The biggest buzz around Eastman Chemical right now is methanolysis. Yet the company has had this technology to recycle end-of-life PET and polyester in its locker since the Kodak era 30 years ago. The difference today is that consumer companies like cosmetics maker Estee Lauder want their usual packaging materials, without the environmental baggage.
The contrast to a decade ago, when Eastman considered moving ahead with the project, is stark. Lacklustre demand thwarted those plans. But consumer brands now more than ever want to show off their environmental credentials, and the start-up of the $250 million facility in Kingsport, Tennessee can’t come quick enough.
“We are well ahead of pace in selling out that facility,” CEO Mark Costa said.
Once up and running, the plant will have the capacity to consume more than 100,000 tons of end-of-life plastics — from packaging to carpets and clothes — that couldn’t be recycled using traditional mechanical techniques.
Moreover, the signs are that recycled PET will command a premium over virgin grade. That’s been one of the big question marks hanging over recycling and the closed-loop idea: would customers be prepared to pay more for the same rehashed molecules?
“When you look at our PET trading at a 60-80% premium relative to fossil-fuel PET in Europe, you know there’s a completely different economic proposition going on around recycled PET and recycled polyesters,” Costa told investors on a call. “What we see is a real detachment now from this business from the fuel-stock market.”
At current oil prices, the cost for Eastman’s PET is moderately higher but any uplift in raw-material and fuel prices would change the economics.
Other chemical companies and even governments are now inquiring about methanolysis PET for packaging, leaving Eastman to cherry pick the most rewarding opportunities, Costa said.
Like Airgas, Eastman could adopt a business model where it provides the technology to a partnership in return for an equity stake. That would avoid putting projects on its balance sheet. Eastman was once one of the world’s largest suppliers of PET. The 1990s and early 2000s were a boom time for PET as drinks bottles and food containers adopted the transparent polymer. As the market matured, Eastman reported mounting losses.
“We are not getting back into the normal PET business, we got out of that in 2011 and we’re staying out of it,” Costa said.