Sheet processor wants to transform APET market

With current amorphous polyethylene terephthalate (APET) sheet capacity of 30,000 tonnes/yr, Octal Holding & Co. already is no small fry, but the Salalah, Oman-based processor announced last fall that it intends to become global APET sheet leader this year. A new $300 million PET resin supply/APET sheet-extrusion complex is slated to come online later this year, giving the processor an additional 300,000 tonnes/yr of APET sheet capacity. Here''s the initial report: http://www.modplas.com/inc/mparticle.php?section=firstlook&thefilename=firstlook11012007_01

Octal’s CEO, Nicholas Barakat, and COO William Barenberg, met with MPW late last year to discuss their plans. In essence, the firm intends to offer precisely extruded and rolled APET sheet, in volumes as yet not seen on the market, they said. Octal is located just 500 meters from Salalah Port in Oman, and Barakat said its deliveries from there can reach almost any port within 12-18 days. Even to a current U.S. customer 1000 miles inland, deliveries take just 20-23 days.

The processor has distribution, sales, and customer-service operations in the U.S. and Asia and intends to open an office in Europe. The firm started operations in late 2006 with 20,000 tonnes/yr of APET sheet capacity and last year added an additional 10,000-tonnes/yr capacity. Assuming competing APET sheet extruders do not increase their capacity by a significant amount in the meantime, Octal says its May 2008 expansion will make it five times larger than the next largest merchant producer of APET sheet as well as the largest PET supplier in the Gulf region, with its capacity then representing nearly 20% of the total industry output of APET sheet. Two private equity firms in the U.S. invested in Octal: Chemlink Capital, of which Barakat is president, and Pound Capital. Several smaller Oman-based investors also fund Octal but the majority of the investment comes from Chemlink and Pound.

Barenberg and Barakat met while employed at International Paper in that firm’s packaging division. “We’re emulating the paper industry’s efficiency,” said Barakat, noting that until now thermoformers purchasing APET sheet have been served by a number of regional powers but none large enough to serve the needs of global thermoforming processors or their OEM customers.

Octal’s big bet is that the packaging megatrend—convenience packaging—will continue. “You can’t stop the tide; people want convenience,” noted Barenberg. Both men see PET as the plastic’s winner in the thermoformed packaging market, replacing PVC and PS as well as non-plastic packaging. “There’s been a perception that PET has been too expensive in the past,” agreed Barakat, but quickly added that his firm’s integrated PET supply/sheet extrusion operation, outfitted with the latest equipment, will enable his firm to provide thermoformers quality sheet that will processing well and offer down-gauging opportunities.

According to Octal, worldwide demand for APET reached approximately $2.25 billion in 2006. A new report on the APET sheet market in Asia from PCI PET Ltd. (Derby, England) stated demand there is rising at an estimated 15%/yr.