HOUSTON - Shirts and bottles are driving up costs for PET. Although healthy demand from the packaging and textile industries pushed PET prices up in the past 15 months, prices for competing materials - glass and aluminum in packaging applications and cotton in textile applications - rose more sharply, helping PET to retain its competitive position.
``PET is the fastest-growing commodity plastics in the world, at 17 percent per year between 1989 and 1993,'' said Mary Blackburn, an industry analyst with CMAI, a Houston-based consulting firm.
Blackburn spoke March 23 at her company's 1995 World Petrochemicals Conference.
Teresa Acosta, group vice president for Dewitt & Co. of Houston, said demand for PET resins grew 18.3 percent in 1994. Acosta spoke March 22 at Dewitt's annual Petrochemical Review, also in Houston.
More than other resins that are used for both packaging and textile applications, prices for PET packaging resins are tied closely to the prices and demand for polyester fiber, primarily because of the demands both applications place on feedstocks.
In the past two years, cotton crop yields have been low, causing textile makers to increase their demand for polyester fibers. That, in turn, placed pressure on feedstocks, driving up prices for both polyester fibers and PET resins.
Demand for polyester fibers and PET bottles is expected to cause an 8 percent increase in demand for terephthalic acid - the primary feedstock used to make PET and polyester fiber - each year from 1994-2000.
In a market study - ``1995 World Xylenes/Terephthalate Strategic Review'' - Blackburn points out that prices for terephthalic acid and paraxylenes, the precursor chemical used to make terephthalic acid, are at historically high levels. Nominations for paraxylene for the second quarter of 1995 showed the highest incremental increases in history, she said. Prices were nominated at 36-391/2 cents per pound, a 61/2-10 cent increase over first-quarter prices.
It has only been since January, Blackburn said, that prices for the feedstock materials used to make PET resins have been high enough for producers to reinvest in their facilities and add more capacity.
Despite increases in production capacities for PET worldwide, Blackburn and Acosta said they expect supplies to remain tight and prices to remain high for the next five years because of limited feedstock availability and increased resin demand.
Even with a 21 percent increase in the prices for PET in the past 15 months, Blackburn said, other materials have not made a dent in PET's competitive position.
``The tremendous increase in aluminum prices during 1994 boosted PET,'' Blackburn said. ``The increase is equivalent to around 50 cents per case of soft drink cans, when an increase of 2 cents per case has been considered high in the past. PET now has an advantage on a cost-per-fluid-ounce basis when comparing 16- and 20-ounce bottles to 12-ounce aluminum cans.''
She noted that 60 percent of the U.S. demand for PET today is for soft drink bottles.
``Even if PET prices continue to climb, it would be difficult to switch back to glass because much of the necessary glass infrastructure has been eliminated,'' Blackburn said.
Also, Blackburn noted that price increases for PET have not been high enough to overcome the costs of converting existing production lines to PVC or high density polyethylene.