Asia Pacific market propels PET demand in flexible packaging sector
The chemical polyethylene terephthalate (PET) which is an integral part of flexible packaging had witnessed growth of around 7% CAGR last decade mainly because of its diverse application in the fast moving consumer goods (FMCG) and food sector, according to chemicals intelligence provider GBI Research. Global PET demand stood at 6,472,350 tons in 2000, increasing at a compound annual growth rate (CAGR) of 6.9% to reach 12,621,553 tons in 2010. This upward trend is expected to continue in the near future, with global PET demand tipped to reach 23,452,281 tons by 2020, following a forecast CAGR of 6.4%. GBI Research analysis indicate that fast growing economies like the BRIC nations (Brazil, Russia, India and China) are emerging to be strong contenders in the global PET market.
A significant portion of demand for PET came from the Asia-Pacific region, which accounted for 40.6% of global PET demand during 2010. This is expected to increase to 47.8% by 2020, as China is rapidly emerging as a global petrochemical products manufacturing hub. Production in China enjoys the advantage of relatively low operating costs and, as a result, there have been huge capacity PET capacity additions in the country, with the country accounting for almost half of Asia-Pacific’s import volumes during 2010. In addition, India’s large population is causing consumption of packaged goods to rise, creating increased demand for PET capacity additions.
Flexible packaging will continue to grow in importance as major retail chains demand greater product protection and longer shelf-life for various products. Carbonated soft drinks (CSD) accounted for an impressive share of 31.5% in the demand for PET during 2010, while the food and beer sectors accounted for respective shares of 22.4% and 11.4%. According to GBI Research’s analysis, PET packaging is expected to increase its share in the packaging sector towards 2020 due to better gas barriers and ultraviolet (UV) light protection, which extends the shelf-life of PET-packaged products, while new hot-filling processes are creating new opportunities for PET packaging for pasta and sauces.
Contributing its share to the Indian packaging market is Uflex Ltd. which is India’s largest flexible packaging company. It is all set to launch a PET film plant in Kentucky, USA and will invest $80-85 mn in the plant. The plant would produce 30,000 MTPA of PET film and the company is currently in talks with local government for land acquisition. The plant is expected to be fully operational by December 2012 and will contribute $20-22 mn per annum of EBITDA.
During the financial year ended March 31, 2012, Uflex Ltd completed the 2nd phase of expansion of its facility in Mexico aggregating a total capacity of 60000 MT of PET film and commissioned an AL-OX coater, CPP plant of 12000 MTs and PET film of 30,000 MTs at Egypt.