Alpek's newly acquired rPET facility to start up in Q3 2021: CEO

Mexico's Alpek expects to finish commissioning and begin production at a Reading, Pennsylvania, recycled polyethylene therephthalate facility in the third quarter of 2021, CEO Jose de Jesus Valdez said July 22.

DAK Americas, Alpek's US subsidiary, bought the facility in late-May for $98.1 million at an auction in the bankruptcy case of California recycled PET producer CarbonLite.

Valdez said the recycling and pelletization facility is one of the largest recycled PET units in the Americas, and can produce food-grade pellets.

The acquisition brought Alpek's total recycled PET capacity to 282,000 mt, "reaffirming its position as the largest PET recycler in the Americas and achieving the company's target of supplying its customers with 25% of rPET content before 2025," Valdez said.

PET is used to make plastic bottles and polyester.

Thailand-based Indorama Ventures, the world's largest virgin PET manufacturer, bought CarbonLite's rPET facility in Dallas, Texas, at the bankruptcy auction for $63.87 million, and TGS Shelf II Acquisition LLC, an affiliate of Houston private equity firm The Sterling Group, bought a third CarbonLite facility in Riverside, California, at the auction for $57.5 million, according to bankruptcy records.

Texas PET/PTA complex costs remain under review

Indorama is one of Alpek's partners in a major PET/purified terephthalic acid complex awaiting further construction near Corpus Christi, Texas. Valdez said July 22 he had no update on the progress of that project, which is undergoing a cost review throughout 2021. Alpek, Indorama and their partner Far Eastern New Century, aim to finalize engineering and construction contracts by year-end so construction can begin in early 2022.

The project includes a 1.1 million mt/year PET plant and an upstream 1.3 million mt/year PTA unit. The three companies bought the unfinished project out of prior owner M&G Chemical's bankruptcy in 2018 for $1.25 billion.

Since then, they have evaluated costs to restart construction that M&G halted in October 2017, and those efforts were suspended in 2020 amid COVID-19 restrictions.

When an analyst asked whether Alpek would buy a larger stake in the project and proceed if one or both partners decided not to push forward with it, Valdez said the company would consider those options if that situation arises.

"At this point, we are not there," he said. "From what we know, all of the partners are interested in pursuing the project."

Valdez noted that demand for virgin PET and polypropylene, which Alpek also produces, was seen strong as COVID-19 vaccinations have improved market confidence, which has strengthened the global economy. PP is heavily used in the automotive sector for dashboards, door panels and other vehicle plastics, but also is used to make plastic food takeout containers, carpet, and other products.

"Alpek has reached 1.2 million tons this period, setting a record for any second quarter in our history and achieving an 8% increase year-on-year," CFO Jose Carlos Pons De La Garza added.

Volumes in the company's plastics and chemicals segment rose 45% on the year, while polyester segment volumes rose 1%.

The company reported quarterly net income of $124 million, up from $6 million in the year-ago quarter.