All eyes on Asia: Will Asia become a potential sourcing destination for the US PTA buyers?
Being in a highly consolidated market, with only 4 major players, US PTA suppliers are enjoying higher profit margin of 10-15% as against the players in the more fragmented Asian market with profit margin of 0-4%. This scenario exists despite similar levels of production cost in both the regions. Excess capacity of PTA in Asia, which is often termed as irrational capacity additions over the last 3 years, is another reason for these squeezed margins in the region. Could this be an opportunity for the US PET manufacturers to source low cost PTA from Asian markets? If yes, this can help in increasing the margins of US PET manufacturers. Introduction Margins touching near zero figures, murky demand outlook and overcapacity are problems which have plagued PTA market for the past 2 years. Moreover, the planned expansions are still being commissioned and Asia will remain the center for future capacity additions and the growth engine for PTA supply market during 2015-2016. Author: Nishanth Reddy
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