By: Frank Esposito
April 18, 2013
HOUSTON — M&G Group plans to direct material from the massive PET plant it plans to build in Texas not only at domestic market growth, but at taking back domestic PET processing from foreign suppliers.
In a recent interview in Houston, M&G North American commercial director Mark Adlam said that the 2.2 billion pound-per-year capacity PET plant that M&G has slated for Corpus Christi, Texas, should be up and running in 2016.
"We're in the permitting phase now," Adlam said of the project, which also will include 2.6 billion pounds of purified terephthalic acid (PTA) feedstock. "That location has the advantage of a deep-sea port and having access to three railroads instead of just one, like most sites in the U.S."
The new site should create about 200 full-time jobs and an additional 700 indirect positions. Up to 3,000 construction jobs also will be needed for the project. Physical work is to be under way by the end of the year, Adlam added, and, once started, construction should be complete in 30 months. Company officials previously have said the plant would be the world's largest integrated PET plant.
Finding a home for all of that new PET resin — as well as new capacities announced in North America by Indorama Polymers and Selenis Canada — will lead M&G to take aim at PET imported into North America from outside the region. Imports currently account for 15-20 percent of the roughly 8.5 billion pounds of PET consumed in North America each year.
M&G — a unit of business conglomerate Gruppo Mossi & Ghisolfi of Tortona, Italy — took a big step regarding the plant's output on April 16 when it announced it had sold rights to almost 900 million pounds of the plant's PET capacity to Mexican petrochemical leader Alpek SAB de CV for $350 million. M&G also will license Integrex-brand PTA production technology from Alpek. In a news release, M&G CEO Marco Ghisolfi said that his firm "will be the first to scale up Integrex PTA technology to this level."
Outside of North America, M&G hopes to export some of the new plant's output to locations such as Europe and South America.
"We're in a relatively flat [domestic] market, so the principal idea of the investment is to lower the cost to be globally competitive, so [processors] can make the choice of a domestic supplier," Adlam said.
Taking back import business will help to compensate for a domestic market that was flat or up no more than 2 percent in 2012, according to Adlam. Similar growth is expected for 2013, he added.
"I think high [gasoline] prices are affecting consumer spending," Adlam said. "People are still feeling the effects of the recession."
The carbonated soft drinks market — which accounts for about half of North American PET demand — is "flat to slightly negative," he added, due in part to negative press about the health effects of soft drinks. The bottled water market is growing, but not at the rate of previous years.
The trend toward smaller-sized bottles actually is helping PET demand, according to Adlam, since the thicker bottles use more PET. Outside of beverages, Adlam said that sales of PET into carpet applications are growing, as are sales into the food sector, which he said is growing faster than carbonated soft drinks.
Light-weighting — a trend that also reduced North American PET growth in recent years — has just about run its course, according to Adlam. A typical water bottle now uses only about 9 grams of PET. Five years ago, that same bottle would have used 11 or 12 grams, he said.
Virgin grades of PET are seeing some competition from recycled PET, but Adlam said trends toward recycling "go in waves."
"Twenty years ago [recycling] was in vogue and it's in vogue now," he said. "People are using more recycled content, but that may not be here forever."
Another strategic option that M&G will take is to increase the use of barrier and other specialty PET grades at its plant in Apple Grove, W. Va. Other grades will continue to be made at its PET plant in Altamira, Mexico.
Work on bio-glycol grades of PET also will continue in Apple Grove, Adlam said. The material — which uses non-food sources for PET's monoethylene glycol feedstock — has been developed at M&G's North American research lab in Sharon Center, Ohio. The product is still being tested, Adlam said, and should be commercially available within the next three years.
And even though Adlam said he considers current North American PET supply to be balanced, he admits the new capacity will cause the market to become oversupplied until it absorbs the new material. Taking back import business, however, also will help improve the regional industry's operating rates.
Consolidations of recent years have left North America with only a handful of PET makers. Adlam said he doesn't expect any more consolidation on their ranks, but he added there's a need for some individual resin plants to consolidate.
"There have been very few [PET resin] plant closures," he said. "No one's really shut anything down."