Europe R-PET eases back from record highs as demand falls

23 August 2010 23:59  [Source: ICIS news]

LONDON (ICIS)--European recycled polyethylene terephthalate (R-PET) prices have fallen from record highs because of reduced demand and higher post-consumer recycling collection rates, buyers and sellers said on Monday.

The biggest falls were seen in the food grade pellet market – where prices fell by €100-150/tonne, down to €950-1,200/tonne ($1,203-1,519/tonne).

The decline in prices was attributed to pressure from the virgin PET market. Large R-PET food grade consumers were no longer prepared to pay above virgin PET in order to ensure R-PET volumes.

“[The] Food grade [pellet market] is in trouble. The [downstream] resins guys are arguing for lower prices on virgin PET prices,” a major food grade pellet producer said.

Prices at the bottom end of the range were for large buyers, particularly from Germany where a higher number of producers means that prices are more competitive, sources said.

Prices at the top end of the range were for mid-sized consumers and for more specialised material, buyers and sellers confirmed. Lower demand due to end-user holiday closures added further downward price pressure on food grade R-PET. Virgin PET spot prices were trading as low as €1,050/tonne.

“The beverage industry doesn’t need so much bottles. We think they have enough stocks, so the prices are going down,” one pellet manufacturer said.

Colourless flake prices also fell, but the price drop was not as pronounced as for food grade material. Colourless flake was trading €20-50/tonne lower, at €900-1,030/tonne. Prices at the top end of the range were for downstream sheeting applications, where demand was strongest.

The fall in prices was attributed to a summer holiday slowdown amongst end users and increased post-consumer collection rates at recycling facilities in July, which had offset some of the market tightness.

Higher collection rates were attributed to peak-season demand in July, due to warmer weather in much of Europe and a boost in plastic bottle consumption – the major source of post-consumer material used in R-PET production – driven by the FIFA football World Cup in South Africa.

Nevertheless, sources said that the market remained tight and there were concerns that collection rates in August were low on milder than expected weather. Some sources said that prices could go back up when end-users returned to the market following Summer holidays.

Mixed coloured flake prices fell by €70/tonne at the top-end of the range, to €800-840/tonne. Prices at the top end of the range had fallen off due to holiday closures and increased supply, sources said.

Because of higher post-consumer collection rates, bottle prices fell by €50/tonne to €350-550/tonne for colourless and €250-450/tonne for mixed coloured. Prices at the top end of the range were still representative of the Italian and Dutch markets, where supply was tightest, sources said.

R-PET prices had been at historic highs across all grades since 21 June because of supply restrictions. R-PET availability has been low since the fourth quarter of 2009 due to rising demand from major corporations keen to establish strong corporate social responsibility credentials, and lower post-consumer collection rates.

ICIS records for R-PET began on 19 June 2006.

All prices were agreed on a free delivered (FD) northwest Europe (NWE) basis

($1 = €0.79)

For more on R-PET visit ICIS chemical intelligence
To discuss issues facing the chemical industry go to ICIS connect

By: Mark Victory
+44 208 652 3214

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