07 June 2010 23:59 [Source: ICIS news]
LONDON (ICIS news)--European recycled polyethylene terephthalate (R-PET) prices have reached new record highs due to supply shortages, buyers and sellers said on Monday.
“We are currently at the top of the worst ever [supply] situation in the [R-PET] business,” a flake buyer said.
Colourless bottle prices increased by €30/tonne ($36/tonne) at the top end of the range this week to €400-550/tonne FD (free delivered) NWE (northwest Europe), according to global chemical intelligence service ICIS pricing. The highest prices were reportedly in Germany. Several sources said that they could no longer find colourless bottles at below €480/tonne, but this was not widely confirmed.
Colourless bottle prices first reached record highs on 26 April when material was traded at €500/tonne, before rising again this week. The previous high was €460/tonne from 16 June to 3 November 2008.
Mixed coloured bottle prices rose by €40/tonne at the bottom end of the range to €300-380/tonne FD NWE, due to tight supply.
A new record price of €330/tonne was first seen on 26 April, before values further increased across the last month. The previous high was €250/tonne, recorded from 4 June 2007 to 9 June 2008.
Colourless flake prices increased by €60/tonne at the bottom end of the range to €900-950/tonne FD NWE, due to tight supply and strong demand. Several producers said that they would no longer sell at below €940/tonne, due to the high price of bottles, but there remained support for numbers as low as €900/tonne. A minority of players saw prices as low as €750/tonne and as high as €1,000/tonne, but neither price was widely confirmed.
Mixed coloured flake prices rose by €50-100/tonne, to €700-800/tonne FD NWE, the majority of sources confirmed. One buyer saw prices as low as €640/tonne, but values that low did not receive support from the bulk of the market.
Mixed coloured flakes first hit record highs on 29 March 2010, when they were trading at €570-700/tonne, before climbing further over the last two months. The previous high was €650/tonne, seen from 16 June 2008 until 3 November 2008.
Mixed coloured flake availability was now so low that some buyers were unsure that they had enough material to continue producing beyond this week, with fears that prolonged supply shortages and high prices, which some buyers have been unable to pass on downstream, could prompt market consolidation.
“We are at the limit. If the situation prolongs into July and August, it will be difficult to survive,” one flake buyer said.
R-PET has been in tight supply since the fourth quarter 2009 because of low collection rates at post-consumer recycling facilities.
Poor collection rates remained a factor in the low availabiltiy of R-PET material. Nevertheless, several market participants said that downstream demand was now driving market shortages, due to empty stocks at many end-users, pre-buying on fears that prices would continue to climb, and seasonal demand.
“There is restocking. All recyclers are short. There are too many recyclers all looking for material,” a major producer of R-PET said.
It was unclear how long R-PET would remain in tight supply. Some sources were expecting collection rates to improve in July, leading to fears that prices could crash as material became more available.
Other sources, however, predicted that supply would remain short until at least September, with seasonal demand counterbalancing any increased supply throughout the traditionally strong third quarter.
ICIS price records for R-PET began on 19 June 2006.
($1 = €0.84)
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