PET duty not to change much for Lotte

The recently imposed duties on Polyethylene Terephthalate will not have a sizeable impact on Lotte Pakistan’s sales.

KARACHI: The recently imposed duties on PET (Polyethylene Terephthalate) will not have a sizeable impact on Lotte Pakistan’s sales, according to BMA Capital.

The European Union (EU) imposed countervailing duties of €44 per ton on PET imports from Pakistan, in addition to imposing the same on Iran and UAE. The three together account for about 39 per cent of total PET imports into the EU.

PET is used in the plastics industry for the production of bottles and sheets.

Any drop in demand from the PET sector is expected to be picked up by the PSF segment which remains well in demand as Pakistan is a net importer of almost 100,000 tons annually, said BMA Capital analyst Sana Bawani.

Local PET dynamics

Over 30 per cent of chemical Purified Terephtalic Acid (PTA) production is sold to the PET sector while the rest goes to PSF and others.

Novatex, a Gatron Group Company, is the sole producer of PET resins in the country at present, informed Bawani in the company research report.

Novatex has a capacity to produce 235,000 tons of PET and operates at an estimated 90 per cent capacity utilisation level.  Furthermore, about 80 per cent of its production is exported while the rest is sold locally, Bawani said.

However, the country still imports about 80,000 tons of PET annually suggesting further room for penetration in the domestic market.

PET exports to EU surge

Novatex is not only the sole PET producer but also the sole exporter of PET as well, said Bawani.

About 40 per cent of its exports go to EU while the rest is exported to US and Middle East, according to the research firm.

Imposition of duties would make Pakistani PET expensive in the EU market and therefore, Novatex may see a decline in its sales going forward, added Bawani.

Published in The Express Tribune, October 5^th, 2010.