DAK Americas Inc. has 450 million reasons to hope that the PET resin market continues to grow.
That's the number of pounds of capacity that Charlotte, N.C.-based DAK will add by the end of the year in Wilmington, N.C.
The 100,000-square-foot expansion will create 40 jobs and lift total annual capacity to more than 1.1 billion pounds. The $60 million project is expected to boost DAK's annual sales by $200 million.
DAK, a unit of conglomerate Alfa SA de CV of San Pedro Garza García, Mexico, is back-integrated into purified terephthalic acid feedstock at the site, which already is used for fiber production.
Combined with projects from three other PET makers, the North American market will see about 1.2 billion pounds of new capacity by mid-2007. And although some market watchers are expecting the new capacity to lead to a resin glut and softer pricing, DAK business director Tom Sherlock expects strong growth in bottled water and related markets to absorb the new capacity quickly.
``Bottled water is still growing at double-digit rates,'' Sherlock said at NPE, held June 19-23 in Chicago. ``It's still the fastest-growing segment in terms of sheer volume.''
DAK projects that the North American bottled-water segment will increase its PET consumption by 750 million pounds between 2005 and 2008. Even with a growth rate of only 2 percent, the market-dominating carbonated soft drink sector could add 200 million pounds of resin use in that same period. Industry experts also anticipate that as much as 450 million pounds of older resin capacity could be taken down during that time frame as well.
``By the first quarter of 2008, [the North American PET market] could be fairly balanced again,'' said Sherlock, adding that DAK expects North American demand growth to average 7½-8 percent for the next five years.
For its part, DAK is working to commercialize its Laser Plus-brand PET. The materials first were brought to market earlier this year and are being made at DAK's Fayetteville, N.C., plant. Manufacturing of the specialty product may be added in Charleston, S.C., in 2007 as well.
Laser Plus offers improved ultraviolet-light protection and can prevent color change and vitamin degradation for containers in the personal-care and beverage market, Sherlock said.
PET is making inroads vs. polystyrene in the clamshell container market, according to Sherlock, because of higher PS prices and excess volatile organic compounds in PS. PET also is displacing PS in some single-serve salad and fruit containers, he said.
Increased interest in recycling and sustainable packaging also has been a boon to PET, which is being used to make smaller containers with more elaborate designs.
In Wilmington, DAK's new plant will use the firm's proprietary Melt-Tek technology, which eliminates the need for solid-stating in the PET process.