A troubled polyethylene terephthalate (PET) project in Corpus Christi, Texas, has once again been mothballed by its owners—Alpek, Indorama, and Far Eastern New Century—which will reevaluate its future in the face of rising costs.
The refrain is familiar for the project, originally undertaken by the Italian chemical company M&G Chemicals a decade ago. At the time, the plant was expected to cost $1 billion and become the largest vertically integrated plant in the Americas to make PET, the resin used in beverage bottles. It is slated to have annual capacity to make 1.1 million metric tons (t) of PET and 1.3 million t of purified terephthalic acid, a PET raw material.
But soon after groundbreaking, financial stresses at M&G weighed on construction. A contractor, Fluor Enterprises, laid off 274 workers in 2017. And firms involved in construction registered about $100 million in liens against the plant due to nonpayment. M&G filed for Chapter 11 bankruptcy in October 2017.
The three current owners, which are among the world’s largest PET makers, bought the project out of bankruptcy in 2018. They intend to split the output from the facility between them and market it separately.
But they have had their own problems, halting construction in 2020 because of rising costs and the COVID-19 pandemic. They resumed work in 2022 with the goal of completing the project in 2025.
Alpek now says that construction and labor costs are exceeding expectations. “Consequently, the partners have decided to pause and further assess options to optimize the project’s costs and timeline,” the company states. “The site will be properly preserved to be able to resume construction in the future.”
The world already has plenty of PET capacity. In a presentation at the World Chemical Forum in Houston last month, analyst Ashish Pujari noted that the industry’s operating rate—the ratio of demand to production capacity—will soon decline. “We are adding so much capacity in an already oversupplied market that operating rates are bound to touch 60% by 2024 to 2025,” he said.