Boom in Bottle Plastic

THAILAND'S Indorama Polymers plans to build what it says will be North America's largest polyethylene terephthalate (PET) plant. Set to open in Decatur, Ala., by the end of 2008, the $140 million facility will add 430,000 metric tons of annual capacity for the plastic to the U.S. market.

Although not a well-known name in the chemical enterprise, Indorama already operates PET plants in the U.S., Europe, and Thailand. The company claims to be the world's eighth largest PET producer and says it will rocket to number three following the construction of the new plant and expansion of existing ones.

The world's number one producer, Italy's Mossi & Ghisolfi Group, announced its own North American investment plan in July: an 800,000-metric-ton plant somewhere in the U.S. and 200,000 metric tons worth of expansion of existing facilities in West Virginia and Mexico.

Meanwhile, the number two producer, Eastman Chemical, opened a 350,000-metric-ton PET plant in South Carolina earlier this year, although it announced plans to close an equal amount of older capacity. The firm has said it is considering opening another U.S. plant by 2009.

According to Indorama CEO Aloke Lohia, the world needs more PET production capacity to serve growing carbonated soft drink, water, and custom-container markets. "We see a looming PET shortage in 2009 as each region in the world heads toward self-sufficiency," he says. Indorama notes that it is currently importing PET from Asia to meet demand on the U.S. West Coast.

Edgar Acosta, who follows the PET business for the Houston-based consulting firm DeWitt & Co., considers a North American shortage wishful thinking, given that 1.4 million metric tons of new capacity has been announced for a market that is less than 5 million tons today. Provided oil prices fall and PET prices drop from their current high levels, Acosta expects the market will grow at 10% annually and be able to absorb the new production in three to four years.

Indorama says its plant will be located adjacent to a BP facility in Decatur that produces purified terephthalic acid, a key PET raw material.