PET resin prices on the rise
Christopher Reilly -- Purchasing, 7/5/2001 2:00:00 AM
Prices: will rise in 4Q
Current average price for PET resin is 64¢/lb, according to buyers responding to Purchasing CPI Edition's monthly survey of chemical transaction prices. Buyers say prices have been flat for the past few months after some upward price movement in late 2000 and early 2001. Current average is the highest PET has been since mid-1996 after a peak of 77¢/lb in 1995.
Business conditions have improved for PET producers in the past couple of years. Brian Gersh, resins market consultant at Cambridge-Mass.-based Arthur D. Little Consultants, agrees that the market price for PET bottle-grade resin is currently averaging in the mid-60s.
In the next few months, buyers expect to see some price increases with tightening supply caused by a summer demand surge for bottle-grade PET resin. Look for PET prices to rise another 2¢/lb by year-end in the U.S. By first quarter 2002, the going price is likely to average around 67¢/lb, according to buyers' data.
Demand: summer boost
Weak economic growth in the U.S. will not have as profound an effect in PET as it may in other markets. In fact, the PET market is set for a seasonal upswing in demand from the rising market for summer beverages.
PET producers saw prices and operating rates dip in the mid-1990s, but in the past couple of years demand and market conditions have improved, Gersh notes. "Demand for PET has been driven by the soft-drink market, which has seen double-digit annual demand growth in recent years," he says. Looking forward, Gersh estimates demand growth for PET at between 8% and 10% for this year.
Bottle-grade PET also continues to find new applications, such as beer bottles. Paul Virosco of IBM-ChemSystems admits the beer market is still a very small application for PET, but says the material is beginning to catch on in some areas. "Packaging beer in PET bottles can be a big advantage to glass, especially at sporting events," Virosco notes.
While overall PET demand and consumption growth may be slowing in the beverage market, Virosco says there are still pockets of growth such as smaller-sized drink bottles and food packaging. Other growing market segments for PET packaging include bottled water, juice and sports drinks.
Supply: tightening near term
PET production and consumption volumes were essentially flat in first quarter 2001 compared with the same period in 2000. This, most sources believe, is due to the general economic slowdown. But while buyers and analysts say there is material available in the marketplace, they expect supplies to tighten in the next few months. IBM-ChemSystems' Virosco says producer operating rates are running between 85% and 90%. "This is not incredibly tight, but it is reasonably so," he says.
In other supply news, some major PET resin players have announced capacity expansions. They include KoSa, based in Houston, Texas, which will add 800 million lb/yr of capacity to the global PET market by 2002. Expansions are under way at the company's facility in Offenbach, Germany, and at two other sites, which were not disclosed.
Also, Nan Ya brought its new 200,000 metric ton/yr facility located in Lake City, S.C., on-line earlier this quarter, Virosco notes.
Market: driven by beverages
Packaging applications represent the lion's share of the PET market, accounting for more than 80% of demand. Within this market segment, beverage packaging is considered to be the primary growth market. PET use has all but replaced use of PVC resins in beverage and food product packaging.
Other uses for PET resin include carpet fibers, audio and video media, magnetic tape, injection-molded motor vehicle components, and electric and electronic components. Together, these applications make up less than 15% of total consumption.
U.S. suppliers and annual capacities
| Supplier (Location) | Annual capacity (1,000 metric tons/yr) |
| Eastman Chemical Co. | |
| Columbia, S.C. | 472 |
| Kingsport, Tenn. | 229 |
| DuPont Corp. | |
| Cedar Creek, N.C. | 100 |
| KoSa | |
| Grier, S.C. | 110 |
| Spartanburg, S.C. | 130 |
| M&G | |
| Point Pleasant, WV | 324 |
| Nan Ya | |
| Lake City, S.C. | 400 |
| TiePet | |
| Ashboro, N.C. | 60 |
| Wellman | |
| Darlington, S.C. | 227 |
| Pearl River, Miss. | 227 |
| Total | 2.27 |
| billion metric tons | |
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