Polyamide Intermediates – World Market Overview

1 (Emma) Liu XiangSynthetic Fibres Raw Materials Committee Meeting at APIC 2015 Seoul, 8 May 2015 Polyamide Intermediates World Market Overview2,5003,0003,5004,0004,5005,0005, 5006,0006,5007,0007,50019841988199219962 00020042008201220162020 Source: Tecnon OrbiChem Forecast Growth paGrowth paCapability to produceAnnual CaprolactamConsumption1,000 Metric TonsIf no new plants2018-2020 APIC 2015 World CAPROLACTAM CAPABILITY versus DEMAND-20002004006008001,0001,200 BASFDSMUbeHoneywellCPDCC apro HongyeZhejiang JuhuaShandong LuxiHubei SanningFujian TianchenHebei XuyangShanxi LanhuaFujian LihengShanxi YangmeiHengyiSource.

2 Tecnon OrbiChemBalingFujianChinaChinaChina2011 Closures2013-2015 Additions 2012 Additions 2014 Additions 2015-2016 Additions 2013 Additions 2017 ShijiazhuangAPIC 2015 CAPROLACTAM CAPACITY 2011 20171,000 Metric Tons per Year05001,0001,5002,0002,5003,0002014202 0201420202014202020142020201420202014202 02014202020142020 Source: Tecnon OrbiChem1,000 Metric TonsTextile FilamentHigh Ten YarnBCF & StaplePA6 EngineeringResinNorth AmericaSouth AmericaWest EuropeEast EuropeME &AfricaS & SE AsiaNEAsiaChinaAPIC 2015 World Polyamide 6 DEMAND BY REGION-750-650-550-450-350-250-150-50501 502503504501,000 Metric TonsS & SE AsiaE EuropeW EuropeN AmericaS AmericaME & AfricaTaiwan & S KoreaChinaJapan2004201420052004200620072 008200920102011201220132014 estSource.

3 Tecnon OrbiChemAPIC 2015 World CAPROLACTAM REGIONAL NET TRADE 2004-2014-750-650-550-450-350-250-150-50 501502503504501,000 Metric TonsS & SE AsiaE EuropeW EuropeN AmericaS AmericaME & AfricaTaiwan & S KoreaChinaJapan2004201420052004200620072 008200920102011201220132014 estSource: Tecnon OrbiChemAPIC 2015 World CAPROLACTAM REGIONAL NET TRADE Post 2014 TrendsForecast Trend to 202005001,0001,5002,0002,5003,0003,5004, 000010 20 30 40 50 60 70 80 90 100 110 120 130 140 150 APIC 2015 ASIAN CAPROLACTAM IMPORT CONTRACT PRICE vs BRENT CRUDE OILS ource: Tecnon OrbiChemBrent Crude Oil $/bblAsian Caprolactam Import Contract $/ton1999-2008200920102011201220132014 Source: Tecnon OrbiChem05001,0001,5002,0002,5003,0003,5 00010 20 30 40 50 60 70 80 90 100 110 120 130 140 150 Brent Crude Oil $/bblAsian PTA + MEG $/ton1999-2008201020092011201220132014 APIC 2015 ASIAN PRICE + PRICEvs BRENT CRUDE OIL05001,0001,5002,0002,5003,0003,500010 20 30 40 50 60 70 80 90 100 110 120 130 140 1502015?

4 APIC 2015 ASIAN + PRICE TREND & CAPROLACTAM PRICE TREND vs BRENT CRUDE OILS ource: Tecnon OrbiChemBrent Crude Oil $/bblCaprolactamPTA + MEG$/ton05001,0001,5002,0002,5003,0003,5 00010 20 30 40 50 60 70 80 90 100 110 120 130 140 150 APIC 2015 AVERAGE PET RESIN AND PA6 POLYMER COSTSvs BRENT CRUDE OILS ource: Tecnon OrbiChemBrent Crude Oil $/bblPA6 PET2015?$/tonAsia Cotton Price (May-Dec 2014) 05001,0001,5002,0002,5003,0003,5004,0000 10 20 30 40 50 60 70 80 90 100 110 120 130 140 15005001,0001,5002,0002,5003,0003,5004,0 00010 20 30 40 50 60 70 80 90 100 110 120 130 140 150$/ton CaprolactamSource.

5 Tecnon OrbiChemAPIC 2015 DEPENDENCE OF CAPROLACTAM PRODUCTION COST ON CRUDE OIL PRICEC yclohexanePacking, loading shippingFixed costs of supplying plantsCats & ChemicalsFixed costs of caprolactam plantCost of Production in Asia Crude Oil Price $/bblDeliveryEnergy dependant costsEnergy related costs (steam, ammonia, etc.)12345678910111212345768910111212345 1098671112512346789101112200920102011201 205001,0001,5002,0002,5003,0003,5004,000 010 20 30 40 50 60 70 80 90 100 110 120 130 140 150$/ton CaprolactamSource: Tecnon OrbiChemAPIC 2015 DEPENDENCE OF CAPROLACTAM PRODUCTION COST CRUDE OIL PRICEC yclohexanePacking, loading shippingFixed costs of supplying plantsCats & ChemicalsFixed costs of caprolactam plantCost of Production in Asia Crude Oil Price $/bblDeliveryEnergy dependant costsEnergy related costs (steam, ammonia, etc.)

6 12345678920132014121110 World CapacityWorldTightnessUtilisation RateMarkets Tight (Sloppy) Source: Tecnon OrbiChemAPIC 2015 TIGHTNESS INDEXFor a given year: World Tightness Index = log10 CapabilityCapability - ConsumptionCapability = Annual Nameplate Capacity less Capacity off line** Due to unscheduled stoppages, not scheduled maintenance turnaroundsSource: Tecnon OrbiChemAPIC 2015 TIGHTNESS IndexBrent Crude Oil Price $/bblVERYTIGHTTIGHTBALANCEDOVER-SUPPLIED (SLOPPY)LOOSEH2 2009H1 2010H2 2010H1 2011H2 2011H1 2012H2 201220132014 Source: Tecnon OrbiChemAPIC 2015 CAPROLACTAM PRICE HISTORY - IndexBrent Crude Oil Price $/bblVERY TIGHTTIGHTBALANCEDOVER SUPPLIED(SLOPPY)LOOSES ource: Tecnon OrbiChemNovember 2014 APIC 2015 CAPROLACTAM PRICE SCENARIOS ASIA NOV 2014 Butadiene Adiponitrile HMDA Acrylonitrile HCN by-product HCN Andrussov Electro Hydro DimerisationH2 HydrocyanationAlternatives+Adipic acid AH Salt PA66 Source.

7 Tecnon OrbiChemAPIC 2015 THE PA66 SUPPLY CHAINI nvista ,240/1,495 ktpaTechnology20141,495 ktpa20192009 HydrocyanationAcrylonitrile EHD1,895 ktpaSource: Tecnon OrbiChemAPIC 2015 GLOBAL ADIPONITRILE CAPACITY8009001,0001,1001,2001,3001,4001 ,5001,6001,7001,8001,9002,00019952000200 52010201520201,000 Metric TonsNo new plants2015-2018 Annual AdiponitrileConsumptionForecastGrowth to produce= 95% capacityBASF closes 116 ktpaat Wilton, UKGrowth s 254 ktpa unit atOrange, USA out of actionSource: Tecnon OrbiChemAPIC 2015 World ADIPONITRILE CAPABILITY vs DEMANDAPIC 2015 World ADIPIC ACID CAPABILITY vs DEMAND1,5002,0002,5003,0003,5004,0004,50 01995199920032007201120152019 Adipic Acid ConsumptionForecastGrowth to ProduceInvista closes 450 ktpaat Wilton & Maitland, rebuilds OrangeGrowth ,000 Metric TonsSource: Tecnon OrbiChem05001,0001,5002,0002,5003,0003,5 002000 2002 2004 2006 2008 2010 2012 2014 2016 2018 20201,000 Metric TonsTextile Fibre Bulked CarpetHigh Ten YarnStaplePA66 2012.

8 Tecnon OrbiChemAPIC 2015 World Polyamide 66 CONSUMPTION BY END-USE1,000 Metric Tons2006-2014 Growth 8%ForecastGrowth 9%Source: Tecnon OrbiChemAPIC 2015 CHINA Polyamide 66 SUPPLY & DEMAND0100200300400500600700800200620082 010201220142016PA66 Capacity PA66 Net ImportPA66 ProductionHigh Tenacity Filament28%Airbag5%Staple4%Cable Tie8%Engineering Plastics52%Textile Filament3%End-Use DemandShenma43%Guorui2%Huafon6%Huayang2% Invista16%Ascend5%Rhodia4%DuPont8%Asahi/ Toray4%Radici1%Nilit4%Others4%Supply by ProducerConsumption 562,000 TonsSupply 580,000 TonsSource: Tecnon OrbiChem & China CustomsAPIC 2015 CHINA Polyamide 66 DEMAND & SUPPLY 2014 APIC 2015 CONCLUSIONS Most of the World growth for caprolactam will take place in China, due to: Dominance in World production of PA6 textile filament Displacement of imports of caprolactam and PA6 polymer Massive caprolactam capacity additions in China have createdovercapacity and have reduced cash margins to zero or negative.

9 The expansion enthusiasm slow down this year due to poor margins. Some plants have been forced to close in high energy cost regions, more may follow The fall in crude oil prices will improve the competitivity of Polyamide versus polyesterSource: Tecnon OrbiChem Steady growth on the global Polyamide 66 demand, but stronger growth is expected to occur in China. With Shandong Runxing new ADN plant and Invista s new HMDA plant to come on stream in China, Increased availability of raw material would help the development of Polyamide 66 industry in China. New Polyamide 66 Polyamide capacity has been announced by Huafon Group (40 ktpa mid-2015), Invista (100 ktpa, early 2016), Henan Shenma (40ktpa, 2016).

10 Besides existing Polyamide 66 polymer players, some adipic acid producers also showed interest of investing Polyamide 66 polymer plant to absorb over-supplied adipic acid : Tecnon OrbiChemAPIC source of expert chemical industry knowledg