Recycled PET (R-PET)

Driving the circular economy with actionable data on this key recycled plastic 

Discover the factors influencing recycled PET (R-PET) markets

Demand for Recycled PET (R-PET) around the globe is on the rise. Driven by building pressure from both consumers and brand owners to deliver more sustainable ways of living and reducing environmental impact, this trend shows no signs of abating. A growing number of legislative targets in Europe and the US, together with country-specific developments in Asia, add yet another reason why keeping up-to-date with global R-PET markets is essential.

Navigating what has become an increasingly volatile market is a challenge for new and experienced market players. Access to comprehensive and reliable recycled polymer market data is key.

To meet the needs of buyers, sellers and traders of R-PET, we have expanded our coverage to encompass Europe, Asia, the Americas and beyond. We are recognised as the benchmark price for recycled polymers, including R-PET. Our European historic price data shows developments since coverage began in 2006, and the additions of the US and Asia reports adds a global view to this dynamic market and enables a holistic view on how this market continues to emerge around the world.

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Europe top stories: weekly summary

LONDON (ICIS)–Here are some of the top stories from ICIS Europe for the week ended 15 March. Europe ethylene and propylene sentiment cautiously optimistic for remainder of H1 Given the better-than-expected demand conditions, with improved sales volumes and higher prices lifting many out of the mire that was 2023, the question on everyone’s lips is how long can we expect this state of affairs to last. Potential for oil market deficit in 2024 as demand expectations grow – IEA Higher oil demand expectations and fresh production cuts from the OPEC+ alliance could push the 2024 crude market balance from a surplus to a slight deficit if the voluntary reductions remain in place for the rest of the year, according to the International Energy Agency. Surging PET bottle bale prices threaten to ‘destroy’ Europe’s R-PET market Feedstock bale prices hit €930/tonne ex-works in Poland on Monday, prompting recycled PET participants to suggest such price levels threaten to destroy the R-PET market as they fear a repeat of 2022’s disastrous price volatility. Europe acetic acid, VAM contract talks for March focus on supply disruption March negotiations are underway for European acetic acid and vinyl acetate monomer (VAM) contract pricing with security of supply a key influence on negotiations amid LyondellBasell’s force majeure in the US and other disruptions to global trade flows. Caution caps optimism as peak season arrives for Europe styrene market Spot activity in the Europe styrene market was moderate in the week ended 8 March, as players attended a key industry event, while cautious and conservative sentiment persisted alongside crosswinds from ongoing demand weakness and thin liquidity, high feedstock costs and reduced availability. Participants pointed to only slight improvements in demand and market optimism from levels seen in 2023. Europe cracker margins up on firmer ethylene, co-products pricing Cracker margins in Europe rose in the week on the back of firmer ethylene and co-product pricing, ICIS Margin Analysis showed on Monday.

18-Mar-2024

BLOG: China average LLDPE net imports could be just 300,000 tonnes/yr in 2024-2030

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: In the third of series on China’s increasing petrochemicals self-sufficiency, I examine scenarios for the country’s linear-low density polyethylene (LLDPE) net imports in 2024-2030. The ICIS Base Case sees China’s LLDPE demand growth averaging 4% a year in 2024-2030 with the average annual operating rate at 73%. This would leave net imports at a healthy annual average of 6.5m tonnes. Last year, net imports were 5.9m tonnes. Demand growth at just 4% would compare with actual average annual demand growth of 13% in 1992-2023 and an operating rate of 91%. But I believe that because of China’s demographic and debt challenges, its petrochemicals demand growth is likely to fall to 1-3% per year. For argument’s sake, let’s assume 1.5% growth for LLDPE in 2023-2040, the middle of this range. Let’s also assume that China runs its plants at an annual average of 83% while adding 4.4m tonnes/year of unconfirmed capacity as part of its self-sufficiency drive. Under this Downside 1 Scenario, average annual net imports would fall to 1.8m tonnes. Downside Scenario 2 again sees demand growth averaging 1.5% per year and 4.4m tonnes/year of unconfirmed capacity coming onstream, but the operating rate averaging 91% a year – the same as the historic average. Net imports would fall to an annual average of just 300,000 tonnes. Under the two Downsides, China would remain in big net import positions in 2024-2026 before reaching close to balanced positions in 2027-2028 and then small net exports in the remaining two years of the decade. There are some people out there who argue that this is just another cyclical downturn, albeit an extended one. The ICIS data consistently suggests otherwise. I believe we are instead seeing a radical shift in how our industry behaves. This means an equally radical shift in business models to a greater focus on the end-users of petrochemicals, on sustainability and on growth opportunities in the developing world outside China. For details on the practical and detailed implications for your company, contact me at john.richardson@icis.com. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

18-Mar-2024

Asia top stories – weekly summary

SINGAPORE (ICIS)–Here are the top stories from ICIS News Asia and the Middle East for the week ended 15 March 2024. INSIGHT: Indorama exit from PET feedstock markets to spur China PTA exports By Nurluqman Suratman 15-Mar-24 11:42 SINGAPORE (ICIS)–Demand for China’s purified terephthalic acid (PTA) will get a boost as Indorama Ventures Ltd (IVL), a global producer of downstream polyethylene terephthalate (PET), shifts away from expensive integrated operations. INSIGHT: Policies announced in China Two Sessions will impact domestic petchems market in 2024 By Jimmy Zhang 14-Mar-24 23:07 SINGAPORE (ICIS)–China's Two Sessions earlier this month – the yearly meetings where its legislature sets laws and its advisory body offers policy recommendations – attracted attention from the market for the growth targets set and announcements on expected future economic development. According to Premier Li Qiang, China's GDP growth target is “around 5.0%”. US outage to boost March Asia-Atlantic spot acetic acid, VAM trades By Hwee Hwee Tan 14-Mar-24 12:26 SINGAPORE (ICIS)–Asia-Atlantic spot trades for acetic acid and vinyl acetate monomer (VAM) are expected to increase after supply gaps in the US and Europe emerged following an unexpected plant outage in the US. Asia caustic soda market could be underpinned by snug supply, limited vessel space By Jonathan Chou 13-Mar-24 15:40 SINGAPORE (ICIS)–Asia's liquid caustic soda spot supply may remain snug in the near term, while demand could continue its gradual growth into the second quarter (Q2) of 2024. PODCAST: China Group III base oils market sees supply, demand changes By Whitney Shi 12-Mar-24 15:53 SINGAPORE (ICIS)–In this podcast, ICIS Senior Industry Analyst Whitney Shi and ICIS Assistant Industry Analyst Jady Ma talk about supply and demand changes in China’s Group III base oils market. Saudi Aramco '23 profit falls on softer crude; ’24 focus on downstream growth By Nurluqman Suratman 11-Mar-24 12:37 SINGAPORE (ICIS)–Energy giant Saudi Aramco's net profit in 2023 fell by 24.7% to Saudi riyal (SR) 454.8bn ($121.3bn), weighed by weaker crude oil prices as well as lower refining and chemical margins.

18-Mar-2024

VIDEO: Europe R-PET market fears 2022 repeat as Polish bales breach €900/tonne

LONDON (ICIS)–Senior Editor for Recycling, Matt Tudball, discusses the latest developments in the European recycled polyethylene terephthalate (R-PET) market, including Polish colourless bales hit €930/tonne ex-works Genuine concerns the market facing repeat of 2022 extreme price volatility R-PET flake now at parity with PET

15-Mar-2024

INSIGHT: Indorama exit from PET feedstock markets to spur China PTA exports

SINGAPORE (ICIS)–Demand for China’s purified terephthalic acid (PTA) will get a boost as Indorama Ventures Ltd (IVL), a global producer of downstream polyethylene terephthalate (PET), shifts away from expensive integrated operations. IVL plant closures likely to focus on PTA – sources Tariff barriers dampen growth prospects for China PTA, PET exports China pins hopes on Belt and Road Initiative for new markets IVL cited overcapacity in China as one of the principal reasons for its new strategy – to procure cheaper feedstock from Asia, instead of running integrated facilities in the US. “A large portion of the refineries in the West are aged and losing their competitiveness. These facilities are expected to gradually close in the future,” ICIS senior analyst Jimmy Zhang said. The Thai company is the largest global PET resin producer with a 20% global market share and operates 147 production facilities in 35 countries, with its sales footprint covering over 100 countries in six regions – North America, Asia, Europe, the Middle East and Africa (EMEA), and South America. IVL 2.0 CALLS FOR SHUTDOWN OF SOME PTA UNITS Globally, IVL has a total production capacity of around 19m tonnes/year, the bulk of which or 67% are in combined PET business, which covers integrated PET, specialty chemicals and packaging, according to Thai investment research firm Innovest Securities. Integrated olefins derivatives account for 21% of the total capacity, while fibres have a share of 12%, it added. Market players said that in the US, IVL may prioritize shutting down PTA units over monoethylene glycol (MEG) units, whose production costs are still competitive compared with other global producers, thanks to their use of shale gas. “Given the current economic and market conditions, it is a wise decision to sell the assets which could not make money to ‘save its life’,” a trader in Asia said. In Asia, IVL currently operates three PTA assets – two in Thailand and one in Indonesia. According to market sources, the company could potentially mothball one of its less cost-effective PTA units in Thailand due to old age and technical issuSes. Its operations in Indonesia can better serve India, benefitting from competitive freight rates to IVL’s key market in Asia, they said. For now, IVL’s PTA plants in Asia still hold a unique export advantage in the south Asian country, as they are certified by the Bureau of Indian Standards (BIS). This certification was mandated by India late last year. Currently, no Chinese PTA producers have obtained BIS certification, reducing competition for IVL from Chinese imports. Origin swaps for PTA have taken place, with lower priced China cargoes being exported into southeast Asia as well as their downstream PET asset in Egypt. This enables Indorama to push for more exports to India at a much better price netback. This will unlikely change unless China PTA producers are able to obtain the BIS certification from India. Under its new masterplan dubbed “IVL 2.0”, IVL said that it will be reviewing six operating assets in the ‘West’ for potential shutdown, as it seeks to boost competitiveness. Including the Corpus Christi Polymers (CCP) joint venture project with Alpek and Far Eastern New Century (FENC) whose construction was halted, the number of projects under review total seven. IVL chief Aloke Lohia said that feedstock prices in Western markets are expected to increase over time as peak oil demand draws closer and refineries shut down, while the reverse will occur in emerging Asian markets as capacity rises, driving feedstock costs lower. The rise in refining capacity in China and India allows IVL to buy petrochemical feedstocks cheaper than they could produce them domestically,  Lohia had told ICIS. CHINA CAN FILL IN IVL PTA NEEDS China has the ability to export PTA at much lower cost amid a domestic oversupply, with the country’s annual production capacity now at more than 70m tonnes, only a small fraction of which – around 3m tonnes – are shipped abroad, according to the ICIS Supply & Demand Database. Over the years, China has continually increased its capacity across the entire polyester chain, granting Chinese producers a significant advantage in integration and scale for paraxylene (PX), PTA and PET, Zhang said. The country is now a major PTA exporter and has swung from being the world’s biggest net importer of polyester fibres and PET resins (bottle and film grade) to being the biggest net exporter, ICIS senior Asia consultant John Richardson said. But trade barriers in several countries hamper imports from China, raising the likelihood of “more barter trading activities” in the future, Zhang said. He is referring to a process in which Chinese cargoes will move to a duty-free country, which, in turn, will re-sell the volumes. With the change of origin, the cargoes can then be sold to markets with existing trade barriers to China duty free. “For example, it is likely that China will export more PTA to South Korea, while South Korea will export more PTA to other countries who set trading barriers for China,” Zhang said. CHINA CHANGES APPROACH TO TRADEWith anti-dumping investigations curtailing direct exports of PET to certain markets, China is moving away from western markets, shifting its focus on those covered by free-trade agreements within its Belt & Road Initiative (BRI). The country’s PET export market has shrunk since mid-2023 after the EU started anti-dumping investigations, with provisional duties on Chinese material activated in November of the same year. Anti-dumping investigations against Chinese PET, meanwhile, are ongoing in Mexico in North America and South Korea in Asia. China is expanding free-trade agreements (FTAs) with Belt & Road Initiative (BRI) and non-BRI member countries to counter growing geopolitical differences with the west, potentially leading to a shift in trading patterns as Chinese apparel and non-apparel production moves offshore to these nations, ICIS’ Richardson said. Overseas plants could be supplied by China-made polyester fibres, allowing the country to retain dominance in the global polyester value chain and offset rising labour costs, Richardson said. “Offshoring to the developing world may also enable China to make up for any lost exports of finished polyester-products to the West due to increased trade tensions,” Richardson added. China had signed 21 free trade agreements with 28 countries and regions as of August 2023, according to the Chinese state-owned Xinhua news agency. More than 80 countries and international organizations had subscribed to the “initiative on promoting unimpeded trade cooperation along the Belt and Road”, which is part of the BRI, it said. Source: Mercator Institute for China Studies (MERICS) Insight article by Nurluqman Suratman With contributions from Judith Wang and Samuel Wong Thumbnail image: Canal Container Transport, Huai'an, China – 12 March 2024 (Costfoto/NurPhoto/Shutterstock)

15-Mar-2024

INSIGHT: EPR Legislation, the solution to stabilizing recycled polymers markets in the US

HOUSTON (ICIS)–The need for robust recycling legislation is increasingly important in the US, especially as the recycled polymers markets struggle to recover from soft demand and high premiums. The US had relied on recycled polymer competitive prices and brand sustainability commitments to support demand. However, over the past year it has become clear that this strategy is unsustainable. With current market volatility, stakeholders are struggling to make business decisions to move towards a circular economy while remaining profitable. They are desperate for stability. Individual States have proposed a slew of plastics related bills due to a lack of action at the federal level. The legislative outlook for 2024 is strong, with 32 bills across 14 states filed as of 22 January (see map below). These bills range from single-use plastic bans to Extended Producer Responsibility (EPR) legislation. A NEED FOR MORE LEGISLATIONBrand commitments, such as the US Plastics Pact and the Ellen MacArthur Global Commitment, have played a big role in driving ​​demand for recycled polymers. However, price movements in 2023 showed that those commitments alone are not enough to counteract other market factors. The increase in premiums for recycled polymers surpassed the willingness to ​​pay of many signatories, causing delays or cancellations in their sustainability commitments towards a more circular economy. ​​​Relying largely on brand commitments revealed two key challenges. First, signatories only account for 20% of the global plastic packaging by weight. It is not realistic to expect 20% of global production to ​​drive change within the entirety of the US market. A greater portion of producers must sign up to sustainability commitments in a joint effort to stabilize demand. ​​Secondly, due to the voluntary nature of these commitments, there will always be flexibility for companies to edit their goals without fear of repercussion. In fact, only two thirds of the brand and retail global signatories are currently on track to meet their 2025 goals as of the latest progress report. An increase in US legislation​​ could prove to be a solution to the two challenges. It would hold all producers who are placing plastic products or packaging onto the market equally accountable in meeting new legislation and would introduce penalties for failing to comply. Simply put, legislation is key to actual enforcement and tangible change within the market because it supersedes the voluntary aspect of brand commitments. As seen in Europe, a strong regulatory landscape with proper enforcement could be key to stabilizing recycled polymer markets and ​​potentially even decoupling them from their virgin counterparts. EXTENDED PRODUCER RESPONSIBILITY (EPR)EPR legislation is an umbrella term for policies that shift the responsibility of end-of-life product management onto the producer, including financial responsibility. For plastics packaging, this may include the cost of sorting, recycling and/or disposal. Producers pay fees proportionally to the recyclability and amount of the packaging they create and place onto the market. Most commonly, under an EPR scheme, a Producer Responsibility Organization (PRO) – which is responsible for organizing all the system's activities – must be established. See simplified diagram below: EPR legislation provides a financial incentive for the producer to reduce the cost of recovering and recycling the waste they produce. It is​​ one of the first types of legislation which encourages a preventative approach, rather than a mitigatory one, by pushing the producer to rethink the design of its packaging before putting it on the market. While no EPR legislation is the same, fees are often structured to promote the use of materials with greater recyclability. For example, fees for clear plastic packaging may be lower than those for colored plastic packaging, to encourage the use of more recyclable materials, to produce recycled material that can feed into higher value applications. These fees encourage greater investment in design for recycling for plastic packaging and applications. Additionally, a portion of the fees managed by the PROs are directly invested in improving the collection and sortation systems. Historically, in the US, the recovery of materials has been the biggest bottleneck in ensuring that there is enough supply to meet demand. Increasing the amount of recovered waste directly improves recycling rates, achieving the legislation's intention to create a circular economy. POSSIBLE SIDE EFFECTSUltimately, EPR legislation in the plastics recycling industry is relatively new and ensuring that it is designed and executed correctly will be essential to protecting stakeholder interests. It ​​would be naïve to think that shifting more of the cost to the producer would not have unintended effects. It is common for increased ​​costs levied on the producer to also be reflected in the price tag of the product once it makes it to shelf. Therefore, the consumer will take on the long-term cost burden. Small producers may also be disproportionately impacted by the compliance costs. EPR legislation is ​​cumbersome and may require a person or team dedicated to ensuring its implementation. The complexity of ​​such implementation increases for any producer that ​​distributes products across more than one state with varying compliance criteria. Additionally, as producers are forced to incur higher costs, this might directly affect their ability to remain competitive in the market, especially when EPR legislation is applied at the ​​state and not federal level. There must be protection mechanisms for ​​compliant producers, giving them an advantage in a competitive market with producers without restrictions. ​ Imports or free riders could be some examples that need to be carefully considered in the policies. CLEAR BENEFITSThe benefits of a stronger legislative landscape are clear. Following the progression of the proposed bills in 2024 will be a robust indicator of whether there might be increased stability in the recycled markets moving forward, eEspecially if all five of the EPR legislations that are currently proposed successfully pass. Due to the novelty and lack of standardization of EPR legislation in the plastic packaging sector, stakeholders will have to remain involved and work with regulators to ensure it has the intended outcomes. Over time, involving more states to account for a larger portion of producers across the US will be essential so that EPR legislation becomes the norm and not the exception. Insight by Andrea Bassetti

13-Mar-2024

INTERVIEW: German biofuels producer Verbio develops ethenolysis-based renewable chemicals project

LONDON (ICIS)–German biofuels producer Verbio is pushing into renewable chemicals with a €80 million -100 million commercial-scale ethenolysis project that will use rapeseed-based biodiesel to produce specialty chemicals. Strategic move to renewable chemicals; 17,000 tonnes/year of 1-decene, 32,000 tonnes/year of methyl 9-decenoate, (9-DAME); Produced from renewable rapeseed methyl ester (RME), using ethenolysis and innovative metathesis catalysts. Ethenolysis is a chemical process in which terminal olefins are degraded. In chemical terms, it is a cross metathesis. The "VerBioChem" project, adjacent to Verbio’s bio-refinery at the Bitterfeld chemicals production hub in Saxony-Anhalt state, is expected to be commissioned in 2025, Andreas Kohl, the company's head of specialty chemicals and catalysts, told ICIS. Regular production at the "first-of-its-kind" commercial-scale ethenolysis  plant should start in 2026, he said. Groundbreaking is scheduled for May. “To our knowledge, it will be the only plant worldwide to operate an ethenolysis process,” he said. 1-decene is mainly used to produce polyalphaolefins (PAO), which are used as group IV lubricants, Kohl said. The 1-decene market is estimated at about 500,000-700,000 tonnes/year, according to Kohl.  Producers of fossil-based 1-decene include INEOS, ExxonMobil, and Chevron Phillips Chemical (CPChem), among others. 9-DAME has applications in surfactants, lubricants, polymers and other specialty markets. While 9-DAME is currently not available on the market in larger quantities, Verbio sees it as a “platform molecule” for use in solvents, surfactants and lubricants, Kohl said. The Bitterfeld plant might also produce C18 diacids in various forms in the medium term, he said. Verbio has been in contact for a couple of years with partners and on request supplies customers with kilogram samples of 1-decene and 9-DAME from a pilot plant, he added. UNIQUE CATALYSTSThe company has developed a unique in-house process for ethenolysis, based on proprietary metathesis catalysts from its 100%-owned subsidiary, XiMo, Kohl said. The process allows the use of ethylene “as kind of a scissor” to split the biodiesel, he said. XiMo specializes in metathesis catalysts, specifically of "Schrock-type" tungsten, molybdenum and ruthenium complexes, he said. Richard Schrock, one of the founders of XiMo, was co-winner of the 2005 Nobel Prize in chemistry for his work on developing the olefin metathesis method in organic synthesis. To serve the ethenolysis plant’s captive needs, as well as the wider chemical industry, XiMo is investing in new capacity close to Budapest, Hungary The 10 tonne/year of metathesis catalyst project in Hungary, which will proceed parallel with the ethenolysis project in Bitterfeld, is due to be in production in 2026. XiMo’s metathesis catalysts “represents a new tool for the chemical industry", for use in industrial processes in the renewable, polymer, flavors and fragrances, agrochemicals and various other markets, Kohl said. STRATEGIC SHIFT TO CHEMICALS Verbio's biofuels are mainly sold into the energy market, “but this is not necessarily the future for us”, Kohl said. While the company has existing biodiesel-linked chemicals production (phytosterol and glycerin), it decided several years ago to expand in renewable chemicals in a bigger way – driven by an ambition to add more value to biodiesel, reduce Verbio's dependence on the biofuels energy market, and help "defossilize" the chemical industry, he said. “We want to become much more independent of the political decisions that are influencing the biofuels market, and chemicals will be a major part of the company in the future,” Kohl said. Although the chemical industry keeps working to reduce its carbon footprint, most of its products are based on carbon and will continue to be so, he said. The challenge, therefore, is to defossilize the industry, which means getting away from fossil-based carbon, leaving three main sources of carbon: carbon capture; recycling; and biomass, Kohl said. “Biomass is a very versatile, a very interesting source of carbon, and it is here today” as companies are already producing chemicals from biomass, he said. Verbio, with its expertise in biomass, is well positioned to expand in renewable chemicals, he said. With the ethenenolysis plant, Verbio will start to serve the chemical industry “with unique, renewable and biobased molecules with a low CO2 footprint”, Kohl said. “This will enable our customers to take a big step towards climate neutrality, saving CO2, attacking scope three emissions, and it will help to defossilize the chemical industry,” he said. The carbon footprint of the new ethenolysis plant will be “at least” about 70-80% lower than that of a fossil-based 1-decene plant, he said. Verbio is undertaking the project’s basic engineering and execution in-house, rather than contracting it out, he noted. FOOD VERSUS CHEMICALS Rapeseed (known as canola in North America) is readily available in Germany as it is part of crop rotation, Kohl said. While using rapeseed for chemical production could trigger debates similar to the “food versus fuels” controversy, it is important to realize that only about 40% of the mass of rapeseed is oils, he said. The remaining 60% is a protein-sugar fraction that is needed in cattle feed “to close the protein gap” and thus supports the food sector. If Germany did not have the rapeseed protein, it would have to import even more soya from South America, he said. He also noted that the use of biomass to make biofuels and other renewable products has been found to stabilize the overall agricultural market in Europe and provide farmers with sustainable income, thus keeping them in business. Verbio at a glance: Sales for the 12 months ended 30 June 2023: €1.97 billion. Employees: about 1,200. Operations in Germany, Poland, Hungary, India, US and Canada. Production of biodiesel and bioethanol: nearly 930,000 tonnes. Production of biomethane: 1.08 GWH. Existing chemical production: phytosterol and biodiesel glycerol (glycerin) CEO: Claus Sauter Headquarters: Zorbig, near Leipzig, Germany Source: Verbio Thumbnail photo source: Verbio Interview article by StefanBaumgarten.

13-Mar-2024

BLOG: China PX net annual average imports may fall to 700,000 tonnes in 2024-2030

SINGAPORE (ICIS)–Click here to see the latest blog post on Asian Chemical Connections by John Richardson: Only a few people thought that China would reach self-sufficiency in purified terephthalic acid (PTA). I was among the few. Now China is a major PTA exporter. This followed China swinging from being the world’s biggest net importer of polyester fibres and polyethylene terephthalate (PET) resins (bottle and film grade) to being the biggest net exporter. Paraxylene (PX) could be the next shoe to drop as today’s post discusses. Given China’s total domination of global PX net imports – and the concentration of major PX exports in just a small number of countries and companies – the potential disruption to the global business is huge. The ICIS Base Case assumes China’s PX demand growth will average 1% per annum in 2024-2030 with the local operating rate at 82%. Such an outcome would lead to China’s net PX imports at annual average of 7.4m tonnes in 2024-2030. This would compare with 2023 net imports of 9.1m tonnes. Downside Scenario 1 sees demand growth the same as in the base case. But under Downside Scenario 1, I raise the local operating rate to 88%, the same as the 1993-2023 average. I also add 6.2m tonnes/year to China’s capacity, which comprises unconfirmed plants in our database. Downside 1 would result in net imports dropping to a 2024-2030 annual average of just 1.5m tonnes/year. Downside Scenario 2 again sees demand growth the same as in the base case, an operating rate of 90% and 6.2m tonnes/year of unconfirmed capacity Net imports would fall to an annual average of just 700,000 tonnes a year. As an important 26 February 2024 Financial Times article explores, China continues to build free-trade agreements with Belt & Road Initiative (BRI) and non-BRI member countries as a hedge against growing geopolitical differences with the West. We could thus see a significant shift in trading patterns as more Chinese apparel and non-apparel production moves offshore to these countries, with the overseas plants fed by China-made polyester fibres. China could thus maintain its dominance of the global polyester value chain via this offshoring process, thereby compensating for its rising labour costs. Offshoring to the developing world may also enable China to make up for any lost exports of finished polyester-products to the West due to increased trade tensions. This shift in downstream investments and trade flows could provide economic justification for just about complete PX and mono-ethylene glycols (MEG) self-sufficiency, which will be the subject of a future post. These are the only two missing pieces in China’s polyester jigsaw puzzle. Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.

13-Mar-2024

INSIGHT: Europe’s PET industry in legislative ‘grey zone’ as the clock ticks on

LONDON (ICIS)–Over 300 members of the polyethylene terephthalate (PET) industry gathered in Brussels at the annual Petcore Europe conference in February, looking for clarity on the wide-ranging, market-changing packaging and waste legislation currently under discussion in the EU, but many left only slightly more informed than when they arrived. EU legislators unable to give clarity on key topics Questions remain around imports Exciting opportunities for growing sectors The industry is currently in a “grey zone’ that relates to the outcome of voting on the EU’s draft Packaging and Packaging Waste Regulation (PPWR) according to Leonor Garcia of consultants E&Act. It would be fair to say, however, that this is the case for most pieces of legislation aimed at the PET and wider plastics industry in Europe. The European Parliament and European Council reached provisional agreement on the regulation earlier this month although the text of that agreement has not been published. The EU Commission, acting as mediator in the trilogue between the two co-legislators, has stalled its approval. The three regulatory bodies involved in the trialogue for the regulation – the European Parliament, the European Commission, and the Council of the European Union – had different views and opinions when it came to topics such as recyclability of plastics, recycled content, restrictions on packaging formats and, particularly, on reuse targets for 2030 and 2040, Garcia noted. This point around reuse targets was emphasized by Delphine Close of soft drinks industry group UNESDA, and the chair of Petcore’s Reuse working group, presenting the different views of the three bodies around reuse targets. PETcore is the trade body representing PET value chains in Europe. When looking at exemptions to the PPWR reuse targets, for example, the Commission has no real exemptions, the Council one exemption and the Parliament several. But it is the timeframe that is of major concern for Close who pointed out that the three parties had little time to reach a decision on a regulation that will change the face of the European plastic packaging industry and its obligations to the circular economy. "There were high expectations for clarity around the regulations by delegates of the conference but at a time when the legislators were still deep in discussions. Clearly industry needs to prepare for the regulations and how it will impact their business but are unable to do so while answers on so many points are still outstanding.” said Helen McGeough, Senior Analyst, Plastics Recycling at ICIS. “To mirror comments made by participants in the event, regulation around recycled plastics is building at a rate which challenges the value chain to keep pace with. Clarity can only support the value chain in delivering on those requirements. That said, the atmosphere was positively charged during the networking breaks, with this sector demonstrating high levels of collaboration to the common goal of improving the circularity of PET.” The audience did not hide its dissatisfaction with some comments from the Commission speakers on the status of non-plastic packaging potential exemptions from the recycled content quotas. Shortly after the Petcore conference a legal assessment was profiled by the European Plastic Converters trade association (EuPC) to highlight that the bans on plastic film for a six-pack of bottles, for example, or exemption of coated paper packaging from recycled content quotas are likely not to be compatible with EU law. TIME RUNNING OUTThe European Parliament will end its mandate in April, and a new parliament will take its place, so the race is on to get the final vote on the PPWR though before then. Nicholas Hodac, Director General of UNESDA said there is still a lot of uncertainty regarding the Commission's and the Parliament’s priorities ahead of the new EU policy cycle in 2024 but stressed that a major focus for UNESDA “has to be the proper implementation of EU legislation that was adopted”. Hodac pointed out that while climate change is likely to remain a top priority during the next parliamentary cycle, focus could shift towards more nature-based policies such as nature restoration, restoration of biodiversity and protection of water resources. QUESTIONS AROUND IMPORTSOne of the main topics brought up during the course of the event was the stance on the flow of waste and products containing recycled material both into and out of the EU. There was a lot of uncertainty around this particular topic, even from Wolfgang Trunk, team leader of the Commission’s DG Environment working group who stated this was the “most delicate” and “most uncomfortable” point for him during his presentation. Trunk pointed to the fact that the Commission’s current proposal relating to the volume of recycled content in products is for products ‘placed on the market’, which, Trunk said, implies these products would be placed on the EU market. Trunk said this failed to take into account imports of products such as PET bottles, for example, that are manufactured in the US but exported to the EU. The current wording would imply this imported product would also be required to meet the same recycled content targets as bottles manufactured in the EU and contain recycled content from EU-produced waste. This contradiction illustrates both the complexity and ambiguity of the wording in the current legislation and raises the question of how the industry should interpret it. On top of this, the ban on exporting waste from the EU to non-OECD countries will take effect from 2026, but, Trunk said, these same non-OECD countries can still be allowed to produce products with recycled content if they fulfill certain conditions. GROWTH AREASOutside of the complexity of legislation, there were updates on the textiles and depolymerisation markets as well as the ever-popular tray to tray sector where design for recycling will play a key role in bringing recycling to an industrial scale. These demonstrated the ability of the PET industry to innovate to achieve recycling solutions. LONG PATH AHEADThe industry faces many challenges, however, when it comes to legislation, particularly due to the current lack of clarity coming from Brussels around specific targets, timelines and what might or might not be counted towards recycled content. The trade group’s conference showed the willingness to work together to address these. All it needs now is for Europe’s legislative bodies to keep pace and clarify targets and requirements. Insight by Matt Tudball and Helen McGeough

12-Mar-2024

Latin America stories: weekly summary

SAO PAULO (ICIS)–Here are some of the stories from ICIS Latin America for the week ended on 8 March. NEWS Brazil’s chemicals output up nearly 8% in January Brazil’s chemicals output rose by 7.9% in January from December, despite the 1.6% fall in overall industrial output, according to the country’s statistics office, IBGE. Brazil’s automotive output up strongly in February as investments soar Brazil’s petrochemicals-intensive automotive industry’s output rose in February by nearly 25%, month on month, in a sign of a strong recovery in the sector, automotive trade group Anfavea said on Thursday. Mexico’s inflation falls to 4.4% in February Mexico’s annual rate of inflation fell in February to 4.40%, down from 4.88% in January, the country’s statistics office, INEGI said on Thursday. Mexico’s automotive output up nearly 8% in February Mexico’s automotive sector posted an increase in output of 7.76% in February, year on year, to nearly 320,000 units, slowing down slightly from January, the country’s statistical office Inegi said on Wednesday. Brazil’s Unigel halts fertilizers production on high natural gas prices Unigel is to “temporarily stop” nitrogen fertilizers production because of high costs and low prices, effective on Wednesday, the Brazilian chemicals and fertilizers producer said. Auto major Stellantis to invest €5.6 billion in South America to 2030 Stellantis is to invest €5.6 billion in its South American operations in 2025-2030, with Brazil’s Betim facilities set to greatly expand to produce hybrid vehicles, the global automotive major said on Wednesday. Petrobras finds no irregularities on Unigel tolling contract after internal investigation Brazil’s state-owned energy major Petrobras has announced the conclusion of its internal investigation into the tolling contract with Unigel, finding no irregularities, the company said on 4 March. PRICING Mexico's PET prices continue to be threatened by import in 2024 Despite the continuous application of import tariffs on polyethylene terephthalate (PET) from Asia, the influx of imports into Mexico, offering enticing deals, is effectively keeping PET prices away from notable price increases.

11-Mar-2024

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