Asia's overcapacity in polyethylene terephthalate (PET) is now so significant that it could potentially meet the entire demand of Europe, the Middle East, and Africa. The consequences of this overcapacity, driven by fierce market competition, have finally materialized. Since the start of this year, with multiple PET expansion projects coming online, the global PET market has faced a severe oversupply, leading to continuous price declines. With more projects expected to come online soon, the situation is set to worsen further.
According to CMAI data, Asia’s PET production capacity has reached approximately 7.4 million tons per year, while local demand stands at just 3.3 million tons. This means there is an excess of 4.1 million tons annually—enough to supply all markets in Europe, the Middle East, and Africa without any additional production from those regions. Meanwhile, companies like Wellman are expanding their presence in North America. In June, Wellman launched its third PET line at its Mississippi plant, increasing annual production by 300 million pounds. This brings the plant’s total capacity to around 860 million pounds per year, with the company’s overall capacity reaching 1.6 billion pounds annually. Similarly, Lithuania’s Neo Group recently started a 15.4 million-ton-per-year PET plant.
As global PET production surges, prices have been under pressure. The benchmark contract price for U.S. PET resin in April was about 73 cents per pound, down 28 cents from October last year. Although prices briefly rose by 3 to 10 cents in June due to buyer hesitancy, only a 3-cent increase was ultimately realized.
Looking ahead, several new and expanded PET facilities are set to come online. M&G Group’s new plant in Pernambuco, Brazil, will start operations in the second half of the year, with a capacity of 990 million pounds per year, making Brazil a PET exporter. DAKAmericas is also expanding its Wilmington plant in North Carolina, increasing annual production by 450 million pounds to reach 1.1 billion pounds.
Eastern Europe is also entering the PET expansion race. Russia’s Polyef plans to launch a 120,000-ton-per-year facility by year-end, while Romania’s Rompetrol aims to start a similar plant by the end of next year.
By mid-2007, North American PET capacity is expected to rise by over 3 billion pounds, a 21% increase. Despite a 7–8% annual growth in U.S. demand, major players like DAKAmericas, Eastman, INVISTA, Starpet, and Wellman are all expanding or restarting production, leading to increased market saturation.
Some analysts believe the current oversupply may force Asian PET producers to restructure their operations in the medium term. In June, two PET plants in Asia were shut down: Hualon closed its facility in Negri Sembilan, Malaysia, due to rising costs and shrinking profits, while Daehan Chemicals halted operations at a 400-ton-per-day plant in Ulsan, South Korea, due to low profitability.
To stay competitive, industry experts emphasize that innovation is key. Companies must not only offer comprehensive solutions but also invest in engineering advancements. Eastman Chemical, for example, is launching its IntegRex plant in the second half of the year. Using patented technology, IntegRex can directly convert paraxylene into PET resin, cutting project investment costs by nearly 50%. Additionally, it reduces processing costs by 50%, giving Eastman a strong edge in a tough market environment.
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