PHOENIX (Feb. 12, 10:40 a.m. EST) — The North American PET market can expect short-term pricing pressure, due in part to tightness in PET feedstocks ethylene glycol and paraxylene.
Ethylene glycol is likely to be tight this year and into 2004, while paraxylene tightness could continue into 2005, as that product recovers from a four-year trough, according to Chase Willett, director of polyester and polyester raw materials for Chemical Market Associates Inc., a consulting firm in Houston.
The near-term result has been a 5 cent-per-pound increase in average selling prices for North American PET. Another 5 cent hike is on the table for March 1.
Looking ahead, Willett said annual growth of PET demand in the Americas should equal 7 percent from 2002-07, a drop from the 11 percent annual growth rate it enjoyed from 1997-2002.
Excess capacity also could be a big market factor through 2005. Almost 1.5 billion new pounds is slated for North America in that period, Willett said, with another 1.8 billion pounds available from potential conversions of PET fiber lines.
Asian material also is entering North America in greater volumes. Asian PET imports totaled 440 million pounds in 2002, a jump of almost 43 percent from the previous year. Although that number is rising, logistics costs are inhibiting the wholesale move of Asian material into North America, Willett added.
“You could shut down [PET production in] North America and supply the region with the excess from Asia,” he said at the Plastics News Executive Forum in Phoenix.
In the end-use arena, the massive carbonated soft drink (CSD) market continues to dominate, even though annual growth has slipped to 2-3 percent.
“The problem in North America is finding the next big application,” he said. “Bottled water came along just as CSD was slowing down. Beer has potential, but it's not the same dynamic as CSD.”