Driven by technology, North America's PET makers are set to bombard the market with almost 4 billion pounds of new capacity in 2008 and 2009.
That's not even counting 2 billion pounds that was added in 2007. The new capacity - made at newer, more efficient plants using proprietary technology - is likely to result in the closing of older plants, although no major announcements have been made.
This touchy topic was tackled at the Packaging Conference, held Feb. 4-6 in Las Vegas.
``If you want to stay in the game, you better be involved in technology,'' said Delane Richardson, research and development director with M&G Group, an Italian PET giant with U.S. headquarters in Houston. ``What was good and new 10 years ago is ready to be scrapped today.''
M&G's part in the increase includes the planned opening of a 1.8 billion-pound-capacity plant at an undisclosed North American location. The new plant will use the same EasyUp technology that M&G has installed at major plants in Altam¡ra, Mexico, and Suape, Brazil.
EasyUp allows solid stating of PET resin in very large incremental units, while producing better-quality resin and creating low levels of dust, Richardson said. The system's horizontal reactor configuration also reduces costs.
Richardson added that the new M&G site will be operational by the end of 2009. The firm also will add almost 450 million pounds of new capacity via debottleneckings in North America through the end of 2008.
``The challenge has been to increase capacity and lower the manufacturing cost of PET,'' she said. ``New technology from M&G and other producers will allow us to compete with the low overall cost of Chinese plants.''
Another active North American player is Bangkok, Thailand-based Indorama Polymers Public Co. Ltd. The plastics and fibers firm operates a 495 million-pound-capacity plant in Asheboro, N.C., and plans to open a massive 1.5 billion-pound-capacity plant in Decatur, Ala., in early 2009.
The Decatur plant is expected to employ 100 and will incorporate Melt-To-Resin technology licensed from Uhde Inventa-Fischer GmbH of Berlin. MTR eliminates solid-stating in the PET process and reduces energy, operating and maintenance costs while increasing raw-material yields and product quality, officials said.
Indorama expects North American PET demand to continue to grow at a 5-6 percent annual rate, slightly less than the 8 percent rate that the firm sees globally, according to D.K. Agarwal, the firm's chief operating officer and chief financial officer.
``PET is still a very fragmented industry because of its low barrier to entry,'' he said. ``Resin prices are at record highs, but we're seeing low margins.
``Low utilization rates worldwide are going to lead to a lot of rationalizations and shutdowns in the next few years,'' Agarwal said.
The trend toward lightweighting of bottles is expected to continue in North America during 2008, Agarwal added. Recycling requirements also are expected to reduce demand for virgin resin. Chinese imports of PET into the U.S. also should ease in 2008 as China's own domestic demand for the resin increases, he said.
But Indorama plans to continue to import PET into the U.S. from other Asian locations. The firm operates PET stocking warehouses in Oakland and Ontario, Calif.; and Tacoma, Wash., and ranks as the largest importer of Asian resin into the United States, according to Agarwal.
He added Indorama has no plans to make PET preforms in North America, as it does in Asia.
Indorama's recent march to becoming a global PET player has included the purchase of Eastman Chemical Co. plants in England and the Netherlands and the opening of a plant in Lithuania with 495 million pounds of capacity, which Agarwal said ranks as Europe's largest PET plant.
With this pace of activity, DAK Americas LLC must feel like a slowpoke, since most of its activity occurred way back in 2007. That's when the Charlotte, N.C.-based company added almost 1 billion pounds of PET capacity in Cape Fear, N.C., and bought Eastman plants in Mexico and Argentina.
``We're poised to serve both North and South America,'' senior commercial director Tom Sherlock said. ``Investing in North America is consistent with our strategy across the Western Hemisphere.''
DAK - with $1 billion in annual sales and more than 900 employees - is the only fully integrated PET maker in the North American Free Trade Agreement region, according to Sherlock. The new capacity in Cape Fear uses DAK's Melt-Tek-brand technology to make Laser-Plus-brand resin.
Laser-Plus eliminates some energy costs and offers improved preform processability and reduced conversion costs, according to DAK research and development director Pete Kezios. The material has been approved for Coca-Cola and PepsiCo products and is running on 50 injection lines at 10 customer locations.
``It's an easy drop-in replacement for various resins,'' he said of Laser-Plus. ``There's no change in bottle physical performance. And it's easier to melt, with improved injection molding cycle times.
``It's basically the same resin formulation - the essential ingredients remain the same. And there are no changes in material handling or screw design.''
Much of that activity has taken place amid the backdrop of Kingsport, Tenn.-based Eastman opting to become a regional player in PET while jettisoning less profitable operations outside of North America. The firm has sold off five international plants, but recently announced a 50 percent capacity increase at a 770 million-pound-capacity plant in Columbia, S.C.
That plant opened in 2006 and uses the firm's Integrex-brand technology, which can reduce PET production costs by more than 15 percent, according to company officials. Eastman also recently has emphasized more specialized resins such as Tritan-brand and Spectar-brand copolyesters.