PET maker Wellman Inc. plans to add 300 million pounds of resin capacity in early 2006 by converting an idle polyester fiber line in Bienville, Miss.
The move is expected to coincide with continued increasing demand for PET in the North American market, according to Michael Bermish, investor relations officer for Shrewsbury, N.J.-based Wellman.
``The resin market is still growing at a healthy rate, and it will need new capacity going into 2006,'' Bermish said in an Aug. 10 telephone interview. ``The [PET] supply/demand balance is tight in 2004 and it will be tighter in 2005.''
Wellman officials expect North American PET demand to grow 8-9 percent this year, spurred by growth of 20 percent in the bottled-water sector.
``Water is being packaged in just about every size [bottle] possible, and we're even seeing growth in carbonated soft drinks, where suppliers are using 12-ounce, 14-ounce and even 11/2-liter sizes,'' Bermish said.
The 11/2-liter bottle, introduced by Coca-Cola Co., uses almost the same amount of PET as a standard 2-liter bottle because of its thicker walls and contoured shape, Bermish added.
Wellman's planned expansion via conversion ``is less expensive than building a greenfield or brownfield plant,'' Bermish said. The line has been idle since at least 2001 because of reduced fiber demand. Wellman officials were unsure how many jobs would be created by the project, which will increase Wellman's total annual PET capacity to about 1.6 billion pounds.
In the first half of 2004, Wellman's sales were up almost 9 percent vs. the year-ago period, to $623 million, but the firm lost about $30 million after showing a first-half profit of $6 million last year. Management cited higher raw material costs, financing expenses and higher tax rates as reasons for the first-half loss.
First-half sales in Wellman's Packaging Products Group, which includes PET, were up 6 percent to $352 million. The group was the largest of Wellman's two segments in the first half, generating about 57 percent of total sales.