02 January 2012 01:00 [Source: ICIS news]
By Trisha Huang
MELBOURNE (ICIS)--Asia’s increasing oversupply of polyethylene terephthalate (PET) bottle chips may force producers in ?xml:namespace>
Chinese PET producers may operate their facilities at an average of 75-80% capacity in the second half of 2012 after producers, including China Resources and Thailand’s Indorama Ventures, start up their plants in the country, the sources said.
Asian PET capacity is expected to rise by more than 2m tonnes/year to about 11.4m tonnes/year in 2012, led by expansions in
The demand growth in the region is lagging behind that of supply and is likely to increase by only 600,000 to 700,000 tonnes to 6.5m tonnes/year, a northeast Asian PET maker said.
The regional supply surplus is estimated by some market participants to increase to 5m tonnes in 2012, from 4m tonnes in 2011.
“Some of the new capacity will have to be directed towards the export market,” the PET maker said.
“Competition among exporters for the existing markets will likely intensify,” he added.
Producers in South Korea export about 80% of their output, while those in Taiwan sell close to 90% to markets abroad, including Russia, the Commonwealth of Independent States (CIS), Africa, the Middle East, Central and South America, Australia and New Zealand.
In Taiwan, Far Eastern Group this year boosted its nameplate capacity to 650,000 tonnes/year.
In addition, Shinkong Synthetic Fibers will double its capacity to 400,000 tonnes/year with the December 2011 start-up at its 200,000 tonne/year line at Zhongli in Taoyuan county.
With the local Taiwanese market consuming only about 160,000-170,000 tonnes/year, 100% of the supply from Far Eastern Group and Shinkong Synthetic Fiber’s expanded plants will be targeted to the export market.
The producer is planning to export about 50% of its output in
The bulk of the new capacity planned for 2012 will take place in
China Resources’ expansions at its
The company is adding two PET lines of 300,000 tonnes/year each to its existing 400,000 tonne/year plant at
In addition, China Resources is planning to start up a 300,000 tonne/year PET plant at Zhuhai city in
The expansion undertaken by Zhejiang Wankai will more than double its bottle chip capacity at Haining in
Thailand-based global producer Indorama Ventures will start commercial output at its expanded plant at Kaiping in
The company is adding two lines totalling 300,000 tonnes/year to the 100,000 tonne/year Kaiping line.
After the expansions,
With exports accounting for only about 1m tonnes of the nation’s PET output, some producers may be forced to cut their plant operating rates to alleviate oversupply.
“However, capacity is set to surge by 1.6m tonnes, which is a net increase of 1.2m tonnes,” the producer added.
“Producers may have to run their plants at reduced rates,” the Chinese PET maker said. “In addition, competition among exporters will intensify.”
Other market participants project
“Competition for the export market will become more severe in 2012,” a northeast Asian trader said. “However, local supply in some of the Asian producers’ biggest export markets, such as the
Capacity expansion in markets, including the Middle East,
However, some market participants said the situation may not be as bearish as the figures suggest.
“The new capacities in
“The numbers refer to the producers’ nameplate annual capacities, but not their effective capacities, which may be lower.”
Chinese PET makers may have to operate their plants at lower rates in the second half of 2012, but this will still be moderate compared with past years, the producer said.
“If you look at Chinese PET producers’ production levels in recent years, those have been roughly at 85-90% capacity,” the producer added.
“Chinese PET output may drop by 5% in the second half of 2012, or by about 100,000 tonnes, which is insignificant compared to the total market size.”
In addition to the staggered timeline for the new capacities, it is common for new plants to be delayed, the producer said.
“Everyone is expecting margins in 2012 to be worse than those seen in 2011, but we as a PET producer expect margins next year to be similar to this year because the effective capacity increase will be balanced by demand growth to a great extent,” the producer added.
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