HOUSTON — Analyzing the PET game is all a matter of perspective and context.
For example, single-serve juice and hot-fill tea applications are expected to grow more than 40 percent in the U.S. and Canadian market in 2001, according to market leader Eastman Chemical Co.
Unfortunately, juice and tea combined account for only 12 percent of the U.S. and Canadian market. Carbonated soft drinks, which hold a 46 percent market share, are expected to advance only 2-3 percent, although even that level would be an improvement over the relatively flat growth of 2000.
U.S. and Canadian growth is pegged at 6-7 percent for 2001, according to Eastman research analyst Dewey Johnson. Again, perspective plays a role, since 6-7 percent is down from the solid double-digit growth the PET market enjoyed for much of the past decade.
Eastman recently revised its global forecast and now expects 2001 and 2002 to be peak years for global capacity use. Tightening in the global supply-and-demand picture led Eastman to revise its earlier prediction of a 2002-03 peak.
"It's a snug global market right now, but I'd hesitate to call it tight," Johnson said at the World Petrochemical Conference in Houston, hosted by Chemical Market Associates Inc. "We've seen a number of [PET processors] seek material in the first quarter and find that it's not readily abundant."
North America is moving toward having balanced supply and demand but could be more snug in 2002 as capacity additions from Nan Ya Plastics Corp. USA and M&G Group are absorbed. Nan Ya is adding about 440 million pounds of capacity in Lake City, S.C., while M&G will add about 100 million pounds through a debottlenecking in Point Pleasant, W.Va.
PET manufacturers still will need to work to manage their production and capacity, some of which was brought on in anticipation of a big payoff in the beer-bottle market, which could double PET demand, DeWitt & Co. Inc. analyst Edgar Acosta said at his company's World Petrochemical Review in Houston. It is unclear when that might happen, however.
"From a cost standpoint, [PET] resin can only be profitable if producers continue to restrain production," he said. "This discipline wouldn't be necessary if we had another launch of a major application."
Globally, Acosta anticipates PET operating rates passing 85 percent by 2005.
In the near term, CMAI expects 2001 U.S. operating rates to be at 87 percent, climbing to 89 percent in 2002.
At Eastman, work continues on the company's planned split into two companies by 2002. One of those firms will concentrate on the commodity PET business.
"We can create growth by having a clear focus on the commodity business," Eastman's Johnson said. "In the past, capacity decisions were viewed in terms of a specialties business, where the volumes are lower. Now we'll be able to address points of pain in the commodity chain that we haven't addressed."