SµO PAULO, BRAZIL—Rhodia-Ster SA has put on hold plans to build a 198 million-pound-per-year PET resin plant in Argentina by 1998.
``At this moment, PET margins are not profitable,'' said Valter Faria, the SÃo Paulo-based company's investor relations manager. ``We'll continue working on areas that don't require major expenditures.''
Rhodia-Ster's annual report, released Jan. 29, showed a loss of about $62.8 million last year.
Faria denied recent rumors that Rhodia-Ster is interested in selling its packaging unit, Braspet, although its results also were negative last year.
Rhodia-Ster is 68 percent controlled by Rhodia SA, the Brazilian subsidiary of Rhone-Poulenc Group. Rhodia-Ster officials claim the firm is the 16th-largest PET supplier in the world, and the largest in Brazil, with a production capacity now at 390 million pounds per year.
The company also produces PET rigid packaging, polyester films, polyester fibers, acrylic fibers, nonwoven polyester and recycled PET.
Although Rhodia-Ster sold 13 percent more resin in 1996 than 1995, its sales dropped 14 percent, to $368.7 million, as a result of falling prices, particularly in the packaging sector. Including PET resin, bottles and films, this niche represented 53 percent of Rhodia-Ster's sales last year.
The company was, in part,
the victim of poor timing. Sales were off in the first quarter, when PET prices where high, because customers were carrying high inventory levels from the end of 1995.
``At that time, PET resin was rare and clients even imported preforms, expecting a good summer season. Summer wasn't that hot and sales growth was not as expected,'' Faria said.
Global PET prices since have dropped as numerous suppliers brought capacity online.