Global markets for paraxylene feedstock have relaxed, sending average North American selling prices for PET bottle resin down 2 cents per pound since Oct. 1.
The decrease comes only a month after higher paraxylene prices sent North American PET prices up an average of 4 cents per pound. It's the third price drop to hit the market so far in 2011, countered by four price increases, as volatility continues.
The October drop “was all about raw materials, with paraxylene moving down,” one resin industry veteran said. “The global [paraxylene] market is still fairly tight, but it's not like it was. [Paraxylene] producers were enjoying the highest margins they'd seen in a while.”
And even with the October decrease, average PET prices in the region remain about 17 percent higher than they were on Jan. 1. Industry sources said paraxylene is expected to be in good supply in November, creating the possibility of another drop in price for PET resin.
As for PET demand in North America, “it remains weak,” according to the industry veteran. No major conversions from metal, glass or other materials have caught on in 2011.
Operating rates for PET in North America remain in the low 80s percentage-wise. They are expected to remain in this range until 2014, when M&G Group of Houston is scheduled to open a massive new plant with more than 2 billion pounds of annual PET capacity in Corpus Christi, Texas.
In a recent interview with Plastics News, an executive with DAK Americas LLC said his firm expects North American PET demand to grow 3-4 percent this year, and DAK plans to continue to run the two U.S.-based PET plants it's acquired since late 2010. “There's no reason to slow down,” Executive Vice President Jorge Young said.
Late last year, Charlotte, N.C.-based DAK bought the PET business of Eastman Chemical Co., including a plant in Columbia, S.C., for $600 million in cash. Then in June, DAK paid $185 million for the PET business of Wellman Inc., including a 950 million-pound-capacity PET plant in Bay St. Louis, Miss.
Those moves made DAK the region's largest PET maker, with a 40 percent share of annual production capacity. Although both the Eastman and Wellman plants will continue to run, Young said their product mix might be tweaked a little.
“It might be better to make one type of material in one location and one in another, but there's only so much we can simplify,” he explained.