Asia's overcapacity has reached a level that could potentially meet all the demand in Europe, the Middle East, and Africa. The fallout from this overexpansion, driven by fierce market competition, has finally become evident. Since the start of this year, as several new polyethylene terephthalate (PET) expansion projects came online, the global PET market has faced severe oversupply, leading to a continuous drop in prices. With more projects set to come online soon, the situation is expected to worsen further.
Analysts emphasize that in this challenging environment, engineering innovation is crucial for PET producers to maintain their competitiveness. According to CMAI data, Asia’s PET production capacity has now reached approximately 7.4 million tons per year, while local demand stands at only around 3.3 million tons. This means Asia alone has an excess capacity of about 4.1 million tons annually—more than enough to cover the entire demand in Europe, the Middle East, and Africa without any need for additional production in those regions.
In early June, Wellman launched its third PET line at its Mississippi plant in the U.S., increasing annual production by 300 million pounds. This brings the plant’s total capacity to roughly 860 million pounds per year, with Wellman’s overall PET output reaching about 1.6 billion pounds annually. Meanwhile, Lithuania’s Neo Group recently began operations at a 115.4 million-ton-per-year PET facility.
As global PET production continues to rise, market prices have steadily declined. In April, the benchmark contract price for U.S. PET resin was around 73 cents per pound, down nearly 28 cents from October last year. Although there was a small increase of 3 to 10 cents per pound in June due to buyer hesitancy, only a 3-cent adjustment was ultimately made.
Looking ahead, several new projects are set to come online, adding even more pressure to the market. M&G Group’s new PET plant in Pernambuco, Brazil, is scheduled to start operations in the second half of the year, with a capacity of 990 million pounds annually. This will make Brazil a PET exporter. DAKAmericas plans to expand its Wilmington, North Carolina plant by 450 million pounds per year, bringing total capacity to about 1.1 billion pounds by the end of the year.
Eastern Europe is also expanding its PET production. Russia’s Polyef is set to launch a 120,000-ton-per-year plant by the end of this year, while Romania’s Rompetrol plans to start a similar facility by the end of next year.
By mid-2007, North American PET capacity is expected to grow by over 3 billion pounds, a 21% increase. While U.S. demand is projected to rise by 7% to 8% annually, multiple companies—including DAKAmericas, Eastman, INVISTA, Starpet, and Wellman—are either expanding or resuming operations, leading to growing market saturation.
Some industry observers believe the current oversupply will eventually lead to a rational restructuring of Asian PET capacity. In June, two PET plants in Asia were shut down. Hualon closed its plant in Negri Sembilan, Malaysia, due to rising raw material costs and shrinking profits. Daehan Chemicals also shut down a 400-ton-per-day facility in Ulsan, South Korea, because of low profitability.
To stay competitive, analysts stress that innovation is essential. Companies must not only offer comprehensive solutions and packaging agreements but also invest in engineering advancements. Eastman Chemical, for example, is set to launch its new IntegRex plant later this year. Using patented technology, IntegRex can directly convert paraxylene into PET resin, cutting project investment costs by nearly 50%. Additionally, the technology reduces processing costs by 50%, giving Eastman a strong edge in a tough market.
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