Brazil Petroquimica Suape starts production of on spec PET

Focus story by Renzo Pipoli

HOUSTON (ICIS)–Brazil’s state owned Petroquimica Suape starting on Wednesday was able to “fully stabilize” production of polyethylene terephthalate (PET) resin that meets required specifications and will make its first commercial sale on Friday, sources very close to the situation said.

Suape has “on specification PET bottle resin material starting today,” the source said adding it has been producing amourphous and crystallized PET for a few days though the specifications it needed to reach for bottle grade resin were reached and fully “stabilized” just this Wednesday.

“The company president will soon make a formal announcement and a press release will be issued” anytime within the next days to officially announce the long awaited start-up, sources said. The plant had been expected to start up in January thought it was delayed because of mechanical difficulties that have been just overcome. Market sources had for months been seeking information on the startup.

The company could not officially confirm the information as the company president is the person in charge of the official announcent, a company spokesman separately said.

The startup involves inaugurating one 225,000 tonnes/year product line in the coming days while a second similar line start up will be delayed for a few months following the first one, as it has been announced in the past.

A market source has separately described the start up of Suape as by far “the most significant event for the industry in all of Latin America in several years”.

“It will change the complete dynamics of supply/demand for all of South America,” the source explained.

Before the start up of Suape, Brazil only had 550,000 tonnes/year production capacity in place, owned by Italy-based Mossi & Ghisolfi. An estimated 100,000 tonnes/year had also been imported into the country mainly through the Manaos special duty area, sources had said. That 650,000 tonnes/year of combined supply represented roughly the total demand for PET resin in Brazil.

But following the start up of one line at Suape, production capacity in Brazil is immediately increasing to 775,000 tonnes/year which means that there will be in theory no need to import and instead an excess production of some 125,000 tonnes/year that can go immediately to other markets in Latin America and compete with material currently imported into those countries from other regions, mainly Asia.

Once the second production line opens, there should be in Brazil in total some 350,000 tonnes/year of export capacity of PET, enough to supply several countries in the area. Asian PET product will need to be offered into the region much more aggressively to compete, sources have said. That competition may lower prices or lead to trade accords and duty changes, sources have said.

The Suape plant was completed at an estimated cost of at least about $4 billion, according to sources. It is by far the biggest PET-related investment completed in the region in several years. The plant is in Suape, northeast Brazil and is fully owned by state oil company Petrobras.