PET giant Eastman Chemical Co. plans to get bigger, unveiling plans for the firm's largest-ever PET plant in Columbia, S.C.
Construction on the plant, which will have annual capacity of 770 million pounds, will begin in January. The plant is set to open in late 2006. Officials with Kingsport, Tenn.-based Eastman made the announcement at a Sept. 2 news conference in New York.
Chairman and Chief Executive Officer Brian Ferguson said the announcement shows that Eastman is ``absolutely committed'' to the PET business, and has ``the ability to reach reinvestment economics in a changing world.''
The plant will cost more than $100 million to build and will use IntegRex technology, a new production process also unveiled Sept. 2. The technology eliminates solid-stating from PET production, which reduces the levels of energy, labor, and equipment needed to make PET, according to Greg Nelson, vice president of technology for Eastman's Voridian division.
Eastman claims IntegRex can reduce the cost of making PET by more than 15 percent.
The technology was developed over the last 21/2 years, in a process that began with a meeting of 40 Eastman scientists from across the globe.
Nelson said: ``We got in a room and said, `Is this the best PET can ever be?' If we started with a white sheet of paper, what can we do?''
The eventual answer was IntegRex, a process that will allow Eastman to build PET plants that take up half the space of standard plants but can produce twice as much resin. The new plant's capacity will be almost double that of Eastman's current largest plant, a 400 million-pound unit in Rotterdam, the Netherlands.
Overall PET production in Columbia currently is about 1.1 billion pounds, but the site incorporates two production units. The new plant will operate on a single line.
This marks the first time since 1988 that Eastman will build a new PET plant in the United States. Between 1996 and 1998, the firm opened plants in Mexico, Spain, Argentina and the Netherlands.
Until the plant opens, customers will be able to sample product from a 15 million-pound-per-year pilot plant in Kingsport. Officials said PET produced via IntegRex processes and performs just like any of Eastman's standard PET products.
``We've made real bottles on commercial-scale machines with IntegRex,'' Ferguson said.
Although few details of the new technology were provided, officials said IntegRex resulted in part from a rethinking of the PET process, which for years had the production of polyester fiber as its end goal. Eastman exited polyester fiber production in the 1980s, and a good portion of that market has moved to Asia.
``We started out making polyester fiber, then stopped and solid-stated it into PET resin,'' said Allan Rothwell, Eastman's executive vice president who serves as president of Voridian. ``But if we have nothing to convert [into fiber], why are we still focused on solid-stating?''
Eastman officials said the plant is needed to meet PET demand that is growing 6-8 percent annually in North America. Growth in the mammoth carbonated soft drink market is around 3 percent a year, but bottled-water growth is at 15 percent and is expected to continue at a similar level, Rothwell said.
Rothwell added that at its current growth rate, the North American PET market will need more than 500 million pounds of new capacity each year between 2003 and 2010.
``This is a commitment to supply from the leader in the industry,'' added T.J. Stevens, vice president of Voridian's polymers group.
Eastman has no plans to retrofit the new technology onto its older plants. Officials said retrofitting could be done on paraxylene feedstock units, but is more difficult to do on the PET-making side.
The lower energy needs of the new process also will provide relief from high costs for both energy and for crude oil-based feedstocks. Cost spikes in these areas have prompted Eastman and other PET makers to raise resin prices an average of 12 cents per pound so far in 2004.
The new plant and the adoption of IntegRex technology will allow Eastman to shift some existing capacity in Columbia to production of copolyester resins, which can compete with PVC, ABS and polystyrene in markets for calendered products, such as those used in building and construction, Ferguson said.
The plant is expected to create 50 permanent new jobs and between 800 and 1,000 contracting jobs during the two-year construction period.
Eastman ranks as North America's largest PET maker with a market share of about 30 percent. Globally, the firm also ranks first in PET production.
Eastman posted sales of almost $3.3 billion in the first half of 2004. The firm's polymers business - consisting mainly of PET - was the largest of its five segments in the first half, bringing in more than 30 percent of total sales.