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PET Supply Chain and Market Outlook
IDDBA Spring Webinar, March 2021
Alasdair Carmichael
NAPCOR is the trade
association for the PET
packaging industry in the
United States, Canada and
Mexico, headquartered in
Charlotte, North Carolina.
55 members encompass all
facets of the PET value chain.
INTRODUCTION TO NAPCOR
2
NAPCOR Members
Container Producers
PET Reclaimers
Suppliers to the PET Industry
Sheet & Thermoform
Producers
PET Resin Producers
3
o Stem the anti-plastic—and, specifically anti-PET—sentiment.
o Put pro-PET advocacy strategies in motion.
o Build consumer confidence in, and appreciation for, PET-based
products, packaging and brands.
o Drive brands to embrace PET as the best choice for their business
and the environment.
o Create a strong, common voice for the PET industry.
o Engage NAPCOR membership, partners, customers and
consumers through accurate, meaningful and creative
communication, and mobilize them to take the lead in a turn-around
for the PET industry.
POSITIVELY PET BY NAPCOR - OBJECTIVES
4
o Where did disruption in the PET supply
chain occur in 2020?
• How will 2021 look different?
o What will sustainability look like for PET
packaging in terms of market availability
and consumer demand in 2021?
TOPICS
5
o Polyethylene Terephthalate is PET
PET SUPPLY CHAINS
o Polyethylene Terephthalate is Polyester
o PET is Packaging; Polyester is Fibers
o They both require the same raw materials,
so we can have supply tightness because of
strong markets for textiles or for packaging.
6
o Oil and Natural Gas
o Paraxylene to PTA
o Ethylene to MEG
o 0.84 PTA + 0.36 MEG
o 1 molecule of PET or Polyester
PET RAW MATERIALS
7
GLOBAL PET/POLYESTER PRODUCTION 2019 BY APPLICATIONS
-
20
40
60
80
100
120
140
Fibers PET Resin Film Others
bil
lio
n lb
s
64%
27%
3% 6%
Global Capacities
2019 (mm lbs)
China 163,207
India 27,626
USA 13,519
Taiwan 6,323
S.Korea 5,071
Total Production
199 billion lbs
Source Wood Mackenzie
8
o Demand for PET - good, but Textile Fibers was badly hit by Covid in
2020, some recovery in 2021. No structural shortage of raw materials.
o PET pricing driven by oil prices. EIA average for WTI oil in 2020 was
$39.17, they forecast 2021 avg. of $51.56, but already at $62.30
o The only interruption in US PET supply chain was Q3 2020 when 2
hurricanes took out Ethylene and MEG capacity in LA and MS.
o Feb 2021 Texas freeze causes further serious outages. 68% of US
Ethylene capacity is in TX. 19 Petchem plants in TX announced Force
Majeures Feb 15 – 19 and 23 plants closed, some restarts, but supply
diminished.
HOW DOES THE SUPPLY CHAIN LOOK IN 2020/21
9
o A major supply issue in 2H 20 and Q1 21 is Ocean Freight. Typically a
40ft container from China to US East Coast has been $3 - 4,000, Q1
prices are $12,000 and for quick loading are as high as $16,000.
Adding up to 18 – 24c/lb for imported PET resin.
o Import options severely restricted. Shipping time and cost. Domestic
producers running full. The US needs imports. No new domestic
capacity likely before 2024.
o Inventory is low in the supply chain – users did not commit to volumes
due to Covid uncertainty, but consumer demand has been strong.
o Shipping lines withdrew capacity, port congestion – labor shortages
due to Covid, containers in the wrong places. Plus Chinese New Year!
CAN IMPORTS HELP?
10
o 2 Key Words:
o Sustainability
o Legislation
HOW WILL THE MARKET LOOK IN 2021
11
BRAND COMMITMENTS - SAMPLES
Coca-Cola debuts 100% recycled PET bottle for
US. Sprite brand will also begin transitioning to a
clear bottle. Feb 2021
PepsiCo to transition to 100% recycled PET in
EU - The move to 100 percent recycled PET is
estimated to eliminate over 70,000 metric tons of
virgin, fossil-fuel based plastic per year. Dec 2020
Keurig Dr Pepper’s Snapple and
Core bottles are transitioning to 100-
percent rPET by 2021. Oct 2020
Nestle investing up to $2 billion to lead
the shift from virgin plastics to food-
grade recycled plastics,
12
o State Level – California passed, Colorado, New Jersey, Maryland, Texas
Massachusetts, Washington, Connecticut, & others all debating action
incl EPR.
o Federal – “Break Free from Plastics Bill”, “Save our Seas”, “EPA –
National Recycling Strategy” & others.
o For PET a common theme is increased Recycled PET (RPET) content.
A number of bills require bottles to have 25% RPET content by 2025, up
to 50% by 2030 and even 80% by 2040. Also beginning to see RPET
content in PET thermoforms (clamshells etc).
o PET is the most recyclable of all plastics – so we see most of this
legislation as positive for PET….
LEGISLATION
13
o PET is the most recyclable of all plastics – so we see most of this
legislation as positive for PET….BUT, there is a problem!
LEGISLATION
o COLLECTION!!
o Typically the US only collect approx 30% of our PET bottles, and
2019 fell to 28%, so it is going to be difficult to have 50% RPET
content if we only collect 30% to go back through recycling!
o We have to improve Collection if we are going to meet Legislation
requirements and Brand Commitments.
o NAPCOR has modelled the issue and there is a lot of work to be
done to have any chance of meeting the goals.
14
RPET CONTENT OF 15% IN 2022, 25% IN 2025, 50% IN 2030 WOULD NEED:
0
1
2
3
4
0
20
40
60
80
100
15 25 50
% RPET Content in Bottles
% R
ecycle
Rate
2019 Rate Report
• Bottle growth rate of 2%
• Non bottle applications
for RPET & RPET
imports remain @ 2019
levels.
• Investment based on
greenfield plant to Food
Grade Pellet with
120mm lbs input and
cost of $80m.
Inve
stm
en
t $b
ns.
15
RPET CONTENT OF 15% IN 2022, 25% IN 2025, 50% IN 2030 WOULD NEED:
0
1
2
3
4
0
20
40
60
80
100
15 25 50
% RPET Content in Bottles
% R
ecycle
Rate
Inve
stm
en
t $b
ns.
RPET Content 15% 25% 50%
Recycle Rate % 39.6 49.0 83.5
Investment $bn 0.42 1.08 3.5
Process Yield
• 2022 Yield remains at
62.8%
• 2025 & 2030 Yield
improves to 70% due to
higher number of
deposit states.
RPET PRODUCT CATEGORIES 2019
16
41%
15% 7%
28%
7% 2% Fiber
Sheet & Film
Strapping
Food & BeverageBottlesNon-Food Bottles
Other
INTEGRATION OF RECLAIMER CAPACITY
17
Shares of Non Bottle
Fiber 58%
Thermoforms 19%
Strapping 21%
Other 2%
Capacity Nov 2020 = 2.655 bn lbs
40%
6%
34%
20%
Non-Bottle
Bottle
Market Seller
PET Resin
19
