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Jumbo in Limbo: PET plant’s shuttering has US market tight
HOUSTON, September 28, 2017 (PCW) --What will become of the world’s largest PET plant, Project Jumbo in Corpus Christi, Texas?
It is about 85% complete but at a total standstill with no indication of when it might be operating. The main contractor, Fluor, shuttered work at the plant this week on orders from Chemtex, the engineering unit of Jumbo’s owner/operator M&G Chemicals, a unit of Mossi Ghisolfi Group.
M&G faces financial problems, including allegations of non-payment made by previous Jumbo contractors. Its major Jumbo partner, Mexico’s Alepk, said in a public statement this month that M&G owes it $49 million in non-payments for PTA feedstock deliveries and that it had stopped PTA shipments to M&G PET plants in Mexico and Brazil. Alpek has rights to 500,000 mt/year of Jumbo’s PET output; its design capacity is 1.1 million mt/yr of PET and 1.3 million mt/yr of PTA at a separate PTA unit.
M&G has repeatedly told PCW it cannot comment on the Jumbo situation or any issues related to its business.
All of Jumbo’s PET was slated for the US. It was supposed to become the largest PET supplier to one of the world’s largest PET markets. Startup was originally targeted for 2016 and delayed several times with the most recent target 4Q 2017.
Now Jumbo’s in limbo.
Port Corpus Christi, meanwhile, is hopeful. The Port built an oil dock and supporting facilities as part of the Jumbo project and has promoted Jumbo as an important new project. In a statement to PCW this week the Port said, “given the fact the plant is approximately 85% complete, we remain hopeful M&G will reach agreements with their lenders, resume construction, and ultimately commence operations in the coming months.”
A Market Without Jumbo
Word of no Jumbo PET any time soon has tightened spot PET availability. PET resin spot business this week was done at 68-70 cpp delivered, for non-contract truckload deliveries, up 10 cpp from a month ago.
End users and distributors had realistically been counting on the plant to be producing in early-to-mid 2018. Without this infusion of supply, they are looking to stock up now to assure supply requirements for 1H 2018 are met.
PET producers in the US and Canada (Dak America’s Selenis operation in Montreal) this month have seen more demand for Q4 2017 and Q1 2018 deliveries than typical for this time period, markets sources said. One distributor was having to cover this month for multiple truckload deliveries to a US customer of M&G.
The Wild Card: US PET Imports
US PET resin imports (the US also imports rPET flake and PET scrap) this year through July have come from 39 countries; they totaled 403,089 mt in Jan-Jul 2017, up 2,319 mt or 0.6% from Jan-Jul 2016. Distributors and end users are now expected to book more imports than originally planned due to the Jumbo limbo.
The US is a coveted PET market due to strong demand year after year and, in general, reliable and timely payment. Imported PET resin is technically bottle grade, with an IV of 78 ml/gram or higher, and can be used for bottle, packaging and sheet applications. Supply from Asia and South American countries remains abundant. Mexico remained the top source of US PET resin imports at 171,947 mt in Jan-Jul 2017—43% of the total -- up 29,481 mt or 21% from the 2016 period. Imports from South Korea, number six in import volume, totaled 24,730 mt in Jan-Jul 2017, up 10,657 mt or 76%. Imports from Taiwan, number two in volume, totaled 57,568 mt in Jan-Jul 2017, down 1,687 mt or 3% from Jan-Jul 2016.
PET imports from Mexico come from several locations, including M&G’s Altamira plant, with capacity of 590,000 mt/yr. Its Brazil PET plant’s capacity is 650,000 mt/yr. Its sole US PET plant is on the Ohio River in Apple Grove, WV (360,000 mt/yr capacity), where it receives feedstock via barge. -- Xavier A. Cronin