The North American PET market hopes to ride a wave of bottled water to big demand gains in 2003.
``The amount of bottled water growth we could see in the U.S. is staggering,'' said Guido Ghisolfi, vice president of operations and technology for PET maker M&G Group of Tortona, Italy.
``You see [bottled water] in vending machines alongside carbonated drinks, and bottled water is usually the one that's sold out,'' he added. ``Kids are going to school and taking bottled water in their backpacks. It's an exploding market.''
One U.S. bottled water supplier that Ghisolfi declined to identify has increased its PET bottle consumption from 400 million in 1999 to 3 billion this year. The market also has been helped by concerns about drinking water quality in large American cities, Ghisolfi said in an interview at the DeWitt Petrochemical Review, held March 26-27 in Houston.
Chase Willett, a consultant with Chemical Market Associates Inc. of Houston, predicts the bottled water market will post annual growth of 15-20 percent for the next several years. Based on per-capita consumption in the more-developed European bottled water market, there's potential for the U.S. market to triple, Willett said at his firm's World Petrochemical Conference, also held March 26-27 in Houston.
Overall, the U.S. PET market should see annual growth averaging 8 percent from 2003-07, meaning there's a need for about 730 million pounds of new capacity each year, Willett added. Short-term demand growth should be covered this year by additions of about 900 million pounds from M&G, Wellman Inc. and DAK Americas. Converting unprofitable PET fiber lines over to resin production also could provide a stream of new material.
Included in the 2003 expansions are 600 million pounds from a new M&G plant in Altamíra, Mexico. Ghisolfi said the plant will have PET commercially available this month and should be running at full capacity by the third or fourth quarter.
Strong pricing pressures could remain on PET from tightness in supplies of key raw materials paraxylene, purified terephthalic acid and ethylene glycol, according to CMAI's Willett. North American prices already are up an average of 5 cents per pound in 2003, with producers seeing some success with a second such increase as well.
Imported resin could become a larger issue in North America, according to Willett, since integrated Asian PET makers now can deliver their material to East Coast ports for about $700 per ton - a figure that's $100 less than the distribution cost of a nonintegrated North American PET maker. Integrated North American PET makers still hold an advantage of about $100 per ton over their Asian counterparts.
On the market side, Ghisolfi said improved resin technology is creating more opportunities for PET in juices and vitamin-enhanced water.
M&G launched new grades in February with improved oxygen barrier performance in an attempt to gain market share in those areas.