PET focus: Octal Petrochemicals

Food and consumer packaging markets in the US, Europe and China are Octal’s prime targets in 2009. The first shipments of PET resin to Europe were shipped earlier this year, and Octal expects total sales to reach US$400 million by the end of 2009.

The new plant marks the company’s emergence as a global player in PET resin and clear rigid packaging.

Octal has become the largest exporter from the port of Salalah and is a growing local employer. Octal uses world-first technology to produce clear rigid PET sheet directly from melted PET resin, delivering significant energy savings and enhancements to the quality and clarity of the final product.

“The biggest development since we last spoke to Petrochemicals Middle East is that we are operational now, but some very important things have happened in the last year,” explains CEO Nicholas Barakat.

“One is proof of concept. The foundation of our business is to chase the clear rigid packaging format that is the fastest emerging product for the packaging of consumer products and foodstuffs. Crucially, what we have proven is that we can go from the resin to the sheet without going through the resin-melt stage.”

For any packaging material to be successful it has to be cost effective. Packaging is ultimately disposable, so it’s important to aim for the best material qualities at the lowest possible cost. Octal’s innovative solution was to create a perfect PET sheet in terms of mechanical and optical qualities without that resin, or chip stage. “This is significant for many reasons, but chief amongst them is the fact that we use 65% electricity than our competitors who still have to go through that melt stage.”

A pleasant discovery for Barakat and his team is that not only does the new thermoforming process work, the product has superior optical qualities. “Our product is more transparent and there is less crystalinity in the end product – this is key for food and beverage producers because they want attractive packaging on their end-goods.”

Octal has managed to achieve this because traditionally in the chip phase the plastic would be cooled and been heated again, but because the new process skips that, there is less thermal history.

“We’ve not fully measured all of the mechanical properties, but our initial view is that there is enhancement there too, beams Barakat.

Sheet Business

Octal has pioneered the direct-to-sheet extrusion technology in the production of PET Sheet. Traditional thermoforming processes start with resin pellets that are fed into large dryers. Any moisture in the polymers during the melting phase will cause problems downstream. These dryers require tremendous amounts of energy to operate.

Once the PET resin has been sufficiently dried, it is loaded into a screw drive that progressively melts the material into a liquid form. The PET molten plastic will then pass through a melt pump that regulates the amount of PET plastic that will be fed into the extrusion rolls.

A molten curtain of PET plastic is dropped onto the cooled extrusion rolls that will then feed the new sheet into the next segments of the process.

Octal’s method replaces the drying – melting process and replaces it with a resin reactor that creates the product directly from its raw material components.

Octal’s reactors create the plastic in a pure molten form, so that when it is time to extrude the polymer, there is no contamination and no need for extensive energy outputs in the drying phase.

In terms of sheet accuracy and consistency, Barakat says that significant advantages and efficiencies are being made through advanced control techniques. “Another important achievement or milestone, is what we’ve managed to do with calliper control. We are achieving a plus or minus 1% deviation, whereas the industry is typically somewhere between 5%-7% per cent. We are now making sheets that are plus or minus one tenth of a per cent with our new equipment.”

Going directly from melt phase onto the rollers means that a huge amount of maintenance intensive equipment is removed from the equation.

“By simplifying the process we’ve negated a huge amount of complexity – and cost,” says Barakat.

Packaging focus

The sheet product is typically used in sandwich packaging, or cut fruits and salad boxes. It’s a solid container that has been formed in the past using PVC and polystyrene. Now the trend is shifting towards PET. There are several reasons for the move, but principally it is a product that is tried, proven, and people like it.

“Most products are now sold on a hook, whether it’s a shirt, food, screwdriver or electronic goods,” explains Barakat. “This enables retail outlets extra space through depth, reduced time wasted for repackaging, sorting and clearing up at the end of the day.

Retail stores worldwide have cottoned on to the fact that putting small, high value, goods in bigger packaging it makes them much more difficult to conceal and steal. Ink toner cartridges, iPod accessories and razor blades are just a few examples or where PET packaging has been introduced on a global scale.

“APET offers great mechanical and optical properties with both merchandisers and thermoformers. It’s a product which enables brands to convert their packaging needs to APET, while keeping up to date with consumer’s high demands for convenience packaging.”

APET is the fastest growing material for the clear rigid plastic packaging of food and consumer products. Its clarity, gloss and toughness make it an ideal material for goods that require product protection while retaining shelf impact. The majority is used for the packaging of fresh foods, especially dairy products, where its oxygen barrier properties make it an ideal choice.

With the boom in PET packaging has come a need to differentiate one manufacturer from another. Standard PET production has become more efficient, but ever-tightening margins have demanded that even more end product be generated from feedstock supplies.

“This is an area where we really feel we have, for the time being, an unassailable lead on the competition. We made a large investment in research and development and are focused on process optimisation. This means we have a first-class product that provides users with greater yields as the specifications have been greatly narrowed,” says Barakat.

Start-up

With such ambitious plans, and being a first mover in Salalah, the plant’s development was not without hitches, but given that the construction and commissioning phase took place when the downstream business worldwide was at full tilt, Barakat says that the process was relatively painless.

“We did have a couple of months delay, but crucially we were able to meet all of our commitments and now that we’re full steam ahead, we’re getting a huge amount of interest and enquiries.”

Requests have come in thick and fast from all over the globe, but Barakat is cautious with his optimism. “Of course some of those enquiries are just testing us out. We are mindful of distinguishing between real market traction and curiosity. We’ve got to be sure that people aren’t going to try it, and return to their established ways. It’s something I’m very aware of, but I remain confident because the consumer has voted for PET. Now the commercial guys are voting for PET, so it is emerging as the substrate of choice, and we are best positioned to capitalise on that.”

Barakat says that now that business is building so fast, this is the most important stage in the company’s history.

Stepping up to the plate and delivering for the big buyers worldwide will mark Octal apart from its competitors, and grow the all-important market share.

“Absolutely the key stage for Octal is now, because the company is at the point where we are converting the big customers from their standing orders of 600 tonnes per month up to 2000 tonnes per month, so basically they’re shifting there whole capacity away from polystyrene and PVC to PET.”

Growing a business organically is one thing, but the CEO says that expanding PET market share was only one goal, and taking market share away from the other plastics was also something he anticipated early on.

Aiming high

Packaging is a $500 billion business. Getting segments of that industry right, means you get it very right. “A good example I like to use is that of a cigarette carton.  It’s the same around the world. A toothpaste tube is the same around the world, lipstick, disposable cups, all identical wherever you go. It’s truly a global industry in that there is very little to differentiate the end product from country to country, continent to continent,” says Barakat. This means that when a company gets the packaging sector right its not just 1000 or 10 000 units they produce, it is huge volumes, and a lot of business. “That’s very appealing to us,” laughs Barakat.

Future talk

Over 1.6 million tonnes – close to 10% of world PET production capacity has shut down in recent years – forced by feedstock high prices, and a declining bottled water market. The fall in product packaging was largely attributable to seasonal variation, and will doubtless bounce back, but the crunch in the industry forced many of the smaller producers to fold, or be swallowed up – seen most acutely in North America and Europe.

Smaller producers now going to have a very tough time competing – but Barakat is certain the size and scope of Octal’s business plan will see them through to a dominant position in the PET business.

“A lot of projects that we’ve seen coming up are just that – projects. We consider ourselves very different in that we are really in this for the long haul, investing a huge amount for the future, and really building a company.

Because of this we’ve been able to attract some real top talent, which can be hard to do with a young company.”

Already Octal is the biggest PET sheet manufacturer, and is on course to be the biggest PET manufacturer. Certainly the company’s investment strategy is ahead of the curve. Already Octal has thrown $350 million into the Salalah plant from scratch.

“That space is wide open for us, because there has been a lack of leadership in this industry. The difference between us and the pack is that we are driving the industry towards the packagers which no one has really got a handle on before. The consumer has voted for PET. It’s a comfortable package, the merchandisers like it because it has excellent protective properties, and it’s an attractive packaging medium.”

In the packaging business, three key factors always rule supreme, says Barakat. “It’s all about margin, leveraging cost advantage, and location – Octal has all three absolutely wrapped up.”

Jargon Buster – PET

Polyethylene terephthalate, commonly abbreviated PET, is a thermoplastic polymer resin of the polyester family and is used in manmade fibres, beverage, food and other liquid containers.

Depending on its processing and thermal history, it may exist both as an amorphous (APET), which is transparent, and as a semi-crystalline, more opaque and white material.

PET can be semi-rigid to rigid, depending on its thickness, and is very lightweight. It makes a good gas and fair moisture barrier, as well as a good barrier to alcohol (requires additional “Barrier” treatment) and solvents. It is strong and impact-resistant. It is naturally colourless with high transparency.

The majority of the world’s PET production is for synthetic fibres (in excess of 60%) with bottle and food packaging accounting for most of the remaining 40%.