Is PTA no longer fragrant? Many giants are “withdrawing” one after another, what’s going on?
Sudden! Ineos, Rakuten and Mitsubishi withdraw from PTA business!
Mitsubishi Chemical: On December 22, Mitsubishi Chemical announced a number of news, including the announcement of the planned transfer of 80% of the shares of the Indonesian subsidiary and the appointment of a new CEO and other high-level personnel.
Mitsubishi Chemical Group Co., Ltd. decided at an executive meeting held on the 22nd to transfer 80% of the shares of Mitsubishi Chemical Indonesia (MCCI) to PT Lintas Citra Pratama, which operates pure terephthalic acid ( PTA) business.
MCCI has been producing and selling PTA in Indonesia since its establishment in 1991. Although the PTA market and business in Indonesia are stable and strong, the Group continues to consider its business direction while promoting portfolio management focusing on market growth, competitiveness and sustainability in accordance with the operating policy of “Forging the Future”.
It is reported that an affiliate of PT Lintas CitraPratama plans to commercialize paraxylene (the main raw material of PTA) in Southeast Asia.
Previously, New Chemical Materials reported that international giants including Ineos and Lotte Chemical have closed/withdrawn PTA projects one after another.
Lotte Chemical announces: complete withdrawal from PTA business
Lotte Chemical announced that it plans to sell its 75.01% stake in Lotte Chemical Pakistan Limited (LCPL) and completely withdraw from the purified terephthalic acid (PTA) business. This business divestment is part of Lotte Chemical’s mid-term strategy to strengthen its high value-added specialty materials business.
LCPL is located in Port Qasim, Karachi and produces 500,000 tons of PTA annually. The company sold the business to Pakistani chemical company Lucky Core Industries (LCI) for 192.4 billion won (approximately 1.06 billion yuan) (Lotte Chemical acquired LCPL for 14.7 billion won in 2009). LCI mainly produces polyester, a derivative of PTA. It produces 122,000 tons of polyester polymer and 135,000 tons of polyester fiber in Lahore each year, while it produces 225,000 tons of soda ash in Heulla every year.
Lotte Chemical stated that the funds obtained from the sale of the PTA business will be used to develop the existing high value-added product markets such as polyethylene, polypropylene, and polyethylene terephthalate, expand the specialty chemicals business, and enter environmentally friendly materials. cause.
In July 2020, Lotte Chemical stopped producing PTA at its 600,000 tons/year plant in Ulsan, South Korea, and transformed it into a facility for the production of refined isophthalic acid (PIA). The current PIA production capacity is 520,000 tons/year.
Ineos: Announcement of closure of a PTA unit
On November 29, Ineos announced that it plans to close the smaller and older of the two PTA (purified terephthalic acid) units in its integrated PX and PTA production facility at the Hull plant in Antwerp, Belgium.
It is reported that the device has been out of production since 2022, and its long-term prospects have been reviewed for some time.
Ineos mentioned in its public news that the main reason for the shutdown of the unit is that the increase in energy, raw material and labor costs has made European production more and more export-oriented relative to the newly commissioned PTA and derivatives production capacity in Asia. Lack of competitiveness; and the group hopes to focus more on high-end new materials.
Raw materials are being put into production like crazy, but there is “0” demand from the downstream?
Looking back at the domestic PTA market, as of now, the average annual price of PTA in 2023 has declined compared with 2022.
Although the recent Red Sea crisis has combined with the impact of local shipping closures due to cold wave weather in China, PTA has fluctuated upwards; however, terminal textile orders have been poor at the end of the year, and downstream spinning and weaving companies lack confidence in the market outlook. They are facing increased inventory and greater financial pressure. Against this background, there is strong resistance to high-priced raw materials, which makes it difficult to increase the spot price of polyester varieties, resulting in a significant decline in the profitability of many polyester varieties.
In addition, with the rapid development of integrated projects, PTA production capacity will still show an increasing trend in the future. Domestic PTA is expected to be put into production in 2024 with 12.2 million tons, and the growth rate of PTA production capacity may reach 15%. From the perspective of production capacity, PTA may face greater excess pressure.
In recent years, the domestic PTA industry has experienced a period of overcapacity and a period of overcapacity reshuffling. Changes in the supply pattern have had a greater impact on the market. As new devices are put into production, the oversupply situation in the domestic PTA industry may become more serious in the future.
Elimination is accelerated! Industry competition is intensifying
With a series of large PTA equipment put into operation, the overall PTA production capacity has become very large, and industry competition has become increasingly fierce.
At present, leading PTA companies continue to lower processing fees, seize market share, eliminate backward production capacity, and most of the devices with high processing costs have been eliminated. In recent years, the newly put into production of PTA devices are all advanced devices of more than 2 million tons from large manufacturers, and the industry average processing Costs have dropped significantly. not yetWith the increase in advanced production capacity in the future, the average processing cost of internal equipment for PTA production in the industry will decrease with the start of production, and processing fees may remain at a low level for a long time.
Therefore, in the context of oversupply, intensified industry competition, and shrinking profits, it is undoubtedly difficult for companies to survive. From this point of view, the choices of Ineos, Rakuten, and Mitsubishi are also reasonable, whether they are to focus on the main business and divest the business, or to Survive with a broken arm, or prepare for subsequent cross-border and other strategies.
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