c





c 
 

Polyethylene terephthalate (PET) exists both as an amorphous (transparent) and a semi-

crystalline (opaque and white) thermoplastic, and can be made into either a resin, film or fibre.
The semi-crystalline PET has good strength, ductility, stiffness and hardness while the
amorphous PET has better ductility. PET also has good processability and can be recycled for

other applications or returned to its constituent monomers.

The largest outlet for PET is for the production of synthetic fibres with bottle resin production
the next largest application. In textile applications, PET is often referred to as µpolyester¶ while
µPET¶ is used often to refer to the packaging resins.

Polyester is the largest synthetic fibre used in the world with production split roughly 60/40
between polyester filament and polyester staple. Filament yarns are used in clothing, furnishings,
tyre cord and technical textiles. Staple fibres are employed in knitted and woven textiles for
clothing and furnishings such as bed sheets, bedspreads, curtains and draperies. Polyester
fibrefill can be used to stuff pillows and cushion padding.

Polyester fabrics can have a synthetic feel when compared to fabrics made from natural
materials. However, polyester does have the advantage of better wrinkle resistance and is often
spun together with natural fibres such as cotton and wool to produce a fabric with blended
properties.

PET packaging resin markets have seen very strong growth over the last 20 years. It first
penetrated the carbonated soft drinks market because it is lightweight and strong. PET bottles are
virtually unbreakable while a typical 1.5 litre bottle weighs about 40-45gm, about one-tenth the
weight of glass.
PET has taken market share in the bottled water market due to its good clarity and not leaving
any taste in the water. It has also found applications in more niche markets such as sports drinks
and fruit juices, and is used to make bottles for cooking and salad oils, sauces and dressings.

The crystalline form of PET is used for trays containing pre-cooked meals that are reheated in
either microwave or conventional ovens. Other uses for PET include thick-walled containers for
cosmetic and personal care products as well as pharmaceuticals.

PET film is utilised in electrical applications such as dielectric metal foil capacitors and for
packaging.

V  


An untapped market for PET is beer packaging with substantial conversion still yet to
materialise. In the past, PET was considered unsuitable for beer due to the material¶s
permeability and sensitivity to oxygen and carbon dioxide. PET bottle manufacturers have
developed a barrier to minimise oxygen and carbon dioxide permeation and can preserve the
flavour characteristics of beer in PET containers for up to six months.

A further problem has been the high heat and pressure in the tunnel pasteurisation process but
manufacturers have found either alternative pasteurisation processes or use a more heat resistant
resin. Finally, consumer acceptance of plastic bottles is low but more concert venues and sport
stadiums now serve beer in plastic bottles for safety reasons, giving an expanding audience a
taste for the future.

PET has captured only 5% of the beer market, in which glass has a 62% stranglehold and metal
cans have 33%, according to Canadean, the UK-based beverage research consultant. The largest
market is Russia, which accounts for 60% of PET¶s use in the global beer market. Other east
European countries are prominent users, but outside these countries, only Germany, South Korea
and Spain make any significant contribution to PET use for beer packaging.

Another factor that could impact the supply/demand balance for PET is the growth in recycling.
PET is probably the most recycled polymer taken from the post consumer waste stream, one
reason being the relative ease of reprocessing. Recycled PET is being used increasingly in bottles
and retail packaging as well as carpet fibre and clothing. Processes are being developed that
depolymerise the PET back to its constituent monomers which can be used to make resin to
virgin polymer specifications.


  

 c 

The polyester fibre market has taken market share from both synthetic fibres and natural fibres.
According to US-based consultants CMAI, polyester filament has grown by an average of
6.9%/year in the 2001-2006 period while staple fibre grew by 5.4%/year at the same time.

CMAI forecasts global polyester fibre demand to grow at 6%/year through to 2011. This will lift
the world polyester fibre market from 27m tonnes in 2006 to 36m tonnes in 2011.
China¶s domination of the world polyester market continues to grow. In the 2001-2006 period,
Chinese polyester fibre demand grew by 17.5%/year lifting its share of global demand from 37%
in 2001 to 55% in 2006. CMAI expects Chinese demand growth for polyester fibre to continue
outpace the rest of the world with its share of global demand reaching 62% by 2011.

Demand for PET packaging resin has also grown strongly at an average of 9.3%/year in the
2001-2006 period. According to CMAI, this lifted global demand from 7.8m tonnes in 2001 to
12.3m tonnes in 2006. The largest outlet for PET, and the fastest growing, is beverages which
accounted for 66% of demand. Food is the next largest consumer at 8%.

In the next five years, CMAI expects growth in PET resin to moderate to 7.2%/year with
beverages continuing to be the dominant outlet. Global demand is projected to grow to 17.3m
tonnes in 2011.

However, capacity has been growing even faster than demand, leading to huge overcapacity.
Strong growth in demand combined with low barriers to entry have attracted far too much
capacity, especially in Asia. Capital costs of PET plants are relatively low while the technology
is readily available

CMAI estimates that capacity in the last five years has grown at an average of 10.5%/year to
reach 15.8m tonnes/year in 2006. This resulted in global operating rates dipping below 80%,
leading to poor margins.

However, CMAI forecasts capacity growth of 4.5%/year in the next five years will be lower than
demand growth, improving operating rates. Capacity is expected to reach 19.6m tonnes/year in
2011. The consultant does warn that the challenge for the industry is not to overbuild in capacity
in the next few years.

Most of the capacity growth has occurred in northeast Asia with the majority of it being built in
China. Asia will continue to have surplus capacity for the next few years and will be a major
exporter as it takes advantage of its low cost position.

Ë

   

The US PET/polyester market still sees healthy growth rates although it has slowed considerably
in the last 10 years. The carbonated soft drinks sector dominates resin demand, accounting for
nearly 40% of consumption. New product applications continue to drive PET growth as former
high growth applications become mature. As a result, carbonated soft drinks will represent 36%
of total PET packaging by 2011.

Beer looks likely to be the fastest growing application market in the US, albeit from a relatively
low base. From 2007-2011, PET use for beer packaging is expected to rise at a compound
growth rate of better than 10%/year. Other growth areas are packaged water, single-serve juices
and hot-filled products.
In the US, PET solid state resins are expected to grow at 7%/year, followed by polyester fibres
and PET engineering resins at 5%/year and 4%/year respectively, according to 
. Polyester
films, however, are only expected to grow by 1%/year. The aggregate projected growth rate for
the US is 6%/year through to 2011.

US demand for PET/polyester is expected to grow from 5.39m tonnes in 2007 to 6.81m tonnes in
2011, predicts 
. Imports in 2007 were 1.65m tonnes while exports were 467,000 tonnes.

In terms of supply and demand, the US market has been well balanced but new capacity is on the
horizon. AlphaPet, a new subsidiary of Indorama Polymers, is building a 430,000 tonnes/year
plant at Decatur, Alabama with completion in the first quarter of 2009.

Mossi & Ghisolfi (M&G) is planning an 800,000 tonnes/year plant in the US of which 650,000
tonnes/year is scheduled to come on-stream in the first half of 2009. M&G is also expanding its
Apple Grove, West Virginia, facility by 100,000 tonnes/year to lift capacity to 340,000
tonnes/year in 2008.

Eastman Chemical is phasing out its old technology plants with its new  process that is
claimed to lower costs and increase efficiency of PET production. It plans to debottleneck its
plants so that its North American capacity rises from 675,000 tonnes/year to 800,000 tonnes/year
by the first quarter of 2009.

Coca-Cola is building a 45,000 tonnes/year food-grade recycled PET plant in Spartanburg, South
Carolina, with full operation scheduled for 2009. Coke now recycles 10% of its bottles but wants
to increase that to 30% by 2010.

Europe is more or less balanced in terms of supply and demand, but will import PET from lower
cost regions. Consolidation in Europe has been driven by La Seda de Barcelona (LSB), which
has bought Advansa Chemicals, Selenis and Volos as well as Eastman¶s plant in Spain. LSB has
united its PET and purified terephthalic acid (PTA) businesses under the name of Artenius.
?