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UK Plastic Tax Levy to increase PET bottle costs: Platts data

Highlights

Levy to debut April 2022

Levy priced at GBP200/mt

  • Author
  • Benjamin Brooks
  • Editor
  • Keiron Greenhalgh
  • Commodity
  • Petrochemicals

London — The unveiling of a plastic packaging tax in the UK Budget, revealed Wednesday by the UK government, will place significantly higher costs on beverage bottle makers, S&P Global Platts analysis shows.

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The government announced a levy on plastic packaging that does not contain a minimum of 30% recycled content would be set at GBP200/mt ($251.61/mt) for packaging produced in or imported into the UK as of April 2022.

For beverage bottle makers using virgin and recycled polyethylene terephthalate, this will see costs increase considerably.

This increase, based on data for the year from March 2019 to March 2020, could average GBP107/mt, based on using 30% recycled-PET and 70% virgin PET. This is due to significant premiums in the market for recycled-PET FGP, which on Wednesday was available at a GBP470/mt premium to virgin PET, according to Platts calculations.

Non-compliant packaging will be even harder hit as it will attract a GBP200/mt levy. Despite the significant premium that recycled-PET holds over virgin PET in the UK market, it will still be more economical for companies to comply with the minimum content than to have to pay the 30% levy, according to Platts data.

Platts pricing data shows that companies using 100% virgin PET to produce beverage bottles after April 2022 will pay, on average, GBP93/mt more than those producing compliant bottles.

As a result of the levy, demand for recycled-PET is likely to grow as companies seek to become compliant.

The cost of recycled-PET is increasing due to the supply tightness, for instance, data from only 2020 show companies will pay GBP126/mt more to become compliant than using 100% virgin material, GBP22/mt more than in 2019.