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Sep 20, 2023

‘Optimizing' assets cited in Alpek Cooper River PET resin plant closure

The closure of Alpek SAB de CV's Cooper River PET resin plant in Charleston,

The closure of Alpek SAB de CV's Cooper River PET resin plant in Charleston, S.C., is an effort to "optimize" its footprint, and customers will continue to receive material from other Alpek PET production assets, a company spokesman says.

"We are optimizing all these assets with the shutdown of the Cooper River PET operations," he added. "There are multiple sites that will be involved, and not just one inheriting the products from Cooper River."

Alpek, based in Monterrey, Mexico, announced the closure on March 1. The site was built in the early 1970s, and has annual production capacity of about 375 million pounds, about 2 percent of Alpek's total assets.

Transferring production will enable annual cost reductions of about $20 million through improvements in capacity utilization.

The Cooper River plant operates as part of Alpek's DAK Americas unit. In an email to Plastics News, the Alpek spokesman said that supply needs will be sourced from across all Alpek Polyester PET production assets.

According to the state Department of Employment and Workforce, the plant closure impacted 125 jobs.

Alpek is a partner in Corpus Christi Polymers LLC, a joint venture that's building a major PET resin and feedstocks plant in Corpus Christi, Texas. After a lengthy hiatus, work on that site resumed in August.

The other partners in the project are PET makers Indorama Ventures of Thailand and Far Eastern New Century of Taiwan. Production is set to begin in 2025 at the plant, which will have annual production capacity of 2.4 billion pounds of PET and 2.9 billion pounds of purified terephthalic acid (PTA) feedstock.

Officials have said the Corpus Christi site will be the largest vertically integrated PET-PTA production plant in the Americas. The JV was formed in 2018 following the $1.1 billion purchase of a partially constructed facility from M&G Group of Italy. Each partner will procure its own raw materials and receive one-third of the PTA and PET produced at the facility to sell and distribute independently.

The Alpek spokesman said that the Corpus Christi project didn't affect the firm's decision to close the Cooper River plant. That decision "was based on optimization of Alpek Polyester's current production assets," he said.

Alpek's decision to close the Cooper River PET plant is not surprising, according to market analyst Phil Karig, managing director of Mathelin Bay Associates in St. Louis.

Karig said that Alpek currently operates about half of all North American PET resin capacity and, with the Cooper River move, "is trimming some of their presumably higher cost production capacity."

Even after the closing, Alpek will be the region's largest PET maker, Karig said, and may be able to integrate the lost Cooper River volume into their other plants through de-bottlenecking or other efficiency gains.

He added that, through the Corpus Christi project, Alpek "will gain additional capacity several times that of Cooper River within the next several years."

Alpek recently released full-year financial results for 2022. The firm set a company record with sales of $10.6 billion, up 37 percent vs. 2021. Alpek's polyester sales for 2022 — including PET, recycled PET, purified terephthalic acid (PTA) feedstock and polyester fibers — were up 45 percent to $7 billion.

The polyester unit's earnings before interest, taxes, depreciation and amortization(EBITDA) for 2022 also jumped 43 percent to $886 million. Production of those materials was up 8 percent to 11.7 billion pounds for the year.

March 1 also marked a leadership change at Alpek with Jorge Young Cerecedo replacing Jose de Jesus Valdez Simancas — known as Pepe, who had been with the firm for 46 years. Valdez Simancas will continue to serve as senior adviser at Alpek's parent firm ALFA.

Cerecedo has been with Alpek for 32 years, most recently serving as president of Alpek Polyester. He'll continue in that role as well as assuming CEO duties.

In a news release, Valdez Simancas said that he was "extremely proud of the outstanding work the entire Alpek team has carried out to continuously transform the company over all these years." Cerecedo added that he "is confident that together we will continue to boost Alpek's growth."

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