LONDON (ICIS)--Polyethylene terephthalate (PET) suppliers remain confident of opportunities to grow despite the challenging economic climate and growing environmental concerns facing the industry.
Industry participants discussed how the PET market could combat challenges facing the industry on Wednesday as part of the ICIS PET Value Chain Virtual Conference.
“Packaging has emerged as the true champion for the pandemic situation and how it has been managed to best serve the public,” said Rohit Maindwal, chief operating officer at JBF Industries.
“We have seen sales still on a high, record levels this year; we have serviced the industry whatever situation came but at the end there was product available on packed form on the shelves of the superstores.”
Although sustainability issues remain a factor shaping legislation around the industry, Maindwal said public perception on environmental hazards of plastics had been challenged by the pandemic.
“While PET is a competitive industry, we can see that people downstream view PET within plastics as a segment that is growing within plastics, and something that finds solutions to challenges,” said Paul Corens, polyester chain manager for Europe, Middle East and Africa (EMEA) at Japan's Mitsui.
RECYCLED MATERIAL NEEDED
Growing demand for recycled material will need continued supply of virgin PET to support production, especially with recycled material selling at a premium, with only 11-12% of product currently being recycled.
“Every year is a pivotal year for the PET market - you will see volatility and challenges everywhere, and the industry reacting,” said Corens.
“This is supposed to be a very bad year for everyone but PET continues to supply the chain at good strong volumes; profitability is always a problem, but they manage, and we have managed to do our part regarding the [EU Green Deal].”
The strength of the recycling market within PET could be an incentive for investment from refineries looking to replace output lost by reduced transport and weaker crude demand.
Maindwal added that volatility is part of any commodity industry and nobody could "wish it away as long as we are linked" to crude oil.
"What is working good for us is that oil and so is majority of feedstock chain which is associated with primary conversion of intermediate products,” said Maindwal.
He cited how JBF had recorded historic high volume growth for production of PET and biaxially-oriented PET (BoPET) films for operating-grade basis in the last three months at its sites in the Middle East and Belgium.
“This does not say that everything is hunky dory, we have challenges and how we see the demand profile shaping up for the second half of the year and following years,” added Maindwal.
While imported material remains a concern for suppliers, what has become clear in the aftermath of mass lockdowns is the importance of local supply chains.
“Every crisis is an opportunity to learn. We have understood the point of keeping your supply chains short as the biggest lesson [from this crisis]," said the JBF executive.
According to him, JBF's plant in Belgium sources 90-95% of its feedstocks in the Antwerp region, reducing sharply deliveries times and the logistics involved.
"This has been the key differentiator which has helped us meet different challenges presented by the industry or our customers,” said Maindwal.
“How will you look at supply chains in the future, what will you prioritise, whether everything is [about the] last five dollars of a negotiation or not.”
Front page picture source: Keystone-SDA/Shutterstock
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