Processors of very different applications are to be served by these two recently announced capacity expansions. M&G's announcement, made last month, involves construction of a massive plant in the U.S. to supply bottle-grade PET for packaging, whereas the SKC project in Korea will increase its capacity of premium optical-grade PET, which is primarily used in the production of high-end films for consumer electronics.
The announcements come as plastics pricing service ChemOrbis notes that in Asia the prices demanded for PET, after two months of falling, have firmed up in the past week due to firmer monoethylene glycol (MEG) costs in the spot market. Now, spot MEG prices indicate increases of $60/ton on a CFR China basis are seen, compared with the beginning of May, while they are $65/ton higher on a week-over-week basis.
These increases resulted from Taiwan's Nan Ya Plastics' shutdown of its 360,000 tons/year and 700,000 tons/year MEG plants in Mailiao, Taiwan. These shutdowns came on top of shutdowns at two other plants of Nan Ya with capacities of 360,000 tons/year each, with those two plants shut May 12 after a fire at its feedstock supplier, Formosa Petrochemical. With all of the company's MEG plants shut as of June 1, the company declared force majeure on MEG exports and spot prices shot higher.
Meanwhile, plastics processors in the region were reported to be running their facilities at close to full capacity, says ChemOrbis, but are not stockpiling material.
This week plastics supplier SKC Co. Ltd. (Seoul) announced it had contracted plant engineering firm Uhde Inventa-Fischer to build a new plant for the production of optical film-grade PET at SKC's operation in Jincheon, Korea. The plant will have two lines with production capacities respectively of 144,000 and 54,000 tonnes/yr. The commissioning of both is scheduled for the second quarter of 2012.
M&G Group (Tortona, Italy) is building a 100,000 tonne/yr PET plant in the U.S., with the new plant expected to be online by late 2012 or early 2013, with the PET plant co-located with one of a new purified terephthalic acid (PTA) plant, also run by M&G.
The new plants will be located in Texas, Mississippi or Louisiana, with M&G expected to announce the location by the end of this month.
The new plant comes as North American PET processors face shortages of the material due to some recent closures and as demand picks up following a few years of stagnation. Market participants have seen a bevy of changes in the past three years. Eastman exited the business, selling it to DAK Americas in North America and Indorama in Europe. Mitsui and Teijin tired of fighting for low margins in Japan and merged their PET businesses. Indorama, based in Thailand, in late 2010 acquired Invista's PET assets in North America, Eastman's in Europe in 2007, and also is established in Eastern Europe.
M&G is the largest supplier of PET for packaging applications in the Americas, with a production capacity in 2010 of approximately 1.6 million tons per annum. The two largest PET plants in the world, both owned by M&G, are in Suape, Brazil, and Altamira, Mexico.