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R-PET buyers switch to virgin material on inflated prices in Europe

by Manolya Tufan -
  • 02/05/2022 (10:22)
In Europe, more recycled buyers have been switching to virgin PET bottle due to soaring R-PET prices. The gap between the two products has widened to a great extent, although prices for both virgin PET bottle and R-PET Flakes posted 3-digit hikes in April.

Packagers favour PET bottle over R-PET

Apart from the preform sector, converters in the packaging, film and thermoforming sectors were seen keeping their R-PET purchases at bare minimum due to inflated levels. A converter said, “We can no longer increase recycled content in our end-products considering the huge gap between recycled and virgin PET prices.”

Indeed, the rally did not take a pause in April as €200/ton hikes sent R-PET Flakes prices to €2100-2200/ton for clear grade on FD Italy, 60 days basis. European R-PET Flakes clear market saw more limited gains, with prices being reported at €1850-1950 FD. Tight bottle bale availability remained the key factor behind huge hikes. However, sales volumes have been limited at such inflated levels.

Players confirmed that overheated price levels in the recycled market prompted converters to buy prime PET instead. In the spot PET bottle markets, price ranges were last reported at €1700-1780/ton FD Italy/NWE, 60 days.

Should R-PET prices remain elevated, buyers may continue to source from virgin PET bottle market that is believed to have peaked in April.

To track developments in Europe’s recycled polymers markets, please see Recycled Polymers (For members only)

April looks to be the price peak for virgin PET bottle

When it comes to PET bottle, spot prices in Italy and West Europe hit record highs after April offers saw 3-digit increases. Although sellers stepped back from their initial hike requests, hikes of up to €150/ton passed on deals. Prices on FD Italy/NWE basis currently stand at their highest levels since ChemOrbis started to compile data, as can be seen in the below graph.

FD – Italy –NWE –PET–bottle

PET bottle sentiment wavered during April, with buyers finding the prevailing levels unworkable. The weekly average for spot PET bottle prices on FD Italy/NWE basis stood at €1740/ton, data revealed. According to players, the peak has been reached for PET bottle in April as further hikes may not be absorbed.

Lower import offers from Asia also played a role in easing sentiment, although players mostly continue to shun Asian imports due to long lead times and uncertainties regarding shipment schedules and equipment availability amid China lockdowns.

Demand below seasonal expectations

Another pressure point has been the underperforming bottle season despite warmer temperatures and approaching summer holidays. High inflation and war-driven uncertainties paved the way for a cautious mood among European manufacturers.

Downstream factories remain under a heavy cost burden emanating from higher utility costs and inflated resin prices, which they cannot pass onto customers fully. A packager said that there has been no recovery ahead of the Easter period despite traditional patterns.

Hence, buyers were sticking to their basic needs during April and purchasing activities wound down from the previous months. According to some sellers, demand was patchy as they said, “Demand is still there.”

Eyes on costs

Eyes are locked on upstream markets, which have been volatile following in the footsteps of crude oil futures. April PX contract settled with rollovers from March. Meanwhile, players are waiting for monthly feedstock settlements for May in order to determine their pricing.

Widespread expectations call for stability or slight downward corrections for now, but recent developments in the energy markets keep players on their toes. Russia cut gas supplies to Bulgaria and Poland after Moscow’s demand to pay for fuel in rubles was rejected. Natural gas prices jumped as much as 20% as a knee-jerk reaction but then fluctuated, with winter demand fading amid lower gas consumption.

Markets remain on a shaky ground amid uncertainty over gas supplies and European countries’ decision to forgo Russian gas gradually. Russian gas meets 40% of Europe’s gas demand, according to media sources.
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