Recycled plastics markets see mixed spread trends in May

European markets for recycled plastics saw mixed spread trends against virgin grades in May.

While robust demand from the packaging and construction sectors supported pricing for some recycled materials, significant decreases in virgin prices and varied demand across applications led to a complex market landscape.

Virgin PET prices drop, spread increases with R-PET

In May, the spread between virgin and recycled polyethylene terephthalate widened in the European market as virgin PET prices decreased.

Platts, part of S&P Global Commodity Insights, assessed the virgin PET FD Northwest Europe spot price at Eur970/mt May 28, marking a Eur30/mt drop from the end of April. This price was at a Eur687.50/mt discount compared with the R-PET food-grade pellets FD NWE spot price.

The spread between virgin PET and R-PET reached a multiyear high May 14 at Eur730/mt, levels not seen since April 2023, driven by falling virgin market spot prices due to low demand and competitive offers from Asia. Despite the decline in virgin PET prices, R-PET prices remained relatively stable throughout May, as recyclers were hesitant to reduce prices due to ongoing tight margins.

As the spread between virgin PET and R-PET exceeded Eur700/mt, consumers showed increased interest in switching from recycled to virgin PET. Sources said the absence of penalties for noncompliance with the Single-Use Plastic Directive's 25% recycled content target facilitated this shift.

Although virgin PET prices generally decreased in May, rising Asian paraxylene and purified terephthalic acid prices resulted in higher offers from Asia, which supported price increases in Europe by the end of the month. Also, the initiation of an antidumping investigation into Vietnam PET led to increased interest in domestic material. As a result, by the end of May, the spread between virgin and recycled PET began to narrow.

R-PE prices rise amid stable demand

An expanding spread was observed for both recycled high-density polyethylene and recycled low-density polyethylene markets in Europe for May, as robust end-user demand from the packaging sector outweighed pricing pressure from virgin grades.

In the recycled HDPE industry, spot prices for natural pellets were stable throughout May. Meanwhile, virgin HDPE prices dropped due to increased imports and low demand, resulting in a widening recycled-against-virgin spread. Despite tentative stability seen in spot pricing for lightly colored recycled HDPE pellets, emerging headwinds were heard from the cosmetic packaging sector.

Platts calculated recycled HDPE natural pellets at a Eur667.50/mt premium to virgin May 28, up Eur21.50/mt from the start of May.

European recycled low-density polyethylene translucent pellet spot prices strengthened throughout May, up Eur30/mt month over month May 28, driven by demand for packaging applications. During the month, the recycled-virgin spread flipped from being negative to positive, as recycled LDPE prices rose from being at a discount to their virgin counterpart to being at a premium to virgin.

Platts calculated the recycled LDPE translucent pellets at a positive spread of Eur70/mt to virgin May 28, up from a negative spread of Eur77/mt from the start of May, showing an increase of Eur147/mt.

Demand from R-LDPE from the packaging sector has been heard strengthening in May, with recyclers mentioning competition among themselves in securing the upstream feedstock for making film products, especially those for low melt-flow applications, such as the shrink-film used for packing beverage multi-packs.

Supply pressures support R-PP black pellet pricing

The European recycled polypropylene market saw stronger pricing for black pellets throughout May, supported by stable demand and tightening supply in recycled polypropylene bales. Conversely, natural pellets saw weaker pricing due to weaker demand fundamentals than black pellets.

Platts assessed black pellets DDP NWE at Eur870/mt May 30, up Eur35/mt from the end of April.

The spread of black pellets to virgin polypropylene narrowed during May. Despite significant decreases in the price of virgin polypropylene during the month, this did not translate into pricing pressure for recycled material. This was due to supply-side pressure from a tightening supply of bales, the main feedstock for R-PP. Stable demand from the gardening and packaging sectors also supported black pellet pricing.

The spread of recycled natural pellets to virgin material was broadly stable during the month, as prices fell for natural pellets. Demand was weaker overall for the natural pellets compared with black, with the availability of off-grade material also softening natural pellet pricing.

Platts assessed natural pellets DDP NWE at Eur1,650/mt May 30, down Eur50/mt from the end of April.

Seasonal demand boosts R-PS prices

Spot prices in the European recycled polystyrene market slightly strengthened in the black pellet segment, driven by a seasonal uptick in the construction and gardening sectors, according to market sources.

Recycled polystyrene black pellets are typically used to produce gardening trays and within walls of buildings for insulation or soundproofing purposes.

"Construction is pushing prices slightly higher for PS," a recycler said. "... Acceptance of any pricing rises is mainly coming from [the] construction industry," a recycler said.

Platts calculated the recycled PS black pellet DDP NWE at a Eur625/mt discount to virgin high-impact polystyrene May 28, down Eur45/mt from a Eur670/mt at the end of April.

Conversely, the recycled acrylonitrile butadiene styrene market saw price easing over the month, driven by ample supply and weak demand, which resulted in the spread between virgin and recycled black pellets widening. The R-ABS black pellet market experienced no seasonal demand increase from the construction sector.

Platts calculated the recycled ABS black pellet spread to virgin ABS at a Eur935/mt discount May 28, up Eur10/mt from Eur925/mt May 7.