28 June 2010 23:59 [Source: ICIS news]
LONDON (ICIS news)--European recycled polyethylene terephthalate (R-PET) food-grade pellet and colourless flake prices have extended their record highs, buyers and sellers said on Monday.
Food-grade pellet prices continued to trade at above virgin polyethylene terephthalate (PET) prices, sources confirmed.
“Prices are really at levels never seen before - even flakes are now more or less the price of virgin,” an R-PET flake buyer for pellet manufacture said.
Food-grade pellet prices increased by €20-50/tonne ($25-62/tonne), to €1,150-1,200/tonne FD (free delivered) NWE (northwest ?xml:namespace>
R-PET food-grade pellets equalled the previous record price of €1,150/tonne - seen between 12 September-30 October 2006 - on 7 June 2010, only to reach a new high on 21 June 2010.
Colourless flake prices increased by €50/tonne at the top end of the range, to €900-1,050/tonne FD NWE, due to low availability and strong demand partly as a result of corporate customers trying to boost their green credentials, buyers and sellers said. The highest prices were reported in
Colourless flake prices first hit record highs on 26 April 2010 and have been increasing ever since. The previous high was €885/tonne, reported between 16 June -3 November 2008.
Spot virgin polyethylene terephthalate (PET) was being offered at €1,120-1,140/tonne FD Europe, according to market sources, meaning that R-PET food grade pellets were being offered at higher prices than their virgin counterpart. Some sources said this was unsustainable as R-PET food-grade material incurred a higher percentage of waste than virgin PET, and so buyers would switch to alternatives on cost-point.
Nevertheless, others claimed demand was being fuelled by corporate social responsibility objectives so R-PET supply and demand had become more important than the cost of virgin PET as large consumers' commitments to environmental sustainability meant they could not now stop purchasing recycled material.
“Customers use it to [burnish] their green image. I think that when demand is low, prices will be below virgin [PET]. But virgin [PET] prices are not having as much effect as they used to,” a pellet manufacturer said.
A major food-grade R-PET producer said the average extrusion cost between colourless flakes and food-grade material was €150-200/tonne. This would mean food-grade sellers would need to sell material at a minimum of €1,050/tonne to break even.
R-PET availability has been low since the end of the fourth quarter of 2009, because of low collection rates at post-consumer recycling facilities. This was attributed to several factors, including: the colder-than-expected winter, which led to fewer purchases of beverages in plastic bottles that are a major source of post-consumer collection material; the economic downturn in 2009 and environmental concerns, which led to lower consumption of water bottles; and a lower PET content of around 25% having been used in virgin bottles during 2009, which meant more bottles needed to be collected per kilogramme of R-PET produced.
Although supply was now easing due to better weather conditions boosting bottled beverage sales, some sources said that strong demand would keep the market tight throughout 2010.
All R-PET grades are currently trading at record high prices because of tight supply, but only food-grade pellets and colourless flakes reached new highs while other grades continued to trade at their previous levels this week.
ICIS records for R-PET began on 19 June 2006.
($1 = €0.81)
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