PTA North America

10 January 2000 00:00  [Source: ICB]

Despite PTA reaching all time lows last year, prices started to recover towards the end of 1999 and strong demand growth is forecast for the first years of the next decade

Supply/demand



PTA (purified terephthalic acid) hit all time lows in 1999, with margins slashed and plants idled or operating at reduced rates. But from mid-year prices have begun to recover although still lagging paraxylene raw material price hikes. Producers argue that in the US and Europe markets are already beginning to tighten. However, global capacity is still running well ahead of supply and in Asia price run-ups have started to lose momentum over the past few weeks, partly due to reduced Chinese buying, partly a desire to ensure that downstream inventories remain in reasonable shape. In 1999 the PTA supply/demand balance in the US suffered from weaker export sales as a result of the Asian crisis and increased Asian domestic PTA production, but the impact has been substantially alleviated by increased exports to Argentina, Belgium and Turkey. In Asia, Chinese purchasing has been key to the healthier market in the second half of the year but the earthquake in Taiwan and a lull in Chinese purchases over recent months has led to softer demand with some Taiwanese players under-running their plants.

Uses



Half of US PTA produced is used to make polyester fibres while over a third is used in the production of polyethylene terephthalate (PET) solid-state resin. Eight per cent of PTA goes towards polyester film and 4% for PET engineering resins. The remaining 5% is used primarily in cyclohexanedimethanol, terephthaloyl chloride, copolyester-ether elastomers, plasticisers and liquid crystal polymers.

Pricing



PTA prices have been rising steadily throughout 1999. In the US market pricing is based on a formula that reflects paraxylene costs, with some recognition also of energy and labour costs. The formula is adjusted from time to time to reflect the changing demand balance. US domestic sales for the final quarter have been priced at 26.76 cent/lb FD ($590/tonne). This compares with prices at the start of the year around 22.5 cent/lb. US export prices are influenced by pricing in Asia and subject to wider fluctuations. Prices which were below $350/tonne fob USG at the beginning of the year had risen to almost $500/tonne by November, mainly reflecting price movements in the Asian market.

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Spot prices which started the year around $400-420/tonne in Taiwan reached $550-560/tonne early in the fourth quarter but fell sharply to below $500/tonne cfr main port by the end of the year. DuPont is seeking a $30/tonne hike in quarter one in the Asian market to $610/tonne cfr main port, out of line with current spot market numbers. In Europe producers are asking for a DM100/tonne rise for the first quarter.

Technology



PTA is obtained by catalytic liquid phase oxidation of paraxylene in acetic acid, in the presence of air. The process uses manganese or cobalt acetate as a catalyst. The reaction is exothermic, producing water which is removed in a solvent recovery system. Acetic acid from this is returned to the reactor together with the oxidation catalyst.

The resulting PTA is purified in a crystalliser where the unreacted xylene and water are flashed off. Technology for PTA has been led by Amoco and DuPont (ICI). However, processes have been developed by Dow (Inca), Mitsubishi, Eastman and Mitsui. PTA plants can be modified to produce purified isophthalic acid (PIA) by substituting metaxylene for paraxylene.

Outlook



BP Amoco has predicted that global PTA demand will rise to in excess of 45m tonne by 2010, from its current level of 19m tonne, growing by 13%/year. Even in the more mature North American market PTA demand is set to grow by 50% between 1999 and 2005, according to DeWitt, and over this period two new worldscale plants will be needed to satisfy demand.

In November a new 500 000 tonne/year plant was announced by Cepsa, in alliance with Societe Generale de Financement de Quebec, to be built in Montreal, Canada. KoSa and DuPont have also been seen as prime candidates to build capacity. KoSa has a licence from Mitsubishi to build a PTA plant in North America. DuPont, with ICI's technology, is well placed to add PTA capacity but announcements are on hold until a partner for its North American PTA interests is agreed. Wellman and Eastman have, at least for now, backed away from planned projects.

Leading merchant player BP Amoco has not announced any new production in North America but is believed to be relying on its ability to pull more production from existing assets through debottlenecking and improving efficiency.

AMERICAS PURIFIED TEREPHTHALIC ACID CAPACITY, '000 TONNE/YEAR

Company Location Capacity
Petrocel Altamira, Tampico, Mexico 350
Temex Cosoleacaque, Veracruz, Mexico 600
Rhodiaco Paulinia, Brazil 250
BP Amoco Cooper River, South Carolina, US 728
Cooper River, South Carolina, US 500
Decatur, Alabama, US 1089
KoSa Wilmington, North Carolina, US 180
DuPont Cape Fear, North Carolina, US 275
Cape Fear, North Carolina, US 275
Eastman Columbia, South Carolina, US 385
Kingsport, Tennessee, US 45
Kingsport Tennessee, US 160

SOURCE: CMAI



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