03 December 2009 18:53 [Source: ICIS news]
HOUSTON (ICIS news)--Expensive equipment retrofits and expected hikes in resin costs are hindering the conversion of food containers from polypropylene (PP) to polyethylene terephthalate (PET), US plastics players said on Thursday.
A major US resin buyer said it has customers who are interested in switching from PP to PET, but the discussions stall on how to pay for expensive new tooling.
PET market participants declined to specify the capital cost of retrofitting PP machinery to handle bottle-grade resin. In general, PET pre-form and blow-moulding equipment costs more, they said.
Permeability and flexibility issues with PP containers mean they often have shorter, thicker walls and require barrier layers - issues absent from PET equivalents.
Thicker walls drive up costs owing to longer moulding cycles, industry sources said. However, this pales against the 6% in additional costs from the additives required to give PP the clarity and strength of PET.
For some converters, especially those using PP in hot-fill food applications, the versatility and performance of PET can present major savings over the long term.
But this is only true as long as PET prices are stable at low enough levels when compared with PP.
At the end of November, injection-grade PP homopolymer prices in the US were up 68% to around 63 cents/lb ($1,389/tonne, €917/tonne) since January, according to global chemical market intelligence service ICIS pricing.
By comparison, bottle-grade PET prices rose by 22% during the same period, to around 66 cents/lb.
US polymer buyers fear PET costs will rise in early 2010 as a wave of stimulus from the Chinese government drives up demand and prices within and far beyond the nation's boundaries. Rising PET prices would put the brakes on conversion from PP, a US resin buyer said.
Talks of converting between PP or PET tend to emerge each time prices cross a given threshold, a global equipment manufacturer said.
PET players were talking in 2005 about switching to PP, the manufacturer said. Close examination of the pros and cons is necessary before making any switch to a new packaging material.
($1 = €0.66)
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