BANGKOK (Nov. 16, 12:45 p.m. ET) — More PET resin capacity is headed to North America.
Indorama Ventures Public Co. Ltd. plans to build a 1.2 billion-pound capacity plant at an undisclosed location in the U.S. The Bangkok-based firm's board of directors approved the new plant Nov. 14.
The expansion is expected to be completed by the end of 2015. In a news release, officials said the new plant “will take advantage of expected growth in North America, while maintaining a low cost structure.”
Officials with Indorama said that no decision has been made as to the plant's location. Indorama already operates a major 965 million-pound capacity PET plant in Decatur, Ala., and a smaller 495 million-pound capacity PET operation in Asheboro, N.C. Market insiders said Decatur is a possible location for the new plant, as is Cooper River, S.C., where British Petroleum plc has PTA feedstock available that could be used to make PET.
North American market watchers have questioned the need for a new PET plant in the region. North America already is believed to be oversupplied for PET, as are many other regions of the world. Lightweighting of PET bottles and slow growth in the carbonated soft drink sector have led to low single-digit growth rates for North American PET in recent years.
M&G group, one of Indorama's competitors in the region, also has announced plans to build a massive 2.2 billion-pound capacity PET plant in Corpus Christi, Texas. No startup date for that plant has been announced.
The IVL board has also decided to carry out a significant debottlenecking at its PET plant in Wloclawek, Poland, instead of setting up a new line as it would be “more value accretive.” The company said the Polish site de-bottlenecking would take advantage of the region's growth market and its virtual integration with third party PTA.
IVL was also starting up this quarter a 440 million-pound capacity PET plant at Rotterdam, the Netherlands, followed by a PTA de-bottleneck to 1.3 billion pounds of capacity by 2015 at the same site.
On the polyester front, IVL's flagship plant with annual capacity of 660 million pounds was due to startup in 2013 in Indonesia, the highest growth region in ASEAN.
“Our strategic initiatives are targeted to continuously improve shareholders returns across cycles while maintaining our global leadership in the polyester value chain,” said Aloke Lohia, Group CEO of Indorama Ventures.
“We have seen clear evidence of our strategy delivering value even in the trough cycle that we are in at present,” he said.
Commenting on the market outlook, Lohia said: “IVL has continued to move forward with our business plans. We expect the industry to start picking up again in 2013 and we want to remain a highly competitive and low-cost leader, focused on returns for our shareholders.”
News of the new North American plant and Polish expansion wrap up a torrid 2012 pace for Indorama that's included the following plastics-related moves:
• Buying polypropylene fiber maker FiberVisions Holdings LLC of Duluth, Ga. FiberVisions has annual sales of about $450 million and operates more than 440 million pounds of annual fiber capacity at plants in the U.S., Denmark and China,
• Buying a 51 percent stake in Beverage Plastics Holdings Ltd., a beverage packaging maker based in Northern Ireland,
• Buying the PET assets of PT Polypet Karyapersada in Indonesia. That business has annual PET capacity of about 220 million pounds,
• Starting production at a 165 million-pound capacity PET plant in Port Harcourt, Nigeria.
ILV's net profit for the nine months ended Sept. 30 plunged 73.7 percent to Bt4.68 billion ($15.44 million) for the same period a year ago.