TextileFuture is presenting to you in today’s Newsletter that Polyester might grow to twice the volume of cotton. This report is based upon the recent Americas Polyester Conference, presented by Phil Marshall, Head of Polyester at PCI Wood Mackenzie and our guest author. The firm provides a broader, deeper view from upstream energy to chemicals, polymers and fibres with our detailed data and integrated analysis. The insight on polyester offers many useful facts and figures
PET Resin: How should new capacity additions be viewed?
Whilst polyester fibres are clothing the world, acting as the primary source for any growth in fabric consumption, production is centred on Asia but growth in PET resin is key to western polyester demand and remains at typically 5 % making substantial inroads into a range of end-use applications in bottles and packaging. As PET resin supply lengthens in the Americas, can we relate today’s market to over-builds in the polyester chain in Asia? Will US PET producers be able to compete with imports of PET resin?
Polyester fibre is a low-cost fibre with excellent physical properties, which has made amazing inroads into global fibres markets. We expect nearly 60 million annual tonnes of polyester to be consumed by 2020. That is more than double the volume of cotton to be used at that time, the next largest source of traditional fibre, and more than all other sources of fibre combined; however, capacity in the chain has been overbuilt, especially in China, and low return on investment means companies have difficulty in justifying further injections of capital. Price setting mechanisms are complex, the tension between fibre producers in Asia and raw material suppliers sets pricing and because paraxylene the key raw material for polyester can assist in gasoline blending, it is impacted by the US gasoline market.
Fibre dynamics drive impact paraxyelene pricing and gasoline dynamics in the US impact PET pricing, this together with the perception of length in the North American PET market is a heady cocktail. With the new Corpus Christi Texas PET plant due to come on line shortly the perception is that the NAFTA PET market will fall into oversupply once this asset starts up, but the story is more complex as high quality technology, highly competitive MEG and a potential to displace imports could mean that the impact could be felt in Asia as their exports markets are eroded.
The Texas plant won’t redefine the PET resin landscape, but it will change the cost profile and trade in NAFTA, where we are likely to see:
The full volume associated with the PET resin plant is likely to hit the market in stages across 2017 and 2018.
These delays will allow organic demand growth to catch up with supply, especially in the Americas
While balances will lengthen in the Americas, re-positioning among players in the PET resin value chain will allow for more optimal flows of intermediates and lower-cost supply of resin to countries within the region, together with the displacement of imports.
Our up and coming Americas Polyester Landscape study will address these issues and more; particularly as raw material costs in the US are set to become more competitive. Some Asian suppliers to the region may see business as usual but that looks less likely.
To learn more, turn to the presentation from our recent Americas Polyester Conference (March 2017), presented by Phil Marshall, Head of Polyester at PCI Wood Mackenzie:
The following Tables are selfexplanatory: