Catalyst Group Resources

Polyolefin Catalysts and Processes: Technological and Commercial Impacts on PE and PP 2015-2025 Advances in Polyolefins XI Santa Rosa, CA September 26th, 2017 Comprehensive Assessment Deep Knowledge Global Impact P.O. Box 680  Spring House, PA 19477 USA  Tel: +1 (215) 628-4447  Fax: +1 (215) 628-2267  www.catalystgrp.com

Who is The Catalyst Group?

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A Global Consultancy established more than 30 years ago which serves a diverse spectrum of process industries. 

Refining, Chemicals, Material Science, Polymers, Specialties, Pharmaceuticals, Environmental, Catalyst Manufacturers, EPCs and Investment bankers.

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We are a Global Technology-Driven Strategic Planning Resource who serves our clients in two ways: via client directed projects (TCG Private Consulting) and via various programs and studies (TCGR).

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Unique Competencies:

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Our Network: Global network of 150+ scientific & commercial leaders which is unmatched in our industry. Less than 5% located at HQ Spring House.

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Our Experience: Our longevity in consulting & repeat client business is a testament to the value TCG provides.

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Our Approach: Our unique ability to connect process technology developments and market opportunities. o Client-centric and highly interactive style

Client list includes top global industrial leaders.

Our Longevity in Consulting & Repeat Client Business is a Testament to the Value TCG Provides 1

A Structure for Success: Methodology •

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Global organization of 150+ people, – 15 full time employees – 150+ in extensive field network. Client-centric approach & highly interactive style Global network of “Dialog Group® Consultants” – Founding principal of TCG’s formation – a virtual subcontracted technical organization to provide consulting services – Why? The best expertise for each specific customer problem – Consultants with many years of industrial proactive & real-world “know how” Global Support, allows Flexibility to adapt to specific client needs & deliverable Focused Numerous collaborations with Universities and National Laboratories Strong client collaborations to innovation centers as clients

Services Offered

 Helping Clients Understand the Market Drivers and Technology Developments  Business Planning & Strategy  5 year Strategic Plans  Competitor Benchmarking  Geographical Specific Market Analysis and Entry Strategy  Technology/Business Integration  Market Entry & Benchmarking  Process/Product Development  Economic Benchmarking  IP Portfolio Evaluations  Leading Edge Catalyst/Process Knowledge  Identify Emerging Technical & Commercial Opportunities  Mergers and Acquisitions  Target Identification, Evaluation and Strategic Fit  Due Diligence 2

TCG - The Catalyst Group Clyde F. Payn, CEO Client-directed Projects

Programs/Studies

TCG - The Catalyst Group

TCGR - The Catalyst Group Resources

Clyde F. Payn, CEO

John J. Murphy, President

% of Business

Mergers & Acquisitions

TCGR

Competitive Assessment and Positioning Technology Development IP Development & Evaluation

TCG

60% 60%

Technical Programs (CAP, CO2CC)

40%

Information Flow One-Way ONLY TCGR to TCG

The Catalyst Review

Multi-Client Studies Workshops/In-House Training

DIALOG GROUP® (Global Virtual Organization) – Top Business & Scientific Leaders (150+ People)

COLLABORATIONS AND PARTNERSHIPS 4

(Universities, Institutes, etc.)

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Why we are different TCG stands out amongst its peers:  Our consulting teams pair the best technical and businetss minds in a cohesive unit to deliver the best technical information & commercial application understanding  We readily purchase the best available market data for our clients and focus on analyzing & assessing the data’s implications for your business and providing a sound strategy for your growth.  Our network is unparalleled offering our clients the best expertise and contacts available to both create sound strategic assessments and needed synergistic relationships.

Dialog Group®  Diverse Backgrounds;  ~60% Industrial  ~30% Academic  ~5% Government  ~5% Industrial active  ~75% of our experts hold PhD’s (many of the others have advanced masters degrees - MBAs or MSC)  Over 90% of our experts have 30+ years of experience in the field, with 42% having 40+ years of experience.

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Highlights: PE & PP Resin Demand Global PE & PP Resin Consumption 2016 162 MMT

PE & PP Consumption AAGR% 2015 World GDP

3%

7%

NE Asia Asia Pacific 37%

18%

North America South America Europe

5%

FSU 16%

14%

ME&A

3.1%

Global Resin ME&A FSU Europe South & Central America North America Asia Pacific NE Asia 0.0%

5.8% 4.3% 4.1% 2.9% 1.1% 4.0% 8.3% 7.4% 1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

ICIS 2016, TCGR 2017

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8.0%

9.0%

ICIS 2016, TCGR 2017

Resin Demand Growth Rates 2015 -2025: PE – 5.6% PP – 6% Growth in NE Asia and AP driven by growing middle class’s demand for consumer goods ̶ Automobile, Food Packaging, Medical Equipment North American announced PE capacity expected to outstrip NA demand in 2015-2020 ̶ If all announced capacity comes online ~30% of North American PE will be exported Globally the demand for specialty resins increasing at a greater rate than for commodity products 5

PE & PP Planned Capacity Expansions 2015 - 2025

ICIS 2016 Production capacity additions are expected to utilize state-of-the-art catalyst and process technologies, enabling the latest resin grades.

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Highlights: Polyolefin Catalysts – Market Size and Growth AAGR$ 2015-2018

TOTAL

Growth drivers:

AAGR$ AAGR$ 2015-2021 2021-2025

5.7%

5.3%

5.6%

5.6%

5.4%

5.5%

6.7%

6.6%

6.7%

5.0%

4.8%

5.0%

4.5%

4.3%

4.0%

6.3%

6.0%

6.3%

5.5%

5.2%

5.2%

2.2%

2.0%

2.0%

5.1%

4.9%

5.0%

TCGR Intelligence Report 2016

 Improvements in “advanced” Z/N catalysts (e.g. 4th/5th generation) continue to fend off metallocene/SSC encroachment (more so in PP than PE)  Metallocene/SSC for LLDPE as well as plastomeric and elastomeric LLDPEs highlight catalyst advances  High pressure LDPE (autoclave, tubular) continues to grow, albeit slowly due to enhanced processing LLDPEs 7

Current Environment – Catalyst Trends Resin manufacturers naturally interested in producing highest margin resins

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Polyethylene – LLDPE o Expect the single-site/ metallocene catalysts area to expand as technology moves off license – HDPE o Movement away from Cr based Phillips catalyst due to regulatory concerns o Tailored Ziegler Natta solutions becoming more popular o Bimodal SSC for PE in single reactor scheme (Univation, Total, CP Chem) Polypropylene – Phthalate free donors (REACH) – Movement towards post-reactor processing

TCGR Catalyst Review 2016

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Highlights: PE & PP Licensor Market Share

TCGR 2017

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TCGR 2017

2016 Announcement by Ineos that they will no longer be licensing Innovene S double loop slurry technology ̶ Strategic response to reduce competition for Ineos Olefins & Polymers business Sinopec licensing major wins in China and Asia Pacific ̶ Erosion primarily into Grace Unipol and Univation’s market shares Industry trend toward JV relationships between feedstock provider, technology licensor, and resin producer ̶ Reduces technology options for independent resin producers Univation acquisition by Dow ̶ Exxon a possible “free agent” ̶ Significant player if they choose to show interest in licensing or 3rd party catalyst

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Highlights: Polymerization – Commercial Drivers 

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Macroeconomics — Growth via “unsaturated” markets, applications (as measured by kg of plastics per capita); affordability/availability of feedstocks; imbalance in production/usage Sustainability — Lighter weight; recyclability; bio-based compositions for biodegradability/compostability (bio-gas generation) Ownership Changes and Alliance Trends — Importance of linkage between process technology and catalyst supply (e.g., Clariant vs. BASF in Novolen/CB&I); technology developers in bio-polymers alliances with endusers vs. petrochemical polymers with catalysts/processes Impact of REACH Regulations — Progress toward substitution in Europe to (eventually) affect resin destinations, e.g., Middle East, Americas

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THE CATALYST GROUP RESOURCES, INC. ● Gwynedd Office Park ● P.O. Box 680 ● Spring House, PA 19477 – USA – Phone: +1-215-628-4447 ● Fax: +1-215-628-2267 ● www.catalystgrp.com ● [email protected]

Highlights: Polymerization – R&D Drivers 

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Plastics Enable Innovation in Other Sectors — Commodity polymers (e.g., PP) delivering specialty performance profiles — Performance property upgrades enhance material substitution (i.e., in healthcare, consumer durables, packaging, etc.) Sustainability and Value Creation — Innovation in electron donors or EDs for PP (di-ether/succinate by Basell) — CONSISTA C by Dow/Grace; others via Ineos/Mitsui and Xian Yang and Dalian (in China) extending ZN to 5th/6th generations Bio-based Monomers and Polymers — Economically competitive routes to conventional monomers or novel monomers/polymers with advantageous price/performance profiles (e.g., bio-PE by Braskem vs. PEF by Avantium) Roles/Impacts of Technology Institutes — BRICI and Dalian in China with commercial partners (e.g., Sinopec) — KAUST in Saudi Arabia with SABIC, others 11

Factors of Note – North American Feedstocks

*Announced

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Chevron 2017

Chevron 2017

U.S. production of ethane is expected to continue increasing ̶ 1.25 million b/d in 2016 to 1.7 million b/d in 2018 according to EIA Expansions at existing ethylene plants added 170,000 b/d ethane consumption between 2013 and 2016 ̶ Significant feedstock cost advantage for NA ethylene producers ̶ Cheep feedstock costs causing a “boom” in North American PE 12

Factors of Note – North American Feedstocks (cont’d) •

North America expected to add 11 billion lbs/year PE in 2017 ̶ Exports need to jump from 25% to 30% to cover new capacity

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Even with delays, expect to see operating rates depressed to 2020

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Winners will be determined via logistics and efficient supply chain management ̶ Premium products into domestic markets ̶ Large scale export -> winners will align product slate selection with international markets

ICIS 2016

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PE Patents Review 2017 Company CPC LYB Sumitomo Sinopec SABIC Dow Univation Exxon Braskem Ineos Borealis Mitsui TOTAL

Initial 10 12 15 5 25 25 7 16 0 0 16 5

2016 relevant 10 12 0 5 13 12 7 14 0 0 11 1 85

Initial 73 74 71 16 135 124 34 53 26 10 78 16

Relevant 68 72 3 14 62 52 34 43 15 7 60 10 440

Analysis of patenting in PE catalysts and processes reveals significant activity over the past 18 months 14

Reliance – PE BACKGROUND Reliance is an important producer of PE in India. There are using mainly gas phase reactor to produce PE . Reliance is mainly focus on the production of PE commodities.

ABSTRACT Reliance patent activities is very fragmented and incremental 1. There appears to be a high focus on the production of UHMW PE 2. The other patents covered specific used of aluminum alkyls or external electron donor with existing catalysts

DETAILS 1.

UHMW PE ̶ Process to control the particle size of the catalyst. Formation of a mixture of Mg Alkoxide with iodine, followed by chlorination. ̶ Use of external donor with a PE catalyst (electron donor is a substituted silanediyl diacetate, trialkyl borate or tetraalkoxy silane). The MW is between 1 million and 12 millions ̶ Preparation of UHMW from a LTM based on imines. Although the MW is high, the activity is 1/3 of comparable catalysts.

COMMENTS 1. 2.

Reliance patent activities are very fragmented and incremental There appears to be a high focus on the production of UHMW PE

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PP Patents Review 2017 Company Total Braskem CB&I Lummus SABIC JPP Toho Grace Reliance Clariant Chemtura Mitsui Sinopec Exxon Borealis LYB Ineos TOTAL

Initial 13 0 2 71 2 0 3 6 8 0 15 5 43 34 12 6

2016 relevant 4 0 2 17 2 0 1 1 0 0 1 5 16 29 12 2 92

Initial 53 35 8 115 17 15 50 47 27 6 93 16 108 114 55 31

Relevant 17 20 1 20 16 9 31 10 0 0 16 13 49 59 44 7 312

PP patent analysis confirmed the focus of many of the major players 16

Japan Polypropylene Corporation (JPP) – PP DETAILS 1.

A new metallocene complex having a substituent introduced into a specific position can produce a highmelting-point polypropylene and, can provide a high ethylene uptake and produce an ethylene-propylene copolymerized rubber component with high MW and activity.

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New support: The support includes an ion-exchanged phyllosilicate having a specific structure in which the amount of specific micropores accounts for 60-100% of the overall pore volume. The catalytic activity improves significantly from 10Kg to 20kg

3.

New catalysts: –

Catalyst producing an ethylene/unsaturated carboxylic ester copolymer. The catalyst is based on Phosphine-Phenolate Complex (A)). or a phosphine-Sulfonate Complex (E)

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An iminophosphine bidentate ligand, complexed with a metal complex (an example of structure is given) can produce a polymer of α-olefin and an acrylic acid ester. Molecular weight remains rather low around 12000

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Japan Polypropylene Corporation (JPP) – PP COMMENTS JPP remains focused on its strengths. 1. New metallocene structures capable to produce ICP with high melting point and high MW of the EPR rubber. JPP is the leader in the production of metallocene ICP. JPP has commercialized these ICP under the WELNEX trade name. The structure of the metallocene is rather complex and could have a significant negative impact on the final cost of the catalyst. 2. New supports that don’t require organic activators like borate or MAO-JPP is a leader in this area as well. Grace and Exxon have started to work in this field as well with rather low activities of the catalyst. JPP has obtained very acceptable catalyst activity (10,000 to 20,000). Including the metallocene cost, these activities could be a little bit too low to be cost competitive with ICP made with ZN catalyst. Properties are however unique. 3. New catalysts to polymerize olefins and polar monomers. JPP is able to copolymerize ethylene with unsaturated carboxylic ester with acceptable Mw. This is rather interesting long term and it could be one of the first commercial developments of copolymer of ethylene with polar monomer made with LTM. These copolymers are further modified to make ionomers.

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Case Studies – Table of Contents Case Study 1 – PE Flexible Packaging Case Study 2 – PE High Performance Pipe Case Study 3 – PE Blow Molding Case Study 4 – PE Injection Molding Case Study 5 – High Melt Strength PP Case Study 6 – PP Post Reactor Enhancements Each Case Study includes the Key Players, Recent Advances, Highlights of a Featured Producer’s Offering(s) and an Assessment of Future Needs/Opportunities in the Application

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PE High Performance Pipe – Key Players and Recent Advances •

Total ̶ patented use of single site catalysts in double loop process technology for PE100+ pipe material

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ChevronPhillips ̶ mixed metallocene catalysts in cascade loop slurry process for PE100+ pipe material with improved SC and low sag

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Borealis/Borouge ̶ continued development of high performance PE100+ pipe materials from Borstar loop slurry/gas phase bimodal technology

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SABIC ̶ development of PE100+ materials in cascade loop slurry with patent claims of MRS 12, low sag and good processability

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JPE ̶ PE100 material having improved processability using advanced catalyst technology in multi-loop cascade process

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SCG Chemicals ̶ PE100+ pipe materials from careful control of Mitsui cascade slurry loop process with specific catalyst technology

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SCG Chemicals’ Latest Developments in High Performance Pipe

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Member of PE100+ association

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Specific catalyst technology and high degree of control of catalyst/process combination

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Claimed improvements in long term pressure resistance, slow crack growth, rapid crack propagation and good sagging resistance

Continued advancements of resin using Mitsui cascade slurry loop technology

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SCG Chemicals’ Latest Developments in High Performance Pipe (cont’d)

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Significant (10%) improvement in minimum required strength (MRS) claimed as measured by EXOVA external laboratory and in commercial offer of EL-LeneTM H112PC

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Claimed to be equivalent to PE112 with consequent potential reduction in pipe thickness and costs

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Claimed increase of 40% abrasion resistance

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PE High Performance Pipe – Future Developments •

Advancements in molecular architecture using combinations of catalyst and process to enhance resin properties for pipe

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PE125 and beyond…… Improved chemical resistance Further reductions in both materials (pipe thickness) and installation costs Product Needs and Opportunities  Increased pressure rating: PE125  Improved resistance to stress cracking at elevated temperatures  Improved chemical resistance

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Conclusions and Strategic Takeaways A detailed technical and commercial assessment of polyolefin (PO) catalysts, processes and resins over the 2015-2025 period reveals: • Polyolefin catalyst supply, process licensing and resin production will remain high-growth markets, well above GDP levels; advantages will be gained via differentiated (i.e., valueadded/specialty) offerings meeting newly-identified performance requirements. • Consolidation and rationalization in process licensing will increase the influence of the “majors” regarding access and pricing. • The linkage between catalyst and process remains critical, as it is the preferred route to identifying new end market/application needs.

The rewards for R&D investments in new technology continue to be recognized in the forms of premium pricing on products, preferred access to novel applications and higher rates of return on capital employed.

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Summary 

TCG/TCGR’s experience and network for providing support to the petrochemical, polymerization, chemical, and associated process industries is unmatched.

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Reference list of customers and testimonials are the leaders in this market space.

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Ability to connect technology developments to the market opportunity is a very strong and unique competence.

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Information and knowledge provided is focused on creating technology advantage as well as business development and growth opportunities for our clients.

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The Catalyst Group and The Catalyst Group Resources, together, continually innovate to provide the best service and create value for its customers – via new programs, new topical studies and individual project specific programs.

P.O. Box 680 P.O. Spring House, PAHouse, 19477 Tel: Tel: +1 (215) 628-4447  Fax: (215)628-2267  www.catalystgrp.com Box 680  Spring PA USA 19477USA (215) 628-4447  Fax: (215) +1 628-2267 www.catalystgrp.com

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Relevant TCG Clients

30+ years of Experience in Catalyst, Chemicals, & Materials….

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Additional Information and TCGR Contact Details… The Catalyst Group Consulting (TCG)

The Catalyst Group Resources (TCGR)

For more information, contact:

For more information, contact:

Clyde F. Payn Chief Executive Officer, TCG

John J. Murphy President, TCGR

[email protected] +1.215.628.4447

[email protected] +1.215.628.4447

P.O. Box 680 Spring House, PA 19477 U.S.A ph: +1.215.628.4447 fax: +1.215.628.2267 www.catalystgrp.com P.O. Box 680  Spring House, PA 19477 USA  Tel: +1 (215) 628-4447  Fax: +1 (215) 628-2267  www.catalystgrp.com

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