22 November 2012 20:25 [Source: ICB]
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).
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 key factors.
With more downstream facilities due in Asia next year, many expect this situation to continue.
Molina said 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 low downstream margins, he sees some market rationalisation on the horizon.
While global PTA was tight in 2011, new capacity, particularly in China, has seen it lengthen. Europe is already exporting surplus PTA to Russia, Turkey and Egypt.
"Margins will remain low," he said, adding that half of Asia's PTA producers are already operating with negative margins.
But Molina believes the market can regain competitiveness through supply reliability and 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 says innovation and process improvements will help keep the market competitive, as demand grows for green and efficient products. "Now there is a need for true innovation," he said.
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