What happened when regenerated PET in Europe entered the most “turbulent” period?
The European R-PET market has entered one of the most turbulent periods in its history. From the tight supply in the first half of the year, the price hit a record high, to October, the supply exceeded the demand seriously, the demand slowed down, and the price fell to a record high. Although the record post-consumption prices of bottles, tablets and food-grade granules are expected to ease down, the market has been surprised by the slow pace since the summer. (Read for reference: demand is falling, and the price of recycled plastics in Europe continues to fall)
The monthly prices of bottles, bottles and even mixed colored bottles and chips after colorless consumption in Northwestern Europe have recorded the largest drop in unit prices since ICIS introduced the quotation in 2006. There are several reasons:
● PET bottles after large consumption in summer enter the recycling stream
● The low price of native PET has led to a large number of replacement of R-PET
● After consumption, the buyers of bottles and bottles have high inventory, and the purchase intention is decreased
● Macroeconomic uncertainty, high inflation and slowing demand for terminal use
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Low prices do not bring high demand
In some cases, the bottle inventory becomes so large after consumption in September and October that some waste management personnel are asking customers whether they can use any spare storage. After consumption, the quality of bottles will decrease with the extension of storage time, especially outdoors. Some buyers also try to buy low-cost packages to reduce the overall cost of products. Bottle and chip manufacturers also have large inventories, forcing some people to cut prices to transfer materials and release some much-needed cash flow. However, lower prices did not translate into higher demand.
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Energy and economic issues
European R-PET market participants said that the demand for recycled materials had not been realized after the summer, and many people believed that it would not recover soon.
Brands and FMCG companies are revising or reconsidering their target of recycled ingredients. Several suppliers in these two industries have noticed the decline in the quantity. They expect that this decline will continue until 2023, although the European Union’s target of reaching 25% of the R-PET content in PET beverage bottles by 2025 is approaching.
In the field of sheet and thermoforming, although the EU plans to introduce an EU recycling content target, packaging companies will continue to save costs by using cheaper PET and reducing R-PET content.
In addition, rising inflation and worries about the economic recession have prompted consumers to change their buying habits, thus affecting the demand for R-PET. However, in the foreseeable future, rising energy costs may be the biggest concern and challenge of the R-PET market.
In Europe, the electricity charges of recyclers have doubled or even quadrupled, which has affected the final price of bottle chips and particles that are very sensitive to price. How the national government or energy supplier deals with the expected increase in electricity costs will put recyclers in an advantage or disadvantage, depending on their location. An Italian recycler said in mid-October that compared with neighboring Spain, Italian recyclers had paid more electricity bills. In addition, people also worry that the war in Ukraine will lead to the reduction of Russia’s natural gas supply to Europe, which may stop the production of R-PET. If the price of gasoline also rises in winter, consumers’ habits may change again, making demand forecasting more difficult.
With the arrival of winter, the only certainty is uncertainty. Some people just want to settle down and get through the coming storm, hoping for a brighter future in 2023 – but few people think that the dark clouds currently hanging over the R-PET market will soon dissipate.
