Price and market trends: R-PET feedstock costs up on tight supply

02 June 2014 00:00 Source:ICIS Chemical Business

Recycled polyethylene terephthalate (R-PET) prices in Europe remain stable, although tight availability of post-consumer bottles is driving up prices, buyers and sellers said on 19 May, citing a pickup in demand primarily from the soft drinks industry that has outpaced collections.

Nevertheless, most sources expect availability to rise in the coming weeks, bringing more balance to the market.

Post-consumer bottles are the primary feedstock for the R-PET chain. Consumption of bottled drinks traditionally rises in the summer months, providing greater availability of post-consumer bottles.

Market players indicated that availability of post-consumer bottles typically starts to grow from May, after the Easter holidays, though despite an early summer this year, supply of post-consumer bottles appears to be below expectations across much of Europe. “For me, the most important question is where the [post-consumer] bottles? Because I would expect that there are enough bottles in the market to negotiate lower prices, but we don’t have that at the moment. What the recyclers tell me is that they have problems with availability of [post-consumer] bottles,” a flake buyer said.

EU R-Pet

“Normally availability is better - people drink more. I don’t understand it – it’s a miracle,” it added.

Most sources were unsure of the reason behind the lack of availability of post-consumer bottles, but some speculated that the tightness stems from higher demand from soft drinks manufacturers, many of which have sustainability targets.

“The demand from fillers is increasing. They have to produce and use bottles as they have to use it, the fillers want green credentials. I think production is increasing, a late spring story. Higher demand from the drinks makers,” a bottle collector said.

One market source speculated that tight availability of virgin PET in Europe may have driven greater demand for post-consumer bottles and R-PET.

Several sources said that difficulty in sourcing post-consumer bottles was driving them to look further afield for new sources of supply.

The price increase on colourless post-consumer bottles was not felt elsewhere in the R-PET chain, players said, citing downward pricing pressure from virgin polyethylene terephthalate (PET). Virgin PET competes directly with R-PET in certain applications.

Most market players only expect the tightness in supply of post-consumer bottles to be short term and unlikely to impact R-PET prices.

Market sources expect availability to grow over the coming weeks and months as summer takes hold. Players said they expect post-consumer bottles prices to fall as availability grows over the summer period, as traditionally occurs.

“It would be nice if there was more availability, hopefully this will improve in June or July a bit,” a trader said.

By Iain Packham