MARKET OVERVIEW – PERFORMANCE MATERIALS AND CHEMICALS Asia is the largest market for HDI and HDI derivatives. In Thailand, Vencorex is the first producer of HDI derivatives with a goal to support Vencorex global development and increase market shares. In 2021, the aliphatic diisocyanate business, which includes HDI and HDI derivatives, improved from 2020 as a result of the improving situation of the COVID-19 pandemic and macroeconomic recovery, causing the improving demand of HDI and HDI derivatives as well. Furthermore, the periodic scarcity of HDI and HDI derivatives occurred due to the production issues suffered by many producers and the global logistics disruptions, which resulted into an imbalanced supply/demand. In 2021, the acrylonitrile (AN) business saw a global demand of about 6.3 million tons, climbing 11.5% from 2019 as the recovering demand after the easing of the COVID-19 pandemic measures. In addition, the recovery of the automobile market and the demand for home appliances and office equipment for working at home continued to grow. As a result, AN demand continued to grow better than pre-pandemic. As for the supply side, the situation in 2021 was tight. Especially at the beginning of the year, the Polar Vortex phenomenon in the US caused many AN manufacturing plants to shut down temporarily. As a result, there were not enough products to meet the market demand. Although the situation in the second half of the year began to improve, including the increase of new production capacity in China but the crisis in which the prices of raw materials and energy were rising around the world, including the Dual Control Energy Policy in China, various industrial plants, including AN plants, especially in China, were unable to operate normally. At the end of the year, it was affected by the Dual Control Energy Policy, causing a slight supply recovery in the market. As a result of these factors, the AN price in 2021 averaged US$ 2,239 per ton, increasing US$ 1,068 per ton from 2020. In 2021, the methyl methacrylate (MMA) market saw a global demand of 3.8 million tons, a 9.6% increase from 2020. This was driven by the relaxation of COVID-19 control measures and the revival of the global economy, demand for MMA products recovered from the auto industry, construction activities, and decorative furniture started to resume more operations after the relaxation of controls. On the supply side, the MMA market was tight, especially in the United States with the Polar Vortex phenomenon at the beginning of the year, including the permanent closure of the Mitsubishi Chemical Methacrylates plant, with a production capacity of 155,000 tons per year, resulting in supply in North America and Europe continued to tighten through Q3, coupled with high MMA raw material prices pushing MMA prices globally and in Asia higher, despite the pressure from demand that tended to weaken after the new wave of COVID-19 outbreak in Southeast Asia. Furthermore on the supply side, China had an additional capacity of 100,000 tons per year and another 100,000 tons per year at the end of the year. The MMA price in 2021 was US$ 1,985 per ton, a climb of US$ 510 per ton compared to 2020. The propylene oxide (PO) market had been continuously supported by market prices in late 2020 from several factors, such as the floods in China, the US AntiDumping Mattress announcement on Chinese mattress exports, including the halt of production according to maintenance plans of many major manufacturers, etc. In addition to the beginning of 2021, the Polar Vortex phenomenon had resulted in the announcement of the halt of all PO plants in the United States, especially LyondellBasell, which was one of the largest PO producers in the world and also the third-largest PO exporter to China, or about 20% of total imports. China was the largest importer globally, including additional factors from the planned shutdown of many factories in China and Asia. As a result, the price of PO products increased by more than US$ 200 per ton to US$ 2,375 per ton in March. This was the highest price in 10 years and remained above US$ 2,000 per ton until May. However, due to the continuous increase in the supply of new production capacity totaling about 800,000 tons per year in China between Q2 and Q3, relatively high PO prices resulted in a bargain between buyers and sellers to the Chinese market. As a result, the price dropped to US$ 1,775 per ton in June. However, it could rise again from positive factors that added in the second half of the year, due to the announcement of the Dual Control Energy Policy that many factories in China had to reduce their production capacity, rising polypropylene prices, the postponement of Lyondell Basell’s exports from the US to China. In the fourth quarter, China’s new production capacity increased by 200,000 tons per year. This resulted in a weakening of PO product prices, but due to the positive factor from planned shutdowns in China at the capacity of 290,000 tons per year and in Southeast Asia at 490,000 tons per year, it did not have a big impact on the price. As 68 PTT GLOBAL CHEMICAL PUBLIC COMPANY LIMITED Form 56-1 One Report 2021
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