European R-PET prices stable in September with downward pressure

01 September 2014 17:33 Source:ICIS News

Focus article by Iain Packham.

LONDON (ICIS)--European recycled polyethylene terephthalate (R-PET) prices look broadly stable in September but with some downward pressure, particularly at the upper end of the range,  reflecting softening virgin PET prices and improving supply of post-consumer bottles, sources said on Monday.

Post-consumer bottles are the primary feedstock for the R-PET chain.

Virgin polyethylene terephthalate (PET) competes directly with R-PET in certain applications.

Prices of post-consumer bottles are said to be stable going into September, despite improving availability after the summer holiday period.

A packaging manufacturer said, “Prices are pretty stable on bottles and flakes. Nobody is trying to increase flake prices these days. There is huge availability, but prices are not coming down on bales [post-consumer bottles].”

Another packaging producer, however, anticipates some weakness in R-PET prices due to softening virgin PET prices. It said, “September is a rollover or a little bit of a decrease, due to the fact there is a situation of virgin [PET] material that will... decline in price. Huge quantities [are] arriving in the market. Prices at rollover, but could be little decrease,” a packaging producer said of post-consumer bottles.

Other sources also indicated downward pressure on prices, especially at the upper end of the range of prices for mixed coloured post-consumer bottles and flakes, due to improving availability after the summer vacation break.

A buyer of mixed colour flake said, “My view was that we had stable prices from August to September and, let’s say, it would have been possible to negotiate some price reductions on mixed colour flake, on the high end.”

Nevertheless, it noted that it had heard some colourless flake producers indicating higher prices for September.

R-PET flake and pellet producers had previously spoken of a desire to lift prices and improve thin margins, though falling virgin prices make this seem unlikely.

“Today Virgin [PET] is cheaper than R-PET pellet prices. Strange situation. This is really tough for R-PET pellet producers,” a trader said.

Nevertheless, some flake and pellet producers are still optimistic of being able to lift prices in September, though with the support of buyers.

“We have to do so [improve margins]. I think there will be a small increase [in September]. We are still in talks, looking for €10-20/tonne increase on flakes to improve margins. So, the flake customers not happy about flake increase, but they understand the actual prices. Virgin [PET] is so cheap,” a flake and pellet producer said.

By Iain Packham