14 November 2012 12:12 [Source: ICIS news]
BERLIN (ICIS)--The global polyester market will face challenges of overcapacity and feedstock supply constraint moving forward, said a major European producer of paraxylene (PX) and purified terephthalic acid (PTA) on Wednesday.
Speaking at the 11th World Aromatics & Derivatives Conference in Berlin, Germany, Carlos Molina, key account manager at Spain's CEPSA Quimica, said overcapacity and limited availability of PX will remain problematic in 2013.
“Globally, PX is constantly balanced-to-tight now,” he said, citing average operating rates of 85-90% amid challenging economics with benzene and toluene as the key factors for this.
With more downstream facilities due to come online in Asia next year, this situation is expected by many to continue.
According to Molina, PTA players will need to secure a reliable source of PX in order to stay competitive, and with the push and pull of tight feedstock supply and depressed downstream margins, he expects some market rationalisation on the horizon.
While the global PTA market was tight in 2011, new capacities, particularly in China, have gradually seen it lengthen. Europe is already exporting PTA to Russia, Turkey and Egypt to deal with the current oversupply.
“Margins will remain low,” he said, adding that half of Asia’s PTA producers are already operating with negative margins.
Nevertheless, Molina believes the market can regain competitiveness through reliability of supply, as well as with improved fundamentals such as logistics.
“A short lead time decreases risk and cash impact,” he said, “in a debt crisis this is essential”.
Molina also believes that product innovation and improvements in processes will help keep the market competitive, citing growing demand for green and efficient products.
“Now more than ever there is a need for true innovation,” he said.
The 11th World Aromatics & Derivatives Conference, organised by ICIS and International eChem, is taking place in Berlin from 13-14 November 2012.
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