Does the industry need more PTA?

By Malini Hariharan

The impending oversupply in purified terephthalic acid (PTA) and likely problems in securing feedstock paraxylene (PX) does not seem to have dampened enthusiasm for new investments,

Around 10m tonnes of PTA capacity is expected to come on stream from the third quarter of 2011 to late 2012, while another 12.9m tonnes of capacity is due to start during 2013-15, according to a recent estimate by ICIS.

China is of course leading the way with nearly 7m tonnes of new PTA capacities due in 2012. By the end of that year, Chinese PTA capacity would total to 32m tonnes/year as against a demand forecast of 23m tonnes. This could result in Chinese PTA exports provided new plants are able to source sufficient PX as capacity additions for the feedstock are taking place at a slower pace.

PX is likely to remain short in Asia until 2013 when five new plants are due to start. But the respite could be shortlived as new PTA projects are once again being lined up post 2013.

The recent entrants to a long list of companies planning new plants includes Ningbo Mitsubishi Chemical which is mulling a 1m tonne/year facility at Ningbo, China. The company has yet to set a start-up date.

Thailand’s Indorama Ventures is also studying PTA projects in the Middle East and India, the company’s chief executive said recently. These are part of the company’s plans to raise its global production capacity, for PTA, polyethylene terphthalate (PET) and fibers, to at least 10m tonnes/year by 2014, from approximately 5.5m tonnes/year today.

Indorama has yet to disclose the location of its proposed Middle East facility but it could be Saudi Arabia where attempts are being made to draw in PTA investments that would offtake PX from a new refinery.

Lotte Pakistan is planning to triple its PTA capacity to 1.5m tonnes/year by late 2014 while Indian major Reliance Industries is working on two new PTA plants with a total capacity of 2.2m tonnes/year for start up in 2013-14. A third plant is also likely although details have yet to be firmed up.

At an industry conference earlier this week, a Saudi Aramco executive confirmed plans for a PTA plant at Al-Jubail based on 700,000 tonnes/year of PX supplied for the new Sartorp refinery. The refinery, a joint venture between Aramco and Total, is due to start operations in H2 2013.

“We’ve had two players coming forward previously but the negotiations have stopped. We are still looking for people to invest in the PTA unit,” said the official, who did not disclose the names of the parties.

Oman and Kuwait, which currently export PX, are also interested in venturing downstream.

India’s JBF had announced last year plans for a 1.2m tonnes/year joint-venture PTA plant with Oman Oil in Oman with PX to be supplied by Aromatics Oman. However, the blog understands that JBF has abandoned Oman and is now looking at building a plant in India.

This is likely to be a temporary setback for the Oman Oil which recently integrated its three subsidiaries Aromatics Oman, Oman Polypropylene and Oman Refineries and Petrochemicals into Oman Oil Refineries and Petroleum Industries Co (Orpic). The newly structured Orpic should be in a better position to pursue a PTA project on its own.

The investment wave is no doubt being driven by optimistic projections for polyester and PET and many of the projects probably have sound economics. But the risk of overinvestment needs to be carefully assessed.

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