By: Frank Esposito
August 15, 2013
North American PET bottle resin prices took a 1-cent dip in July, in a move that surprised some buyers and market watchers.
The 1-cent decline follows a 7-cent decline that covered March and April. The 1-cent move came as a bit of a surprise since it came in a summer month when beverage bottle demand normally is higher because of warmer temperatures. Earlier in 2013, colder-than-normal spring weather in parts of the United States drove down beverage consumption.
Regional bottle resin prices now are down a net of 6 cents so far in 2013. That works out to a drop of about 6 percent, based on prices shown on the Plastics News resin pricing chart.
Ongoing lightweighting of PET carbonated soft drink and water bottles also is affecting North American resin demand. Market analyst John Maddox said that the July price move — and most future PET price moves — are likely to be chalked up to feedstock issues, since regional resin demand growth should only be in the low single-digits.
Paraxylene feedstock prices were down, and prices for ethylene glycol feedstock were soft as well, according to Maddox, president of the SBA-CCI Inc. consulting firm in Jacksonville, Fla. Total U.S. PET growth for 2013 should check in at 2-3 percent, he said.
Most of that growth, however, will come from the film, sheet and fiber sectors, Maddox added, as growth in rigid packaging, including bottles, might be only one percent.
The major capacity news hitting the North American PET sector in the first half of 2013 was DAK America's mid-June announcement that the firm would close its plant in Wilmington, N.C. by September. The plant — known as the Cape Fear plant — employs 600 and has annual PET capacity of 440 million pounds.
"Cape Fear was a high-cost plant, according to DAK, so it was one of the plants we thought would be shut down first," Maddox said. "And there could be others in the region closing."
Market watchers had been saying for a while that closing down older capacity was needed to alleviate North American oversupply, which was estimated at 2 billion pounds. The move by Charlotte, N.C.-based DAK will help in that regard, but at the same time M&G Group and other suppliers have announced major capacity expansions elsewhere in the region.
Earlier this year, DAK's parent firm — Alpex SAB de CV of Monterrey, Mexico — bought the rights to 900 million pounds of new PET capacity at a plant that M&G will open in Corpus Christi, Texas, in 2016.