INSIGHT: The battle for Europe’s recycled PET

30 May 2011 14:53  [Source: ICIS news]

By Mark Victory

Pre-formed plastic bottles at Coca Cola factory in FranceLONDON (ICIS)--Unlike other chemicals markets, the suppliers of recycled polyethylene terephthalate (R-PET) are not multinational chemical companies or oil giants, but us as individuals. 

By taking our used plastic drinks bottles or empty plastic food trays to our local recyclers, we directly decide the pool of material available for reprocessing as R-PET. We are not doing enough.

According to the European trade association PET Containers Recycling Europe (Petcore), 48.4% of all post-consumer virgin bottles were collected for reprocessing as R-PET in 2009, the latest year for which data is available. 

The depressing truth of this statistic is that over half of all used virgin PET bottles are not being recycled. The good news is that there is room to grow supply as demand expands.

The total volume of post-consumer PET collected in 2009 for recycling was 1.4m tonnes, an 8% increase from 2008. If collection continues to grow at that rate, then by 2015 Europe will be collecting 2.22m tonnes/year of post-consumer PET.

But this figure is almost certainly wrong, because individuals act as the feedstock supplier for R-PET. Although investment can be made in expanding the collection infrastructure, individual participation in recycling depends on a complicated web of factors, including social paradigms, awareness, peer pressure and the media.

Because post-consumer PET collection is reliant on individual participation, it is impossible to say that a certain amount of investment will result in a specific percentage increase in post-consumer PET collection. 

Post-consumer PET collection will never reach 100% of the virgin PET produced, simply because it relies on individuals. Smoking kills 5m people a year globally, according to the World Health Organisation, and yet despite consistent warnings and a wealth of health information, people continue to smoke.

Similarly, there will always be people who refuse to recycle, be it through laziness, scepticism, or miseducation. Even if there were to be a highly successful media campaign that convinced 100% of people to recycle, it would not be enough.

According to the American Plastics Council, participation in local recycling programmes can increase by up to 20% following educational and promotional campaigns. Nevertheless, rates fall back to their pre-campaign levels if investment in education and promotion is not maintained.

To increase collection rates, it is necessary not only to invest in infrastructure, but also in campaigns that convince people to recycle, and to maintain that investment. But do collection rates need to be increased?

R-PET demand grew by approximately 10% per year from 2006-2010. Market sources are estimating growth in the region of 20% in 2011. The majority of this growth is from large corporations in the packaging industry  particularly in the bottling market  which aim to project a “green” image because of growing concerns over the impact of plastics waste. 

Two good examples of this increased interest are Coca-Cola and Danone. The recycling process weakens the tensile strength of PET, meaning that a 100% R-PET bottle is not possible and R-PET must be blended with virgin material in bottling applications.

Market sources estimate that the current technical limit for the R-PET content of a drinks bottle is 50%. Coca-Cola is aiming for 25% R-PET content in its European bottles by 2012. Danone’s Volvic and Evian brands already contain 25% R-PET.

Approximately 3m tonnes of virgin PET bottles are produced in Europe each year, according to market estimates. If all of these bottles contained 10% R-PET, then the bottle market would need to source 29% of collected post-consumer PET.

At 25% R-PET content, in line with the target from Coca-Cola, the bottle market would need to secure 71% of all post-consumer PET collected.

At 35% R-PET content, well below the 50% technical limit, the bottle market would need to secure every molecule of post-consumer PET collected in Europe.

Reprocessing capacity  the process of turning post-consumer PET into R-PET  in Europe was 1.6m tonnes/year in 2009. This is a 200,000 tonne/year shortfall with supply.

The shortfall becomes more marked when you consider that 25% of post-consumer PET is wasted during reprocessing, taking the actual shortfall to 550,000 tonnes/year.

Because of the structural shortfall, R-PET prices have been at record highs throughout most of 2010 and 2011. Buying interest during 2010 and 2011 has, according to market sources, been above reprocessing capacity.

If collection growth rates continue at 8% and wastage rates remain at 25%, then at 10% demand growth  the level seen from 2006-2010  the structural shortage will grow to 1.69m tonnes/year by 2015. If demand growth in 2011 is 20%, as market sources predict, and continues at that level, then the shortage will grow to 3.11m tonnes/year by 2015.

RPET prices in Europe 2007 to 2011

The bottle market currently holds an approximate 20% share of post-consumer PET usage, behind the fibre market (in the region of 40%) and the sheeting market (approximately 30%).

As demand from the bottle market increases and the structural shortage grows, more players will be left fighting over smaller volumes, and material will flow to the highest bidder. Who is prepared to pay the highest price will depend on the reasons for purchase.

Traditionally, players bought R-PET predominantly because it offered cost savings against PET. As R-PET players increasingly focus on ecological image rather than economic reasons for purchasing material, traditional players could find themselves squeezed out.

That is unless investment is made in collection rates to tackle the shortfall. With individuals as the suppliers of the R-PET market, investment must be made in the promotion of recycling as well as in infrastructure to increase collection. 

Additional reporting by Caroline Murray

For more on R-PET and virgin PET, visit ICIS chemical intelligence


By: Mark Victory
+44 208 652 3214



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