Executives from Tennessee-based Eastman signaled uncertainty with the future of a federal grant supporting construction of their second chemical recycling plant, and apprehension about a potential trade war with China, during the company’s Circular Economy Deep Dive investor meeting.
“When it comes to the reliability of the grants, well, we’re in a new political world, so I’m not going to predict what happens,” said CEO Mark Costa in the Nov. 21 call. He added that Eastman’s investments help work toward reshoring U.S. production and building a local economy, which is “in line with the current agenda of the incoming administration.”
In March, Eastman was awarded up to $375 million in funding from the U.S. Department of Energy and as a result announced it would proceed with a second chemical recycling plant, located in Longview, Texas.
Although President-elect Donald Trump has not specified plans regarding recycling, he has pledged to do away with unspent funds from the Inflation Reduction Act, which helped greenlight such projects as Eastman’s Longview plant.
“Eastman is already under award contract with the DOE for our project in Texas,” spokesperson Kristin Parker told Plastics Recycling Update shortly after the election. “We are working together closely and don’t believe the change in White House leadership will impact our award.”
During the investor event, Costa added that programs funded by the Inflation Reduction Act and the 2022 CHIPS and Science Act, which incentivizes U.S. manufacturing especially for semiconductor chips, “are incredibly important for our national security to continue to increase our industrial base and our national security to be able to supply our own materials, as opposed to depending on other countries. So I think that that’s hopefully still very much in line. And since we have a signed contract, hopefully very durable.”
Net capital required for the new Texas plant is around $900 million, and “obviously, benefiting from a very large grant from the DOE,” said Chief Commercial Officer Brad Lich during the event. “We feel good about our engagement from the DOE, and I also feel very good about the engagement and support from the state of Texas, from the community of Longview.”
The project “really checks all the boxes for whatever stakeholder group you’re talking about because we’re addressing plastic waste, we’re creating U.S. jobs, both in the construction of the facility as well as U.S. jobs in the operation of the facility, and then we’re cutting off the need for imports when it comes to Chinese imports or other countries’ imports on both virgin PET and recycled PET,” Lich added.
Costa added that “people are very emotional about plastic waste in their environment, and they want it out. That’s sort of bipartisan. It’s not only an agenda in progressive states, and they want that solved now.”
In discussing the company’s 2025 outlook, Costa used the last pre-pandemic year as a comparison, including the tariff-induced tensions with China that dampened demand and raised consumer prices.
“2019 was not a good year for our industry or Eastman because that was when the trade war was going on with China, which maybe is a little bit relevant to what we’re looking at going forward in the future now with the outcome of the election,” he said, adding that for 2025 the company expects only modest improvement from 2024 levels in demand for durable goods and home construction.
On Nov. 25, Trump announced via social media that he would impose additional tariffs on Chinese-origin goods, as well as on North American trade partners Canada and Mexico, on his first day in office.
France project remains paused
Referencing Eastman’s planned facility in France, executives said during the call that planning remains paused as the company works on establishing offtake contracts, which is moving “a lot slower than we thought” due to macroeconomic headwinds, Costa said, though Eastman isn’t seeing partners in the project disengage.
Lich said the impending EU Packaging and Plastic Waste Regulation, which will encourage recycling rates and discourage incineration, and regional extended producer responsibility schemes should boost demand for recycled plastics. Despite the subsequent uncertainty, “it’s not a question in our mind about if, it’s just when we build this plant. Europe needs multiple plants this size, and so we feel good about it.”
Expanding market reach to packaging, intermediate chemicals
Eastman historically has focused its PET production on specialty polyesters, including its Tritan brand. The Tritan Renew line is made with feedstocks sourced from methanolysis, and both Renew and the virgin option often act as a BPA-free substitute for polycarbonate in durable goods applications, such as consumer housewares and small appliances.
The additional capacity from the new U.S. recycling facilities will allow the company to expand its presence in the packaging sector. Eastman currently provides materials for cosmetics and personal care packaging as well as shrink labels. Moving forward, the company looks to include food-grade applications and health and wellness, sectors that executives said need higher quality RPET than what is produced with mechanical recycling.
For example, the flagship offtake contract for the Texas plant is with PepsiCo for PET packaging containing methanolysis-sourced feedstocks.
“Most customers want a meaningful recycled content,” Costa said. The challenge lies in finding the right balance of price, percentage of recycled materials and performance.
“If you’re the brands in the marketplace who have done an excellent job of raising the price of their products to consumers, but now they’ve gotten to the point where their demand is now sort of flattened out or dropping off,” he said. Brand owners must balance “very aggressive” targets for 2025 and 2030 with shareholder demands.
“So where do they look? They look backward to every supplier.”
To this end, the company plans to expand the reach of the PET feedstocks generated by the methanolysis unit, monoethylene glycol and dimethyl terephthalate. Eastman plans to market volumes of RMEG from its Kingsport plan starting in 2025.
In addition to new capacity projects, Eastman could also license its technology for preparing plastic feedstocks for methanolysis to third parties while still retaining control, said Chris Killian, chief technology officer. “We would be open-minded in future projects about having that outsourced and done by someone else to free up capital for other growth investments.”
