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The consequences of overcapacity triggered by the competition for the market finally emerged. Since the beginning of this year, with the successive operation of a batch of polyethylene terephthalate (PET) expansion projects, the global PET market has experienced excess capacity and market prices have continued to decline, and some of the projects to be completed soon Make the PET market worse. Analysts pointed out that in such a severe market situation, engineering innovation is the key to maintaining the competitiveness of PET producers.
According to CMAI statistics, PET production capacity in Asia has increased to about 7.4 million tons/year, while Asia's demand is only 3.3 million tons/year. According to CMAI, the excess capacity of 4.1 million tons of PET per year is sufficient to meet all market demands in these regions without any production capacity in Europe, the Middle East and Africa. In early June this year, Wellman launched its third PET line at the Pearl River plant in Mississippi, USA. The new PET production line will increase 300 million pounds per year of production capacity, so that the plant's total PET production capacity will reach approximately 860 million pounds per year, and Wellman's total PET production capacity will reach approximately 1.6 billion pounds per year; Lithuania Neo Group also recently launched a production capacity of 1 15.4 million tons/year PET plant.
With the production of a large amount of PET capacity, the PET market price is getting lower and lower. The benchmark contract price for US PET resin in April this year was about 73 cents/lb, down by about 28 cents/lb from October last year. In June of this year, due to the buyer’s reluctant attitude, the PET price was raised by 3 to 10 cents/lb, and only 3 cents/lb was put in place.
Under such a severe market situation, a number of new construction and expansion projects will be put into operation in the near future. M&G Group's new PET plant in Pernambuco, Brazil will be put into operation in the second half of this year. The plant will have a production capacity of 990 million pounds per year. The new capacity will make Brazil a PET exporter; DAKAmericas plans to locate it in North Carolina in the fourth quarter of this year. The Wilmington plant's PET capacity increased by 450 million pounds per year to about 1.1 billion pounds per year.
Eastern Europe also joined this round of PET expansion. Russian manufacturer Polyef plans to start a new PET plant with a capacity of 120,000 tons/year by the end of this year; Romania's Rompetrol plans to start production of a PET plant with a capacity of 120,000 tons/year by the end of next year.
By mid-2007, North American PET capacity will increase by more than 3 billion pounds, an increase of about 21%. Although the demand for PET in the United States will increase at a rate of 7% to 8% per year, DAKAmericas, Eastman, INVISTA, Starpet, and Wellman are all expanding production capacity or resuming production, so the North American market is also becoming saturated. Some institutions believe that the severe market situation will also allow Asian PET production capacity to undergo rational restructuring in the medium term. In June of this year, two PET plants have closed in Asia. Hualon shut down its PET plant in Negri Semé„„bilan, Malaysia, due to rising raw material costs and shrinking profits. Daehan Chemicals also shut down a PET plant with a capacity of 400 tons per day in Ulsan, South Korea, because of low profits.
Analysts pointed out that if PET manufacturers want to remain competitive, innovation is the key. While providing comprehensive solutions and package agreements, manufacturers need to carry out engineering innovation. Eastman Chemical will launch its new IntegRex plant in the second half of this year. Due to the use of IntegRex's patented technology, it can directly convert paraxylene to PET resin, so the investment cost of the project is reduced by nearly half. More importantly, IntegRex technology can also reduce the cost of PET resin processing by 50%. These engineering innovations will enable Eastman Chemical's PET resin to maintain its competitive advantage in harsh market conditions.
(Asia's excess capacity can even meet all needs in Europe, the Middle East and Africa)