18 April 2011 23:59 [Source: ICIS news]
LONDON (ICIS)--European recycled polyethylene terephthalate (R-PET) colourless flake prices extended their record highs by €50/tonne ($72/tonne) from last week at the top end of the range due to strong demand and tight supply, sources said on Monday.
Colourless flake values reached €1,300-1,450/tonne FD (free delivered) NWE (northwest Europe).
Prices for all other grades of R-PET are stable at record highs, which were first established on 31 January. Availability is low and consumption firm, but this was already priced in.
The R-PET market remains highly regionalised, with prices at the top end of the range representative of trading in Germany and Italy, where shortages are most apparent.
The tight supply is the result of low collection rates at post-consumer recycling facilities. Cold weather limits post-consumer collection rates because fewer bottled drinks are consumed.
Low temperatures from October through to March had limited post-consumer bottle collection.
Although April saw warmer weather across the bulk of Europe, there is a lag of around six weeks between higher temperatures and increased availability of post-consumer material.
As a result, the majority of sources are expecting R-PET availability to remain restricted until at least the end of May, but some stressed that peak-season demand traditionally seen in the second and third quarters will counter-balance any increase in supply and the market will remain short until September.
Demand is firm because of an increased focus on sustainability measures at large corporations.
Some R-PET sources said that the rise in recycling initiatives has left the market structurally short.
As a further boost to consumption, R-PET is being used as an alternative for cotton because flood damage to cotton crops in the fourth quarter of 2010 had created a shortage.
The low availability of virgin polyethylene terephthalate (PET) also meant that R-PET is being used as a substitute. An increase in the amount of imported virgin PET entering the European market, however, means that some players are seeing a drop in demand for R-PET as a virgin PET alternative.
Automotive demand is increasing as car manufacturers look to secure greater volumes of mixed coloured flakes – used in car interiors – both on a cost point and for their environmental image.
Warmer weather means that bottlers are preparing for peak-season demand, increasing consumption from the bottle-to-bottle market.
($1 = €0.69)
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