Plastics Industry Perspective
4th Quarter 2012
PET overcapacity and low growth
By Kevin Duffy
PET prices rose 14.8% in
Q4 2012 from $0.88 per pound
to $1.01 per pound. The increase in price mainly was tied
to raw material price increases. These PET raw materials are
currently in tight supply, with
minimal capacity anticipated to
be added in the near future.
PET resin is estimated to
currently have excess production capacity of approximately
20 billion pounds globally and 2
billions pounds in North America. Although production capacity is at an excess to current demand, additional PET capacity is scheduled to come on-line
with anticipated new plants to
be built by M&G group (2.2 billion pounds capacity) and Indorama (1.2 billion pounds).
PET growth rates have been
low and are anticipated to remain that way in the near future.
PET bottles have been experiencing “lightweighting” (the use
of less material
per bottle). Also,
retail sales of
soft drinks have
been slow due
to more health-conscious consumers, and
government
programs in
schools and
cities. On the
positive side,
however, the
impact of lightweighting likely
has run its
course, and is
not anticipated
to impact future revenues.
A potential, but unexpected,
area of growth is using PET as
a replacement material in thermoforming for cups, blister
packs and other similar items
Kevin Duffy is a Senior Inventory appraiser who specializes in the plastics industry. He
has appraised numerous plastics-related companies in North America that are involved
in distributing, compounding and manufacturing resins, films, sheets, and molds. Kevin
received his B.A. in finance from Illinois State University, and passed the CPA exam in
Illinois. Kevin has diverse business experience in
accounting, banking, manufacturing,
distribution, and retail.