Europe R-PET prices maintain record highs on tight supply

04 April 2011 23:59  [Source: ICIS news]

LONDON (ICIS)--Prices of recycled polyethylene terephthalate (R-PET) in Europe have remained at record highs for another week, extending prices for all grades except food-grade pellets, due to tight supply and strong demand, market players confirmed on Monday.

R-PET prices have been at record highs since 31 January 2011.

The R-PET market remains regionalised, with prices at the top end of the range representative of those in Germany and Italy, although price ranges are narrowing as producers in other countries follow the prices in those two countries.

Colourless post-consumer bottle prices rose by €100/tonne ($143/tonne) at the bottom end of the range to €700-800/tonne FD (free delivered) NWE (northwest Europe), as the lower-cost material that had been coming from France disappeared.

Values are expected to increase a further €50/tonne in April because of low availability, but numbers above €800/tonne are not yet a regular feature in the market.

Mixed-coloured post consumer bottle prices also rose by €100/tonne at the bottom end of the range, reaching €500-600/tonne FD NWE, due to tight supply and rising demand. Values as high as €700/tonne have been mentioned for high-quality material, but those were not seen as representative of the overall market.

Colourless flake prices increased by €40-100/tonne to €1,300-1,400/tonne FD NWE because of tight supply and strong demand. Although values as high as €1,500/tonne were mentioned, they were not seen as representative of the overall market. Colourless flake prices are expected to rise in April, because of higher prices of the feedstock post-consumer bottles.

Mixed-coloured flake prices increased by €100/tonne at the bottom end of the range to €1,100-1,200/tonne FD NWE, as lower-priced material that had been available from countries such as France disappeared due to tightening supply.

Some players quoted values as high as €1,250/tonne – and prices are expected to firm in April on higher post-consumer bottle costs – but this was not yet seen as representative of the overall market.

Several flake buyers said that they are looking into alternatives to R-PET, such as polyvinyl chloride (PVC), because R-PET prices are now too high. Nevertheless, this was dismissed by most players, who said that technical restrictions would prohibit conversion for most applications. 

Low availability throughout the R-PET chain is the result of low collection rates at recycling facilities and strong demand.

Collection rates are limited by cold weather because bottled drinks are the major source of post-consumer R-PET material and fewer drinks are consumed during cold periods. Despite rising temperatures in most of Europe, there is a lag of four to six weeks between warmer weather conditions and improved availability of post-consumer material.

In addition, the majority of market players said that because of large corporations' interest in sustainability initiatives, which is fuelling recycling demand, the European R-PET market is now structurally short. 

Consumption is increasing because warmer weather conditions meant that bottlers were preparing for peak-season demand, increasing offtake from the bottle-to-bottle recyclers. 

Consumption of R-PET had already been at a high level prior to the increased interest from bottlers. This was because of several factors.

First, tight supply and high prices in the virgin polyethylene terephthalate (PET) market mean that players are using R-PET as a lower-cost alternative.

Also, R-PET is being used as a substitute for cotton, because of damaged cotton crops caused by flooding in Pakistan and Taiwan in the fourth quarter of 2010.

Finally, automotive demand is increasing as car manufacturers look to secure greater volumes of mixed-coloured flakes, which are used in car interiors for their affordable cost and environmental image.

($1 = €0.70)

For more on PET visit ICIS chemical intelligence

By: Mark Victory
+44 208 652 3214

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