Brazil focuses on PET exports, driven by soft domestic market

Domestic contract negotiations for 2017 are underway between producers and large consumers, taking into account average prices from other regions, particularly Asia. Some price increases are expected for 2017. Above, a ship leaves port at Rio de Janeiro. (Design Pics Inc/REX/Shutterstock)

Focus article by Ron Coifman

HOUSTON (ICIS)–Polyethylene terephthalate (PET) producers in Brazil are focusing on efforts to export resin because of weak domestic demand as the peak season begins, but are faced with several challenges, sources said on Tuesday.

PET supply is gauged as ample, while resin demand is not meeting expectations even in countries in the southern cone of South America where the peak bottled-beverage season is starting.

Although sources noted hints of rising activity in Argentina and Brazil amid warming weather, business in the bottled-drink, preform and PET markets is weaker than in previous years at this time, when producers usually raise inventories in anticipation of the peak season, according to sources.

However, Brazil’s PET exports to Venezuela have been reduced because importers in Venezuela are having difficulty meeting payment deadlines as a result of limited access to US dollars.

Additionally, Brazilian PET producer M&G Chemicals, a division of the Mossi Ghisolfi Group, will be exporting less to the US, as its new 1.1m tonne/year PET plant in Corpus Christi, Texas, is expected to start production in the first half of 2017, sources said.

However, some of Brazil’s volume loss in PET exports to Venezuela and the US are expected to be at least partially offset with exports to other destinations, including Argentina, Uruguay and Paraguay, sources said.

Domestic contract negotiations for 2017 are underway in Brazil between producers and large consumers. Brazil contract prices take into account average prices from other regions, particularly in Asia, international freight rates and import duties. Some price increases were expected for 2017, sources said.

In Brazil, an antidumping inquiry against PET from various Asian countries is in process, with resolution expected for 22 December. If antidumping duties are applied, these could vary according to country of origin, and could also vary by producer in a given country. Local sources said that speculation suggests that some antidumping duties may eventually be applied to some points of origin.

If antidumping duties are applied on PET, these would be in addition to the current 14% import duty.

Mexico-based conglomerate Alpek had received a 30-day extension period to continue exclusive negotiations with Brazilian state energy producer Petrobas for its potential acquisition of subsidiaries Petroquimica Suape (PQS) and Citipe, the Mexican producer said.

Selling PQS is part of the “Petrobras 2015-2016 Divestment Plan”, according to a company news release. Regional sources expect negotiations to be concluded by the end of November.

PQS and Citipe, owned by Petrobas, operate an integrated purified terephthalic acid (PTA)/PET facility in Ipojuca, Brazil, with an installed capacity of 700,000 tonnes/year of PTA and 450,000 tonnes/year of PET.

Additionally, Citipe operates a 90,000 tonne/year texturized polyester filament plant on site.

Alpek is a major petrochemical company in the Americas, and produces PET, purified terephthalic acid (PTA) and other polyesters. Among the companies Alpek owns are DAK Americas, which is the sole PET producer in neighboring Argentina with a capacity of 205,000 tonnes/year.

INSET IMAGE: Business in the bottled-drink, preform and PET markets is weaker than in previous years at this time. (Design Pics Inc/REX/Shutterstock)