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Global Plastics Summit: Soft markets will continue for PET

Global Plastics Summit: Soft markets will continue for PET
Chicago--Global PET markets will continue to be vastly oversupplied, leading to significant rationalization of older plants, said Chase Willett, director of PET at IHS, at the Global Plastics Summit. New capacity is being added while demand slides. "We are seeing year-on-year declines in the carbonated soft drink market," he said. The diet soft drink market is dropping at a 6% annual rate. Demand for water bottles is rising at about a 4.5% annual rate. "People are making choices based on perceived health concerns."

Willett also noted that water bottles are about one-third the weight of carbonated soft drink bottles because of thin-walling. "We're seeing the water bottle being turned into the water bag," another speaker at the conference said.

About 1.6 million metric tons of new capacity will be added through 2017, exacerbating market weakness for PET. As a result older plants in North America are expected to close, particularly if they are not directly integrated into a feedstock source. Production capacity will be concentrated with three players: M&G (32%), DAK (31%), and Indorama (28%).

The good news for buyers is that PET prices are expected to remain weak. "Consumers will see a much more competitive industry, but this will be a painful process for the producers," Willett said.

The elusive Holy Grail for the industry has been the adoption of PET by the beer and milk industries. Neither, however, senses that a switch to PET would attract more buyers.

He also told attendees at the conference that he doesn't expect that use of biobased feedstocks will have a significant impact because they add cost.

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