The big PTA headache

By Malini Hariharan

If sourcing PTA has been challenging this year, the bad news is that the situation is unlikely to improve for the next couple of years.

Rapid polyester capacity expansion, especially in China and India, is already outpacing growth in PTA capacities and the situation is set to worsen.

PTA producers, on the other hand, can look forward to healthy margins.

At the Indian Petrochem conference last week, YJ Kim, managing director of PCI Xylenes & Polyesters, Malaysia, predicted: “We are seeing historical high margins this year and this will probably continue next year.”

He expected a PTA margin of over $200/tonne until early 2012.

Strong demand would result in plants being run harder. Average global plant utilization rate is forecast to rise to 90% in 2011, up from 87% this year.

Kim pointed out that the average utilization rate in China is 91% this year and plants would have to run at 95% next year to meet demand.

“Industry players say this is not possible and the maximum that plants can run at is 92%. So China will need to import more, but everyone is sold out,” said Kim.

Chinese PTA demand is expected to grow by 2m tonnes next year and finding these volumes could be a problem.

Indian PTA buyers too face a similar situation, especially if Mitsubishi Chemical continues to face operating issues at its second PTA unit. Average utilisation in India is only around 75% this year and plants would have to run at a ‘challenging’ 95% next year to meet local demand.

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The situation is likely to reverse only in late 2012 or 2013 once new plants are fully operational. Over 14m tonnes of new capacity is scheduled to come onstream during 2011-2013, mostly in China.

The polyester chain has seen plenty of action this year. And it looks like the excitement will continue.

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