INTERACTIVE: US PET markets shaken again, this time by Mexico PTA fire

HOUSTON (ICIS)–A tight US polyethylene terephthalate (PET) market is facing yet another test after a fire shut down Alpek’s purified terephthalic acid (PTA) plant in Altamira, Mexico.

The feedstock disruption comes amid peak demand season in a market that has been repeatedly pummelled over the past year, starting with the financial woes of former PET producer Mossi & Ghisolfi (M&G).

The table at the bottom shows a timeline of the events affecting the industry.

“We can’t handle another event,” a source said earlier this summer amid BP’s sales allocation on PTA, stemming from an acetic-acid outage, which is being resolved.

But on the heels of the long-awaited restart of Far Eastern New Century’s (FENC) PET resin plant, Alpek’s PTA lines went down on 15 July.

The outage is expected to last four to eight weeks, Alpek CEO Jose Valdez said on Thursday’s second-quarter conference call, and the damage was contained to wiring and piping rather than major structures.

“We are leaning more toward the lower end of that range,” he said.

The plant’s capacity is 1m tonnes/year, and it had been running at high utilisation rates. It supplies a number of PET resin plants in the Americas: a nearby M&G plant, DAK Americas’ Pearl River site in Mississippi and various other plants in Mexico and South America. It also exports to European polyester producers.

Market participants expect some loss of PTA, but the effects are not immediately clear. Thus far, no pricing impacts nor force majeures are heard.

Peak season is still in full swing in North America, so the event has caused concern across the PET chain.

“Demand is strong, and producers are hand-to-mouth,” a source said. “The supply chain is as tight as it can get.”

Immediately prior to the PTA outage, PET supply relief came when FENC started up one of two resin lines at its West Virginia plant, whose total capacity is 360,000 tonnes/year.

“Everyone had high hopes that FENC would start up and solve everything,” a source said.

Where FENC’s product is going is not entirely clear, but buyers have begun to receive resin. A source said there was concern there will not be much material available for the spot market, though.

“There was a sense of relief in July, more of a sense of security, and that’s what dictates the market,” a source said about the start-up.

The start-up of a new plant is still more than a year away.

Assuming regulatory approval of Alpek, Indorama and FENC’s joint venture to purchase M&G’s unfinished integrated PTA/PET project in Corpus Christi, Texas, Alpek estimates PET lines could start in the first quarter of 2020 followed by PTA in the fourth quarter of 2020 or first quarter of 2021, Valdez said on Thursday.

Domestic bottle grade PET resin was assessed at 72-78 cents/lb ($1587-1,720/tonne).

Major producers of US PET are Indorama, DAK, Nan Ya and FENC.

Photo above: Bottles like these are made of PET. Image by Javier Garcia/BPI/REX/Shutterstock

Focus article by Amanda Hay