Hello, and welcome to Alpek's Fourth Quarter 2021 Earnings Webcast. I am Alejandro Elizondo, Alpek's IRO, and today, I have the pleasure of being joined by our CEO, Pepe Valdez, and our CFO, José Carlos Pons. This presentation is divided into two parts. First, Mr. Valdez and Mr. Pons will comment on Alpek's fourth quarter and full year performance, guidance figures for 2022, as well as relevant events, including our recent agreement to acquire Octal. Afterwards, we will move on to Q&A. Please note that the information discussed today may include forward-looking statements regarding the company's future financial performance and prospects, which are subject to certain risks and uncertainty. Actual results may differ materially, and the company cautions the market not to rely unduly on these forward-looking statements.
Alpek undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. I'd like to remind everyone that today's webcast is being recorded and will be available on our website at alpek.com. I will now turn the call over to Mr. Pepe Valdez.
Thank you, Alejandro. Good morning, everyone, and thank you for joining us today. I hope you are all doing well. This morning, I'm very pleased to inform you that Alpek has completed 2021 on a very high note. A strengthening in global reference margins for our products helped the company achieve historical levels in terms of quarterly comparable and reported EBITDA. On an annualized basis, Alpek matched or exceeded company records for revenues, volume, reported and comparable EBITDA, as well as leverage. Let's just start by reviewing the main topics we will cover in today's webcast. First, Alpek significantly surpassed financial performance expectations for the fourth quarter and 2021 overall. José Carlos will review this in greater detail later in this presentation. Second, we recently signed an agreement to acquire Octal, a major PET sheet producer.
We will discuss the transaction overall and how it aligns with our long-term growth and ESG strategies. Third, we will provide insight into 2022 guidance figures and assumptions which we released earlier today. Providing some context for our latest results during the fourth quarter, increased demand for petrochemical products was combined with a tighter global supply, specifically from China, which resulted in sharp increases to reference margins for key products in our portfolio. During November, China implemented energy rationing measures at coal-based power sites in an effort to improve air quality in the region prior to the 2022 Winter Olympics, as well as to meet their CO2 emissions reduction goals.
As a result, output for both PET and EPS producers in the region was aggressively affected, increasing Asian integrated polyester reference margin to an average of $431 per ton for the quarter and $359 per ton for the full year. Both figures were far higher than Alpek's revised guidance figure of $315 per ton, which was based on the supply-demand balance expectations at the end of the previous quarter. North American polypropylene reference margins also remain at near record levels, averaging $0.47 /lb , a 9% decrease quarter-over-quarter, as propylene prices came down to match the cost of Asian import alternatives. At this point, I would like to turn the call over to José Carlos , who will go into more detail regarding the effect of these changes on our financial results.
Thanks, Pepe, and thank you all for being here with us today. I would first like to highlight some of Alpek's main achievements during the fourth quarter and for the year overall. Alpek matched 2020's record annual volume of 4.8 million tons by setting a record high for its plastics and chemicals segment. Also achieved record quarterly comparable EBITDA of $300 million, with both the polyester and plastic and chemical segments posting their highest figures ever for any fourth quarter. Highest ever annual comparable EBITDA of $962 million. Recovered $8 million in guaranteed debt from M&G Mexico during the quarter. Further reduced leverage to 1.1x , and regained our investment grade level rating with S&P. If we take a deeper look at volume, Alpek reached 1.17 million tons this period.
A small reduction of 2% quarter-over-quarter, as demand for all of our products remains strong. In the polyester segment, volume was 1% higher quarter-on-quarter, benefiting from a lessened effect from extraordinary weather events such as drought in Altamira during the third quarter, but affected due to plant maintenance at some of our production sites. In plastic and chemicals, volume was 11% lower quarter-on-quarter, mainly due to a scheduled turnaround maintenance at a recently acquired EPS facility in Pennsylvania, as well as normal fourth quarter seasonality effects.
On a full year basis, Alpek matched the record 4.8 million tons set in 2020. As the plastic and chemical segment set a new annual record of 1 million tons, thanks to the successful operation of its EPS facilities in the United States, offsetting the aforementioned effects related to the extraordinary weather in the polyester segment. Moving on to raw material price dynamics. The global economy has continued to show its strength despite the resurgence of the Omicron variant. Average spot Brent crude oil price increased to $79 /bbl , 9% higher than the same figure in the quarter. However, U.S. reference product xylene prices only increased by 1% versus last quarter, as margins for this product tightened globally.
In plastic and chemicals, propylene prices averaged $0.66 /lb , a 20% decrease when compared to the previous quarter, to match the cost of import alternatives from Asia. Switching over to EBITDA breakdown for the fourth quarter, we can see that comparable EBITDA was $300 million, 28% higher quarter-on-quarter. This was primarily due to higher than expected reference margins for our main products, as well as solid volumes across both segments.
Reported EBITDA was $269 million, 4% lower quarter-on-quarter, as this result also included a non-cash inventory loss of $11 million, a positive carry-forward effect of $6 million, and a one-time $25 million loss related to the footprint optimization as our caprolactam site in Mexico and staple fiber facility in Cooper River were shut down after years of low industry margins and profitability. If we turn our attention to results by key segment, we can see that polyester comparable EBITDA was $160 million, 49% higher quarter-on-quarter, and marking the highest fourth quarter ever for the segment. Result largely benefited from a strong Asian polyester reference margins, which averaged $431 per ton, after reaching peaks above $500 per ton at one point during the quarter.
In plastics and chemicals, comparable EBITDA also reached a new quarterly record of $138 million, an increase of 11% quarter-on-quarter and 109% year-on-year. This was mainly due to the higher PET EPS margins stemming from strong demand, coupled with lower supply coming from Asia, and propylene margins which remain higher than expected to the end of the year. Moving on to analyze results. 2021 comparable EBITDA was a record-breaking $962 million, 60% higher year-on-year, and vastly exceeding our revised guidance figure of $850 million, as the strong volume and margins for our core products combined through the year.
With regards to free cash flow generation in the quarter, net working capital investment decreased by $51 million, largely due to the declining price of propylene during the quarter. CapEx totaled $32 million and was mainly used for maintenance and minor asset replacements. Positive free cash flow totaled $226 million as a strong EBITDA and a decreasing net working capital more than offset other expenses. Alpek paid a $56 million shareholder dividend based on the strong results in 2021. Finally, regarding our financial position during the fourth quarter, Alpek's net debt decreased to $1.23 billion. Last 12 months EBITDA increased sharply, resulting in an improved leverage of 1.1x net debt to EBITDA.
If considering net debt to comparable EBITDA, we also see that Alpek further improved this ratio to 1.3 x. As a result of Alpek's improved financial position, but more importantly, after a thorough review of the company's business risk profile, in December, S&P reverted Alpek's credit rating to BBB- on a standalone basis, equivalent to investment grade. As such, the company now holds stable investment grade ratings across all three major rating agencies. Thank you, everyone, and I will now turn the call back to Pepe.
Thank you, José Carlos. Turning our attention to recent events, as José Carlos mentioned, Alpek concluded 2021 with the lowest net leverage in eight years, a strong financial position that allowed the company to consider additional growth opportunities. Two weeks ago, we announced that Alpek has taken an important step forward in its long-term growth strategy after reaching an agreement to acquire Octal, a major PET sheet producer. The transaction is an ideal fit for Alpek for several reasons. One, it incorporates PET sheet into our portfolio. A new high-value product, PET sheet is an easily moldable product used in diverse food and beverage applications that currently represents 13% of global PET demand, and it is expected to grow at a strong 6.4% per year.
Two, the addition of DPET proprietary technology, a PET sheet production process that eliminates several energy-intensive conversion steps, resulting in the lowest cost production method for this product. Three, PET sheet is 100% recyclable, and Octal production generates a product that has a 25% smaller carbon footprint than the rest of the industry. The addition of this product into our company accelerates Alpek's portfolio evolution towards even more sustainable products. Four, transaction expands our geographic footprint, allowing Alpek to reach customers more easily on a global basis. Finally, the deal was attractive from a financial point of view, which we will discuss in more detail on the next slide. With a purchase price of $620 million, and a last 12 months EBITDA of $135 million, the deal has an implicit multiple of 4.6x.
Moreover, the transaction is expected to close by the second half of the year, at which point the asset would become immediately EBITDA accretive to Alpek. Furthermore, giving Alpek's strong performance to date, as well as the addition of Octal's EBITDA, Alpek expects to remain at reasonable leverage levels even after the acquisition is concluded, reaffirming its commitment to financial stability. Finally, regarding guidance for 2022, and as announced in this morning's press release, Alpek's outlook remains positive. We expect the strong economy and positive changes to consumer behavior to continue supporting demand. As such, the company expects a continuation of strong financial performance across its core product portfolio throughout the next year. Our guidance figures are based on the following, key market and business assumptions. Average Brent crude oil reference price of $81/bb l.
Asian integrated PET reference margin of $315 per ton based on demand and high freight costs, combined with a normalization in the Asia versus North America PET spread which was very low in 2021. Total volume increase of 4%, largely from the polyester segment, as we do not expect a repeat in the adverse weather events of 2021, and only slightly offset by a reduction in the plastic and chemical segment as our ongoing EPS maintenance concludes during the first quarter. As well as a gradual decline in North American polypropylene margins, which remain high in 2021, and are still expected to remain well above historical levels. Based on these assumptions overall, comparable EBITDA for 2022 is expected at $1.031 billion in the year.
It's important to note that this figure does not yet include the EBITDA contribution from the Octal acquisition. Annual CapEx for the year is expected to be $130 million, which includes $620 million associated to Octal's purchase, as well as $125 million for strategic projects and $85 million in maintenance CapEx. In terms of dividends, Alpek is proposing $173 million for shareholder approval, in line with the amount it has proposed in previous years. Possibility for an additional dividend will be assessed later in the year, depending on the company's results. Finally, from a financial standpoint, Alpek has kicked off 2022 with extremely solid position of 1.1 x net debt to EBITDA.
We expect leverage to remain in line with our requirements as an investment-grade company, and well below our target of no more than 2.5 x. As always, I would like to thank our team, customers, and suppliers for helping Alpek reach new heights. I am confident that the records we broke in 2021 can be surpassed again this year. I would also like to thank you for your attention today. I'll now turn the call back to Alejandro to open the webcast for Q&A.
Thank you, Pepe. At this time, we will now take your questions. To ask your question live, we ask that you raise your hand virtually through Zoom. We will call on participants in the order that hands are raised. Alternatively, you may also type your question through the Q&A function. We will attempt to cover as many questions as time allows. Our first question comes from Leonardo Marcondes from Itaú. Leonardo, your audio has been enabled. Please unmute yourself and proceed with your question.
Hi, guys. Can you hear me?
We got you, Leo.
Okay, perfect. Thank you for taking my questions. I have actually two questions about the guidance. My first is could you provide a bit more color on the supply and demand dynamics for polyesters that explain actually polyesters margins for you guys expect for 2022? I mean, I believe that almost all the petrochemical spreads will normalize this year, right? Could you provide more color on what do you expect in terms of capacity addition or closing? Globally speaking, how demand should behave for PET this year? My second question is on the risks of the guidance. With the guidance provided, Alpek will post another record annual EBITDA, right? I would like to know from you guys what are the biggest risks you guys see for 2022, besides lower spreads? Is there something else that could impact the company's expectations this year? Thank you.
Leonardo. Yeah, thank you for your question. In terms of the supply-demand, I have to say that certainly increased in both the demand and supply and, the, let's say, supply-demand, or the operations rate globally, perhaps are gonna be similar to last year. However, we do believe that there are some other factors that are playing in a very important role this year. Let me start by saying, in the guidance, you probably noticed that we are assuming a margin in Asia of $315 per ton. You compare that to $431 in fourth quarter, that means we are assuming a very rapid normalization of margins in Asia.
I have to say that, however, you have to take into consideration that in Asia, and China in particular, prices of energy have been much higher than normal. Prices of natural gas, some points in time around, up to $30 per million BTU, and, of course that impacts the power cost as well in a significant way. That is part, I think, of the explanation of why the margins in Asia remain at a higher level today than in the past. Keep that in mind. Again, $350 per ton Asia, I would say normally, in a normal situation, we would be forecasting, let's say perhaps $270 or in that range.
But, of this increase from $270-$315, there is a considerable impact of the energy. That's why we are keeping the margins higher than a normal year. The other aspect, well, has to do with, of course, the ocean freight rates, particularly for containers. We have seen, I think most of you are familiar with this issue, that traditionally container cost from Asia to, let's say, North America, which is our main market , again, West, would be around $2,000 per container, and to the East Coast, perhaps closer to $3,000. Okay? That's the normal range for freight rates.
Today, in our budget, in our guidance, and we didn't mention this, so this is an important clarification or addition. We are assuming a container, an average container cost from Asia to North America and South America, again, which are our main markets, of around $6,500 per ton. As we speak, these freight rates are more in the $9,000-$10,000 range. That again is a very important assumption. I think this would probably give you some a little bit more, let's say, a little help in you know in making your own your own predictions. I mean, basically what we're saying is guidance in margins of PTA $315. Right now, margins are closer to $400 than $315.
Freight of again $6,500 per container, we're now closer to $9,000, $10,000. At least from those two important assumptions, we are relatively conservative in our guidance. Of course, we're assuming freight rates will come down as the years go by. We believe that probably we should start to see that second half this year. Also, I tell you, a lot of people, experts in the industry, believe that the normalization of the freight rates will start more into next year. We are assuming it starts earlier, and that's why we're using this number of $6,500. Again, this freight rate is important not only for polyester, but also for EPS.
For both products, this is an important premise or assumption, because in both cases, our prices, in some cases are based on margins outside of or margins in Asia plus rate. That's one point. Then you ask about the risks of our guidance. Look, the other important assumption in the guidance is that we are reducing our polypropylene margin so that we end the year, let's say at a normal margin, an average margin. That reduction, so far, let me put it this way, so far, the margin reduction is not going down as rapidly as we have assumed in the budget. Perhaps, I mean, it's only two months, so it's too early to say how it is gonna end.
I just wanna convey the fact that I believe we try to be conservative in our key assumptions for the guidance. If you ask me today, I see a higher probability of upsize than downsize to our guidance.
Thank you very much, Leo.
That's very clear. Thank you, guys.
Our next question comes from Tasso Vasconcellos from UBS. Tasso, your line has been unmuted. Please go ahead and ask your question.
Hi, everyone. Thanks for taking my questions, and congrats on the results. My questions are regarding Octal acquisition and M&As. Other than the expansion in terms of portfolio with the acquisition of Octal, there is obviously a strategic geographic positioning. Could you expect additional movements in the region with Alpek seeking to strengthen its competitiveness in either Europe or maybe Asia? As you mentioned, leverage is still below 1.6 x, relatively comfortable. Is there additional M&As on the pipeline in the short term?
My second question is regarding what are the risks you're seeing with the Octal acquisitions? Most of the M&As face some challenge, not in terms of expanding its portfolio per se, but maybe integrating operations, different kind of cultures or even relationship with clients. Alpek has a solid track record with M&As, so maybe could you comment on main challenge you faced with other acquisitions, and what are the biggest risks and challenges you have mapped after the closing of Octal? Those are my two questions. Thank you.
Tasso, well, first, of course, the Octal acquisition is very well aligned, as I mentioned, with our strategic pillars. First of all, we do believe this strengthens our existing business overall. Just, I mean, if our capacity of PET today is close to 3 million tons, this would add almost a million tons additional in PET. And again, it provides a lot of synergies in procurement of raw materials, and some other important aspects. Octal complies with the first leg of pillar of our strategy, which is strengthening the business. Number two, which is sustainability and circularity. In that, I already explained, that's also very clear.
I think this technology is certainly up to at least from what we know today the most or the lowest carbon footprint to produce PET. Believe it or not, there are not so much capacity with this technology globally. That is another important aspect that we consider in making this decision. In terms of the other pillar is we prefer to grow in products or businesses that have some sort of adjacency to what we do to diminish risk and to capture synergies. Again, this project of Octal also complies with that. Octal, you can see in a way as a geographical diversification for our products, but also as an integration.
I mean, the sheet, it comes from PET, so it help us integrate also our existing product line. Again, it's a very special situation with Octal. Now, when you ask me about new M&A, I would say, well, we would consider it. We will continue to look at new M&A, particularly in companies or sectors that comply with all these requirements. In some cases or in many cases, we do have a relatively, you know, important presence in the regions where we are. I would say you will have to expect some of these M&A could be in product lines that we already are in other geographical areas. That would be one possibility.
Of course, let me emphasize, the other very important priority for us is to continue to invest and to grow in circularity, in recycled products, and also, not only circularity but also in sustainability, products that help improve our carbon footprint. In terms of recycled products, of course, you know what we have done in polyester. We acquired last year, what we consider to be one of the best plants for mechanical recycling in the U.S. It's very close, in our opinion, to a state-of-the-art facility. Although we understand and accept that mechanical recycling has to continue to evolve to improve cost, scale and quality, there is no question that this plant provides a lot of opportunities.
That's part of the reason why we invested in that. We will continue to look for opportunities in M&A, in mechanical recycling, as well as in chemical recycling. Although in chemical recycling, more than M&As, look for new technologies, alliances, new projects, because chemical recycling is a little bit not, let me put it this way, as advanced as what you see in mechanical recycling. Mechanical recycling, we think is a mature technology. It still has to improve, but it's closer. In terms of chemical recycling, I think we're at the beginning of what's gonna happen in chemical recycling. You know, in chemical recycling, just also to make sure we understand it, you know, each other, there are several different processes for chemical recycling.
One, which is perhaps the most advanced today, is what is called methanolysis, where you input, let's say, used PET into the plant, and you get back MEG or glycol, and you get back DMT. There's a couple of projects that Eastman is now proceeding with, and one in Europe and one in the U.S., and I think this is, you know, a significant improvement. These plants do have a scale that is required. But again, let us not forget that chemical recycling also needs feedstock, also needs the bottles. Again, on the one hand, is to have good technology to convert bottles into PET, or in this case, PET precursors.
On the other hand, there are other technologies that perhaps would make a little bit more sense to us because in our plants, mostly we don't consume PET as much. The other technology that is called glycolysis, which converts PET into the polyester monomer, so normally it's, you know, called DHET. That is again a feedstock that we could use in our existing PET plants to produce recycled PET. That technology in particular would be also of great interest to us. We are, you know, talking to different technology suppliers or different companies that are working in this area to see how we can advance, accelerate these processes. Last, there's another process.
Well, there are two more processes in chemical recycling. I think that the other one would be what is called hydrolysis, but that is technically a more complicated process. In that case, you go back from PET. I mean, you go back to PTA and glycol. Again, it has some significantly more challenges from a technological point of view. Last, the other technology that is important is pyrolysis. But we're looking at that technology more than for polyester, for other plastics. That technology is again that's not a new technology as opposed to all these depolymerization I was talking. The pyrolysis is a technology that has been known for many years.
That is, I think, very important, particularly for recycling of other plastics. Mainly I would say polyolefins, because that again converts those plastics into feedstock for crackers. That's another possibility. Again, we look at that more from the polypropylene perspective than from the polyester perspective. That's also an important technology that we're working with.
Thank you, Tasso. Our next question comes from the line of Vicente Falanga from Bradesco. Vicente, your line has been unmuted. Please go ahead and ask your question.
Thank you, everybody. I had two questions. With the Octal acquisition, Alpek, like you mentioned, take some steps towards the more value-added side of the chain, which could reflect in less result volatility in the future, and therefore possibly more premium valuation for the company. Could this be a motivator when analyzing future M&A, and could we expect the company to become more and more forward integrated? My second question. This time last year, the northern hemisphere had a big polar freeze, which impacted the supply logistics of petrochemicals. We have had a few storms, I think, in the U.S. Do you think that these were in the same magnitude or strong enough to potentially impact prices? Thank you very much.
You were talking about the sheet business and asking whether there's more opportunities to forward integrate. I would say in this sense, Octal was a unique opportunity for us because we do not have a lot of customers that are producing this product today. They have a very differentiated technology. That's what made this decision attractive to us. In most of our other, you know, opportunities, PET markets or even polypropylene or EPS, we have consciously made the decision not to integrate forward. Because it would result in competing with our customers in many cases. In many cases as well, these businesses are of a different nature.
They're not so much chemical business, they are different business types and where it's not necessarily that our competence would be so important. I don't see as a rule defined that we would not be looking at other integration. What we're looking at is trying to add more differentiated products. An example you have, we are investing in our polypropylene facility in adding copolymer capacity. We are investing in EPS, in the ARCEL product, as you well know, which is also a differentiated product. We are increasing our capacity or planning to increase our capacity there. We have just recently developed biodegradable EPS.
We've tested this commercially, and again, as I mentioned before, we are right now relatively tight in terms of EPS capacity for a short period of time. Because we are making some improvements to the plants we recently acquired, once those improvements are finished, we will be able to also start to produce the biodegradable EPS in a more normal fashion. Another very important product that we are going to start investing in, and I didn't mention before, we also have developed together with another company a technology to again chemically recycle EPS and PS back into styrene monomer. We have already tested this at the pilot level, and the results are very promising.
We are now considering to build a commercial plant of a relatively small size, so that we can test the technology and be ready to move ahead. That's also an important opportunity for us to grow in the future. Again, you know, the challenge with this recycling, polymer recycling or mechanical recycling anyway, is the challenge or the limitation for us to continue to grow there is the availability of used bottles or of used plastics. That is the key limitation that we are facing. If we had enough feedstock, we would be growing much more aggressively. It's extremely important that we can develop more sources for feedstock.
We are also, honestly, we are also spending a lot of resources, time to make sure of that. To make sure that the collection of our products can be increased. We are working actively, I would say, in The Recycling Partnership, which is an organization in the U.S. that is precisely trying to find ways to increase the collection of our products in its final stage. That's another area again, where we're trying to continue to invest. As you can see, it's a lot of opportunities, but not only in our existing product line, but in areas related to that. Recycling, circular economy. Eventually also, of course, we are also working with some people in potential opportunities for bioproducts.
Not only biodegradable, but also bioproducts, meaning that the raw materials come from bio raw materials. This case is not an issue of circularity. It is more an issue of improving carbon footprint. Again, as part of our, let's say, opportunities going forward, recycling, improving collection one way or another, biodegradable products and also biomass products, all of these we are very much emphasizing. We also have some biofertilizers and biopesticides that we are very advanced in terms of the development of the product, and that's a very interesting possibility. We have a very unique product there, and this product will be used for organic production or required to produce organic products. We don't see anything like that in the market today.
We're just waiting. The product has been fully developed. We are waiting for the approval of COFEPRIS, which is a, you know, regulatory here in Mexico, and unfortunately has taken a lot of time. This agency, government agency has been very busy with all of the COVID situations and we have not yet gotten approval. But again, I probably asked too much. I mean, I probably answered too many things, but I want you to have an idea of all the things that we are looking at for the future.
No, that is very clear.
Let me just make a comment because and again, when we look at these products, we're not dreaming with a multiple of 14x or 15 x EBITDA. We are doing this because we feel it's the right thing to do. If we happen to get those multiples, well, that's gonna be an added bonus. That's gonna be great. Again, this is something that we are doing. We don't require those type of multiples to move ahead with these opportunities.
That's very clear. You have a lot on your plate.
Okay. Now, you asked a question about the polar vortex. Look, this situation we lived last year was the one, I mean, was really a black swan. I think, you know, last two weeks ago, the market was again going crazy because they were expecting a similar situation which did not materialize. I think, you know, that we are all learning how to avoid these problems. I'm sure there will be, you know, external factors that would impact our production and everything. But hopefully, I mean, they will not be the same. Hopefully we're learning from what happened and try to reduce possibilities of these things happening again. Let me just give you an example.
As you know, it was not only the polar vortex. For us, the biggest impact last year in terms of our production was the drought in Altamira. Again, that was a combination of lack of maintenance from some of the facilities in that area, in the lagoon that has, you know, that is there, and which are being addressed. What happened was the level of water in the lagoon was so low that the water from the ocean started to leak into the lagoon and made the quality of that water very difficult to use. What's now happened, the first thing done is all of those leaks have been fixed.
Hopefully, if we have a low level of water, at least the ocean, the salt water will not come into the lagoon, number one. Number two, we also, on our side, we have invested now in some water treatment technologies that will significantly reduce our consumption of water and improve the quality. Again, another opportunity to get reliability in our plants and also to help our sustainability efforts, reducing water consumption.
That is great. All very welcome. Thank you, Pepe.
You're welcome, Vicente.
Our next question comes from the line of Jean Bruny from BBVA. Jean, you've been unmuted. Please go ahead and ask your question.
Hi there. Thank you very much for taking my questions. I just have a couple, actually. The first one, I don't think I get that if you mentioned it already, but what impact of Octal to the EBITDA guidance you have for this year, assuming for the second half, I believe. If you can give us those numbers for the contribution of that new business to your EBITDA guidance. The second one is probably more on the dynamic of the markets. I believe we're seeing some scarcity of the products in some regions. In the U.S., it appears that it is getting difficult to get access.
If you see a change of attitude of your customers, maybe they are committed to more of your volumes, more long-term volumes, in pricing as well. The question is also for recycling. We're seeing in some part of the world, like in Europe, the recycled PET trading at a premium to virgin. Are we seeing this as well in the U.S.? We've seen a lot of customers that are committed to include some recycling PET to the product. If they can get access, are they ready to pay more for the recycled product?
You mentioned there's a difficulty to get access to the raw material as well. You mentioned in the past that maybe we can have a new formula to calculate the price of recycled products. If you can just mention it broadly, and if within the recycling product, we can see different prices for mechanical, for pyrolysis or monomer recycling as well. Thank you very much.
Okay. With regards to your first question, in terms of Octal EBITDA, we believe that perhaps second half of EBITDA from Octal, I would say will be estimated to be around $80 million. That that's the number we have in mind, and it's not included in our guidance. Number two, again, you're coming back to the circularity issues, recycle. What I just mentioned to you, the unavailability or the scarcity of recycled bottles or bales, as we call them, has driven the price of the bales themselves higher than the price of the virgin products. Just to give you an example, here in Mexico, the bottles, you want to buy a bale, bottle bale, PET I'm talking now, you have to pay $1,100.
$1,100 for the bale itself, out of which you're gonna have a yield, I don't know, perhaps 65%-70%. Once you yield the bale, it will give you a price of $1,500 only for the raw material. On top of that, you have to add the conversion cost to convert those bottles into rPET, pellet or flake, whatever route you go. That's the reason why our pricing in—a gain, this price of the bales is very volatile. It changes a lot, up and down, depending on different situations. That's why our pricing policy for rPET is absolutely based on a cost pass-through.
We have a cost of bales, and then we add the conversion cost to that. That's the way we sell the product. It has nothing to do with the price of the virgin product. Completely independent. The good news is that the customers, our customers, brand owners, they agree on that. They accepted that, and they believe it's a fair way to go, and that's the only way we can continue to invest in that business. That, I think, a solution has been found for that. Again, this is for me, mechanical recycling, chemical recycling, whatever. That's the new, let's say, formula or pricing formula that is being used by most of the industry today.
Perfect. Very clear. Just, maybe a last one on Corpus Christi. If you can give us an update on the timing you're thinking for the project?
Yes. Corpus Christi is progressing. We have advanced on the, let's say, cost estimate to finalize the plan. We still have, put it this way, some work to do there. I would say that I would expect that by April this year, we should be able to. We should be ready to make the final decision to go ahead.
Okay. Very clear. Thank you very much, Pepe. Bye.
You're welcome, Jean.
Thank you, Jean. We're gonna get our next question now from Andres Cardona from Citi. Andres, your line has been unmuted. Please go ahead and ask your question.
Yeah. Thanks, Alejandro. Good morning, Pepe, José Carlos. Maybe following up with the question, the previous question about Corpus Christi, just to clarify. So the CapEx guidance doesn't have any budget for Corpus Christi? Then the question that I have been, like, preparing is, over the last 18-24 months, we have seen, or at least in my view, several structural positive impacts for your business, with demand growing very fast. My question is about what are the structural impacts you see for the business?
In particular, I care about if you think the industry is developing enough capacity to keep serving the market, in particular in the Americas. Because it seems we are seeing a kind of a reliability premium, which seems to be, or at least to me, to be a pricing signal to develop more capacity. The second is still associated to the changes that we have seen in the industry over the last couple of years. If your long-term view about the integrated PET margins have changed along this period of time, and if so, how it has changed? Thanks again, and congratulations for the results.
Okay. Well, your first question I get is whether the investment or CapEx for CCP are included. We are including some amount of CapEx in there. Again, if the decision is made end of April, beginning of May, then of course, you know, first month is going to be getting the site ready and everything. So it's not. We're not expecting a lot of CapEx this year. The biggest CapEx will be 2023 and 2024. But we are including a certain amount of CapEx for CCP in our CapEx budget. Okay? In terms of capacity in America in PET, well, I think you are right.
Demand has grown faster than we anticipated, so that's why that's a plus for Corpus Christi going ahead. Having said that, you know, we also see that rPET is gonna continue to increase. That should also help, you know, fulfill the demand. In a way, also our Octal acquisition would also allow us to import or bring more PET into the U.S. Change in PET margins. That question, Andres, if I knew the answer. Look, there are some reasons why you would consider that they have to improve going forward, the margins for PET in Asia. I mean, one of those, some people say that margins are gonna go back, but perhaps not gonna go back all the way.
That they want to remain, at least for a while, a little bit higher than what they were before, you know, the pandemic. That's one reason why even if the margins in Asia remain the same, that it is still, you know, the margins overall could improve in the Americas. I mean, that's one possibility. The other aspect I think I mean, we are in our internal assumptions, we are assuming that the margins in Asia will remain the same. We are assuming that the freight rates will remain the same. I see your point. There is a possibility that they could move a little bit higher.
On the Asian side, the China side, yeah, of course, the energy issue that I mentioned before is likely. I think China has been depending a lot on their coal for you know, for energy to supply power. As we move forward, and they are reducing their emissions, perhaps they have to convert some of those power plants that use coal to other feedstock, natural gas or whatever. Again, I think yeah, that might you know have an impact on the margins, some increase in margins going forward. Again, our assumptions in our plans is that they will continue on a similar level. I think that forces us more to continue to improve our cost and our operation efficiency.
Thanks, Andres. Our next question comes from Vanessa Quiroga from Credit Suisse. Vanessa, your line has been unmuted. Please go ahead and ask your question.
Yes. Hi. Hi, Pepe. Hi, José Carlos. I entered a bit late on the call, but I understand that you are representing the premium that you are getting for PET in Americas or North America as a normalization of prices versus Asia. I want to understand that better because what year you are taking as the target then for normalization? Thanks.
I mean, the margins that we are using, I think I mentioned this before, for margins in Asia long term, are going to be $270 in Asia. In the guidance that I just mentioned, we are using for this year, for 2022, we are using $315. We are assuming that this year, 2022, is gonna be slightly higher than the equilibrium margin in the future due to, again, some of these energy issues that I was just mentioning that have created, you know, increased, you know, an increased margin.
Also we are assuming that this year, you know, perhaps we're gonna start, at least the first quarter, we are assuming that the margins will be higher. Again, all of these energy prices are gonna remain high at least until the first quarter, and then perhaps they will start to normalize. But that's why we're using $315 this year versus the $270 normal figure, you know, let's say starting 2023 onwards.
Thank you, Vanessa.
That's great. Thank you. Yes, thanks.
Thank you.
Thanks, Vanessa. That concludes our questions to be submitted orally. We have a few questions via text. We'll get to maybe one or a couple because we're running out of time. The first one. Some of them have already been answered. Liliana De Leon asked about Octal figures for EBITDA in guidance. As Pepe already answered, that's around $80 million if transaction concludes in the second half. Lucila Gómez and Federico Galassi both asked about where Asian margins are currently at and in January and February to get a better understanding of how fast the normalization is happening. Pepe already answered that they are currently around $300-$310 per ton.
No, no, no.
No.
That would be China, not Malaysia.
I'm sorry. Yes, Chinese.
It'll be 400.
Yeah, 400.
They're in the order of 400.
Thank you. Thank you for the correction. $400-$410 per ton. We have a question from Andrés Antonio, who asks if greenhouse gas emission reductions are expected to be positively perceived by investors. Pepe.
Well, that's a very good question, a very important question. I think you're all familiar with our ESG press release. We committed ourselves to reduce our CO2 emissions 27.5% for 2030.
Mm-hmm.
From 2018 to 2030, according to the guidance of the United Nations and the Paris Agreement and all of that. I'm glad to tell you that we believe this year, 2022, we're gonna get close to 20% reduction already. By the end of 2022, I think we're gonna be 20% lower than 2018. We still have another 7.5% or, let's say 10%, to go. We are very advanced in meeting this emission reduction. We do have, of course, plans to get to this 30% . Basically, I think the biggest some improvements in technology, which will reduce energy intensity in our products.
Some switching to renewable power that we can do from now to 2030. Then on top of. Yeah, I would say those are the two major opportunities. Beyond 2030, I do believe that at that point in time, this value product opportunity will help us to continue to reduce. We do have more opportunities to change to renewables after 2030 because we have a contract with clean energy, but still not renewable, that goes all the way to 2031, I think. We do still have some opportunities to continue to reduce our emissions after that. We're working as we speak in opportunities, carbon capture, green hydrogen.
We're looking at all of those technologies, which today, you know, they're not mature enough, and they might even be expensive. We're looking at those opportunities, and hopefully those will materialize in, you know, after 2030 to allow us to go to carbon neutral or to zero carbon emissions in 2050. We see opportunities to continue making progress.
Thank you, Pepe. That was the last question we have time for today. Rest assured, we will follow up via email if we did not get to your question on this call. As always, I'd like to remind you that you can find both a video recording of today's webcast as well as a transcript on our website at alpek.com. Thank you all for participating in Alpek's webcast, and have a great day.