28 February 2011 23:59 [Source: ICIS news]
LONDON (ICIS)--European recycled polyethylene terephthalate (R-PET) food grade pellet and post-consumer colourless bottle prices extended their record highs by €50-75/tonne ($68-103/tonne), due to strong demand and tight supply, buyers and sellers said on Monday.
All other grades were stable at record highs for the fifth consecutive week. Prices in other R-PET grades were expected to increase in March.
Tight supply was the result of low collection rates at recycling facilities due to winter weather conditions through much of Europe, players said.
There were several factors contributing to high consumption, according to sources.
Low availability and rising prices of virgin polyethylene terephthalate (PET) were causing players to use R-PET as a lower-cost alternative.
Strong demand was also caused by an increased focus on sustainability measures at large corporations, with several large bottle manufacturers setting aggressive targets of up to 25% R-PET content for 2011.
Further strengthening buying interest, cotton shortages caused by flooding in Pakistan and Taiwan damaging crops in the fourth quarter of 2010 meant that synthetic fibres such as R-PET were being used as an alternative, players said.
Some players said that R-PET was now in a pricing bubble, and that factors such as the low availability of virgin PET would not last and when the situation changed there would be a swift and strong market correction, which would place immense pressure on producers.
“Everyone is aware that we need stable prices - it’s not happening. It’s a [pricing] bubble - it must collapse,” a flake manufacturer said.
Players said that passing costs on downstream was difficult and slow, and called for more stable pricing in the R-PET market.
Nevertheless, the majority of players felt that strong demand and tight supply would continue to push R-PET prices up in the short term.
Italian R-PET producer Corepla settled its March tender for colourless bottles at an average of €750/tonne EXW (ex-works), a company source said. This was adding further impetus on price hikes in northwest Europe, and some players expected colourless bottle prices to hit €800/tonne FD (free delivered) NWE (northwest Europe) during March.
Colourless bottles rose by €50/tonne and were trading at €600-700/tonne FD NWE, with the highest prices seen in Germany, where availability was lowest, according to ICIS. The previous record high for colourless bottles was €600/tonne, first seen from 26 July to 23 August 2010. The previous record high was equalled on 31 January 2011, since when prices have risen further.
Food grade pellet prices strengthened their record highs by €50-75/tonne, to €1,450-1,525/tonne FD NWE, because of tight supply and strong demand, according to ICIS. Some players saw food grade pellet prices as high as €1,650/tonne, but this was not widely confirmed.
($1 = €0.73)
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