Europe recycled PET faces downward pressure

10 November 2008 23:59  [Source: ICIS news]

LONDON (ICIS news)--European recycled polyethylene terephthalate (RPET) flake prices face downwards pressure in November due to increasing competition from its virgin counterpart, said market players on Monday.

“There needs to be at least a 10-15% price difference” [between clear flakes and virgin PET, otherwise customers opt for virgin material] a recycler said.

European PET contract prices have seen decreases totalling €160/tonne ($205/tonne) in September and October and the recycled PET market was struggling to keep pace.

“It’s not convenient to buy flakes. We might as well buy virgin [PET]. It’s a paradox,” said a PET customer.

Spot virgin PET was being delivered into Europe in the €900s/tonne FD (free delivered) NWE (northwest Europe) and this was pushing recycled levels down, a source said

The RPET clear flake prices were assessed at €780-850/tonne FD NWE for November, according to global chemical market intelligence service ICIS pricing. This represented a drop of €30-35/tonne from October.

Mixed coloured flakes prices also moved down by €30/tonne at the upper end of the range, taking November values to €540-620/tonne FD.

Sellers in both the RPET and mono ethylene glycol (MEG) markets, one of the raw materials for virgin PET, noted a shift in buying activity, particularly in the spot market.

“One of my customers has already stocked up on virgin material until at least the end of the year,” said one RPET seller.

“We have seen smaller spot customers move away to virgin material, but our contract business has been unaffected, with customers already taking positions [for 2009],”noted another manufacturer.

“PET customers need volumes...They want their [mono ethylene glycol (MEG)] contract shipments [delivered] earlier,” an MEG supplier said.

Looking ahead, increasingly competitive PET imports from Asia and the Middle East due to arrive in Europe in December were expected to put further pressure on recycled PET prices.

“Import [PET] material is a real threat’ [to the RPET market] said a source.

Asian PET offers were heard around €770/tonne CIF (cost, insurance and freight) and figures of €730-740/tonne ex works or CIF Europe were heard for Middle East material. A 200 tonne parcel of Middle Eastern PET was reported to have been sold at an equivalent of €875/tonne FD west Europe, for delivery at the beginning of December.

($1 = €0.78)

Additional reporting by Caroline Howard

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By: Heidi Finch
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