04 June 2012 00:00 [Source: ICB]
European demand has been damaged by the poor macroeconomic conditions affecting downstream PET during a time of global capacity expansions.
Portuguese producer ARTLANT PTA's new 700,000 tonne/year PTA plant in Sines is the latest European plant to start up, increasing the region's nameplate capacity to 4.3m tonnes/year. The plant has had production difficulties since its opening in March 2012. Its key market is Europe, and target markets include Africa, the Middle East, India and Brazil. As part of its restructuring, La Seda de Barcelona (LSB) sold 59% of its stake in ARTLANT PTA to three Portuguese investment funds in September 2010.
Poland's PKN Orlen started up its new 600,000 tonne/year PTA plant in Wloclawek in the second quarter of 2011.
Although higher sea freight costs, exchange rates and a lack of demand are hampering imports into Europe, there is still length in the European market. Russia has lifted its 5% import duty on PTA for 2012.
PTA prices move in line with those for upstream paraxylene (PX), which rose by €138/tonne ($172/tonne) in the first quarter. PTA values increased from January's range of €915-940/tonne FD (free delivered) NWE (Northwest Europe) to €1,007-1,032/tonne in March, based on commentary from market players and calculations made with the variety of conversion fees that were reported.
April fell by €29/tonne, following PX's €43/tonne drop to €1,225/tonne, while May PTA could see another decrease, of about €15/tonne.
Following healthy profit margins in early 2011, PTA producers in Europe have since struggled with costs. Demand has been weak, while the cost of PX rose 13% between November 2011 and March 2012, according to ICIS. Further complicating matters, new PTA capacity now coming on stream has been expected to put downward pressure on prices and strain PX supply.
PTA and PX prices are now dropping, and demand remains lackluster.
PX price sentiment could be bearish moving into the summer months because of the global economic situation, political uncertainty and softening crude oil prices. Should the general malaise persevere, PX output may be cut, potentially affecting PTA prices.
Modern technologies produce PTA by the catalytic liquid-phase oxidation of PX in acetic acid, in the presence of air, using a manganese or cobalt acetate 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 crystallizer, where the unreacted xylene and water are flashed off.
Some plants have been modified to also produce isophthalic acid by substituting metaxylene for PX.
Globally, PTA looks set to grow by 4-5% in 2012, with Asia polyester the driving force. Asia's growing appetite for fiber intermediates is being fueled by a consumption boom driven by rising income levels. This situation is changing, however, as Asia demand slows and the market reacts more cautiously as a consequence of the eurozone debt crisis.
PET demand in Europe alone is likely to be flat in 2012.
Asia polyester capacity and demand reached 49.4m tonnes/year and 40.6m tonnes/year, respectively, in 2010. Capacity is due to grow to 67.5m tonnes/year by 2013, exceeding demand growth. There have already been delays to start-ups caused by technical problems, and there is little motivation at present to speed up the process, according to industry sources.
This year Asia is facing an onslaught of 11.5m tonnes/year extra PTA capacity over the 2011 figure of 43.7m tonnes/year. In theory, global PX supply is structurally short because of the increased demand into PTA. Players estimate this shortage to continue for the next two/three years.
Thailand's Indorama Ventures still plans a 250,000 tonne/year expansion at its plant in the Netherlands, but timing remain unconfirmed. Russia announced plans in April 2012 to build a PTA plant to supply the 486,000 tonne/year PET plant to be built in the southern Kabardino-Balkariya region by 2015.
Until the PTA project is completed in 2018, the PET plant will import PTA from Europe and Asia.
Russian companies SIBUR and Gazprom are negotiating a potential 50:50 joint venture to produce 350,000 tonnes/year of PTA in Omsk, Western Siberia.
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