Europe R-PET faces demand fluctuations, lower bottle availability in October

Author: Matt Tudball

2020/10/01

LONDON (ICIS)--The European recycled polyethylene terephthalate (R-PET) market will continue to see significant variances in demand levels on a case-by-case bases, as well as lower availability of post-consumer bottles (PCB) toward the end of the month, though impact on prices will be limited.

Demand for colourless (C) R-PET flake in particular has varied significantly between market players ever since the end of the summer holiday period in late August. Some flake sellers have reported a drop off in volumes being requested by customers in September, while others have seen September demand increase, particularly in the sheet sector.

The increase in sheet demand in particular is of interest because virgin PET prices have remained stable at a low level since 2H September. The sheet market saw significant substitution away from R-PET and back to PET from April onwards as converters took advantage of the lower priced, better quality virgin material.

So why some flake sellers are now seeing improved demand from that same sector when virgin prices still remain below those of C flake prices is a bit of a mystery.

One answer may be that the brands, which often dictate the level of recycled content in their products to the converters supplying them, are actively seeking to secure of even increase the amount of recycled content in their products from a sustainability or marketing standpoint.

There seems to have been a flurry of news recently about brands looking to increase the amount of R-PET in there products, such as Coca-Cola in the Netherlands and Norway, and Nestle moving to 100% R-PET in the UK. This may also be driving other buyers to lock in and secure volumes now for next year if they anticipate flake availability may tighten.

As well as the brands’ pledges, there will also be more demand coming from the bottle to bottle market, as 2021 will see several new extrusion facilities start up, including the partnership between REMONDIS and Morssinkhof, and PET-Verpackungen GmbH Deutschland's plant at Großbreitenbach come online. This could potentially be leading sheet producers to move to secure material, or strengthening relationships with suppliers.

This mixed view on demand is also present in the food-grade pellet (FGP) market, evidenced by a wide range of prices being offered by sellers.

One pellet seller is seeing prices well above the ICIS published high end price of €1,400/tonne FD (free delivered) NWE (northwest Europe). Conversely, a different market source said it had seen European Food Safety Authority (EFSA) approved pellet being offered in Germany as low as €980/tonne FD NWE but with no buying interest.

These low pellet prices have been around in the market for some weeks, but it is not clear if these are distressed cargoes from sellers looking to free up some working capital or trying to shift material from their storage facilities. Either way, it is unlikely these low levels can be sustained, and buyers purchasing at that level now may find themselves in for a shock if or when that material disappears from the market.

Flake producers will also be watching the post-consumer bottle market more closely in October, as at least two bottle suppliers said they expect availability to tighten towards the end of October. However, because of poor demand from the downstream flake sector, bottle supply in most of Europe is plentiful, so it waits to be seen if a lack of PET bottles entering the recycling stream later this month tightens the market enough to have an impact on the PCB prices.

Focus article by Matt Tudball

Click here to see regulatory targets and a list of chemical and mechanical recyclers on the ICIS Circular Economy topic page.