European R-PET Prices on Horrendous Rally Amid High Trending Virgin PET, Market Seeks Traction in Obscurity

European prices for recycled polyethylene terephthalate (R-PET) are relentlessly escalating since August as the market seems torn between the high energy costs and jumping conversion costs of R-PET from bottle bale. ChemAnalyst, in the last week of November, assessed the Germany prices for food-grade R-PET and R-PET flakes at USD 2,270 per tonne and USD 1,770 per tonne respectively, after registering a rise of over 17% from the prices recorded at the close of the 2021-second quarter.

The R-PET prices in Europe got fired up due to the market tightness owing to the soaring recycling costs, a huge share of which depends on the costs of virgin PET, which is the raw material used for recycling. Europe’s virgin PET market is under turmoil as the PET prices are skyrocketing throughout the fourth quarter and had reached a record ten-year high in the November start. Subdued PET production on strained import-dependent PTA feedstock availability backed by logistic delays and high freight charges propelled the rise in the prices of virgin PET.

The market pressure has further been exacerbated as the European region grapples with an energy price surge since the third quarter causing a lag in operations in almost every sector including the petrochemical industry. Amid the firm demand for energy across the globe with the rebounding of activities after the pandemic effects wearing off in the third quarter and increased tendency of securing inventories for the winter season the gas imports to Europe from Russia and Norway have taken a toll.

R-PET are the recycled form of virgin PET which is a thermoplastic resin composed of ethylene terephthalate monomers derived from petrochemical feedstocks. Given that, beverage bottles are typically manufactured from PET, the used bottles are usually collected by the recycling companies for converting them to R-PET, which is used in the manufacturing of containers, bottles, textiles etc.

As Europe is striding towards transitioning to sustainability with its increased investments in R-PET packaging solutions and technologies, the contradicting global events make Europe’s ambition a distant prospect. The constraints following the ongoing energy crisis, high freight costs, and raging PET prices are anticipated to keep the prices for R-PET on an upward trajectory. Besides, the scarce supply of post-consumer bottle bales in winters is expected to further worsen the situation. However, the hopes are high for the R-PET recycling companies to operate at higher production rates in the peak summers when surplus post-consumer bottle bales will be available, causing the R-PET prices to cool off.

What’s on the Horizon? The emergence of a new COVID variant that has sent tremors in Europe may reverse the current market sentiments by lowering down R-PET demand. The demand for PET may also receive a hit upon reduced consumer purchase activities during the lockdown constraints. A potentially larger impact may come in the form of giant beverage companies who may opt-out of their commitments of exploiting R-PET in their packaging bottles as a step forward towards sustainability.