European R-PET premium to virgin widens due to coronavirus pandemic

New York — The European premium for recycled polyethylene terephthalate clear flakes, used to make plastic bottles and food packaging, over virgin PET resin has increased since the start of the coronavirus pandemic, as buyers appear locked in to their sustainability commitments and recyclers struggle with tight supply.

The premium increased to Eur110/mt ($119/mt) on Wednesday from Eur70/mt at the beginning of January. Virgin PET prices have been hit by falling feedstock prices despite robust demand from the beverage and food packaging sector as well as from the personal protective equipment sector.

Since the start of the year, virgin PET spot prices in Northwest Europe have fallen Eur90 to Eur790/mt on Wednesday. They peaked in mid-January at Eur900/mt.

R-PET prices, on the other hand, have fallen just Eur50 since the start of January to Eur900/mt Wednesday, as recyclers try to retain margins in the face of tightening post-consumer PET bottle bale supply.

Post-consumer PET bottle bale supply has tightened across Europe as lockdowns in various countries have meant reduced local waste collection and capacity at waste-sorting centers due to social-distancing guidelines.

"Thirty-five percent of sorting centers have stopped in France. They don't have the personnel to sort it," a recycler said, adding: "The collection of waste does continue, but without sorting centers open the waste is incinerated."

Additionally, fewer bottles are entering the recycling stream as a result of consumer stockpiling and the reluctance by or inability of consumers to leave their homes to return used bottles, sources said.

Despite this tight supply, buyers are maintaining their R-PET purchases as they seek to continue their sustainability commitments, which will mean many having to include 25% recycled content in packaging by 2025 under EU legislation.

Analysis by S&P Global Platts Analytics suggests that, as of 2019, global recycled plastic inclusion was 7%.

Another reason why many buyers have to maintain their R-PET purchases is the design of the packaging they are making and the need to maintain stable ratios between virgin and R-PET to avoid having to redesign it.