Strong European post-consumer supply pulls down pricing
Prices have fallen throughout the European recycled polyethylene terephthalate (R-PET) chain because of ample supply and weak macro-economic conditions.
Seasonally lower demand post-summer, particularly in the bottle-to-bottle market, combined with continued strong availability of post-consumer PET bottles after summer, has put downward pressure on prices, particularly at the upper ends of the ranges.
Market players expect availability of post consumer PET bottles to tighten through the rest of October and into the first quarter of 2014 as is seasonally usual. What impact this will have on pricing remains unclear, though, due to the impact of ongoing global economic uncertainty, particularly over the U.S. debt crisis.
Flake prices at the upper end of the range have fallen because of lower post-consumer PET bottle prices. Flake prices, however, didn't fall to the same extent as post-consumer bottle prices due to reduced availability of high-grade material with low levels of contaminants.
A northwest Europe (NWE) flake producer noted that demand from eastern Europe is strong, particularly from the strapping sector. It said demand from the sheet market is also rising, due to a number of new sheet producers that have switched feedstock from virgin PET to cheaper recycled material.
Demand in southern Europe is stable to weak, reflecting macroeconomic conditions, and demand is forecast to remain broadly flat in November, a source said. A flake producer said demand for clear material is stable while demand for coloured material is weakening. It noted this weakness is highlighted by falling demand from two of the region's key markets, strapping and fibre for auto.
Demand in NWE is weak, reflecting a seasonal slowdown that is being worsened by macroeconomic uncertainty, weakness and general hesitation in the market, a food grade pellet producer said. It noted that food grade material is facing further downward pricing pressure because of cheap virgin PET imports from southeast Asia and the Middle East, reflecting a stronger euro versus the US dollar. Virgin PET is a direct competitor to R-PET in some downstream markets such as fibre and packaging.
Upstream, the value of European virgin PET remains a concern for producers, as prices decrease before feedstocks settle. The combination of the peak bottling season ending, downward pressure on feedstocks and a barrage of cheap imports on offer, has pushed customers to the sidelines.
($1 = €0.74)
Covering editor: Iain Packham