PET should continue its solid growth in 2002, but growth rates may be lower than in the past and more bottle-grade resin could be on the way as producers convert unprofitable fiber-grade operations.
A pair of executives with PET maker KoSa of Houston, as well as industry analyst Edgar Acosta of Houston's DeWitt & Co. Inc, consulting firm, addressed those topics at petrochemical conferences March 20-21 in Houston.
Growth of 6-8 percent seen in 2001 could be exceeded in 2002 as the global PET industry moves toward an average of 9.5 percent annual growth from 2001-05, according to KoSa strategic planning manager Todd Murray. In North America, the 2001-05 growth rate is pegged at about 8 percent annually.
The double-digit growth the North American PET market had enjoyed may be in the past as the industry becomes increasingly global, Murray said at the Chemical Market Associates Inc. World Petrochemical Conference.
Carbonated soft drinks look to remain the largest single PET end use in North America, but growth in water and juice markets has been impressive, said Tom Brekovsky, KoSa's U.S./Canadian business director for packaging resins. North American PET operating rates are expected to top 90 percent this year.
Pricing continued its up-and-down tilt in 2001, with producers winning increases in the summer months as beverage consumption climbed, only to give the increases back later in the year as temperatures dropped. Producers currently are working to raise prices by 5 cents per pound effective April 1.
No major new North American PET capacity is expected until M&G Group opens a 600 million-pound-per-year plant in Mexico in 2003. However, the total market could add about 300 million pounds of bottle-grade capacity this year through fiber-grade conversions by KoSa and others.
Such conversions are attractive because of the depressed state of the fiber market and because they allow producers to add bottle-grade capacity at only 15 percent of what a green-field expansion would cost, Acosta said at his firm's World Petrochemical Review.
Fiber-grade conversion ``turns nonproductive assets into margin producers,'' Acosta said, adding that about 550 million pounds of fiber-grade was converted to bottle-grade in the Chinese market last year.
China is expected to play an even larger role in the global PET game as it opens up to more outside economic opportunities. Acosta estimates that China's PET consumption will climb from 1.1 billion pounds in 2000 to more than 2.7 billion pounds by 2005. In that same period, China will move from importing 2.6 billion pounds of PET to exporting about 1.8 billion pounds of the material.
Recent decisions by Coca-Cola Co. and Pepsi-Cola Co. to include 10 percent recycled content in their bottles by 2005 also will have an impact on PET producers and processors. Murray said the big challenge facing the industry will be finding enough recycled material to meet those goals.
``The problem still is collection,'' he said. ``Is there enough, and are the economics in place [for bottle collection]?
``The [U.S.] infrastructure is nowhere near what you see in places like Germany. It comes down to the mind-set of society and even to things like the location of [recycling] bins.''
Murray said a lot of recycled PET currently makes its way into the carpet business, where applications are more developed.