Challenges in Supply and Demand Fundamentals Drive Fluctuations in R-PET Prices

The global Recycled Polyethylene Terephthalate (R-PET) market witnessed a surge due to strong market purchases and gradual depletion of inventory, apart from China, where Lunar New Year festivities-maintained prices at a steady level due to reduced purchasing activities during the holiday period. Southeast Asia demonstrated robust demand, although buyers remained cautious amid holiday-related closures. Globally, Food Grade FD Hamburg prices saw a modest 2.1% increase, primarily propelled by elevated clear bottle scrap costs. Meanwhile, in North America, R-PET Clear Flakes prices experienced a 1% rise fuelled by increased demand and disruptions in shipping. These market dynamics present pricing and environmental sustainability challenges.

Following the established two-week pattern, R-PET prices in China maintained their stability for the third consecutive week, holding steady at USD 820/MT until the week ending on February 23rd. The Northeast Asian R-PET market continued to exhibit a subdued trend particularly in China, primarily influenced by the aftermath of the post-Lunar New Year holidays. Conversely, Southeast Asia displayed robust demand, yet prices remained resilient. Many buyers exercised caution, refraining from committing to definitive bids, especially as downstream production facilities underwent closures during the holiday period. In China, the stability in prices demonstrated resilience with minimal fluctuations, attributed to both subdued demand and heightened ocean freight charges. This unwavering stability persisted due to a combination of factors, including the absence of substantial demand and the impact of increased ocean freight charges. Challenges faced by exports due to these factors were further compounded by limitations in container availability.

Simultaneously, Food Grade FD Hamburg prices of R-PET experienced a modest increase with narrowing profit margin among the significant manufacturers. This upward trend was driven by a rise in purchase costs for clear bottle scrap. Recyclers, responding to pressure from the virgin material sector and increased demand, successfully implemented larger price hikes. In Eastern Europe, both flake and pallets prices witnessed an increase, fuelled by demand resulting from inventory restocking and limited supply availability. Spot purchases also contributed to the overall rise in R-PET prices. The surge in prices was primarily attributed to an uptick in recycled plastics imports into the EU, creating an imbalanced market. This situation not only poses environmental consequences but also challenges the environmental objectives of the European Green Deal, contributing to the deindustrialization of the EU. The confluence of increased demand, supply constraints, and the influx of recycled plastics imports presents significant challenges in the R-PET market, affecting both pricing dynamics and environmental sustainability efforts.

In the North American region, the surge in prices was fuelled by a surge in demand from importing nations, leading companies to ramp up production rates. Global shipping disruptions, compounded by a decrease in the availability of vessels, played a significant role in driving prices higher. Producers of R-PET noted heightened demand alongside low inventory levels, which further propelled the price escalation. The confluence of increased production rates, logistical challenges in shipping, and heightened demand highlighted the market dynamics that contributed to the observed price increase in R-PET Clear Flakes during the specified period in the US.

In the Middle East, the upward trend in the upstream PET market since January played a significant role in driving up the prices of R-PET. In the Middle East, prices experienced an increase due to demand fuelled by inventory restocking and constrained supply availability. Spot purchases also contributed to the overall upward trajectory in R-PET prices. The combination of these factors indicates the market dynamics that led to the notable price increase in R-PET during the specified period in Saudi Arabia.

According to ChemAnalyst, there is a likelihood of an increase in the prices of R-PET in the upcoming weeks. This projection is based on the rising demand for both upstream PET and downstream products in various countries. The surge in demand, particularly from the virgin material sector in Europe, coupled with high domestic demand and limited supply, may contribute to an upward trajectory in prices. Additionally, factors such as inflation in Germany and a higher cost of living are expected to support this price increase. In the US and APAC markets, the prices of R-PET are anticipated to rise due to higher shipping costs and constraints in vessel availability for exports. These challenges in logistics may exert upward pressure on prices in these regions. The combination of increased demand, limited supply, and logistical constraints suggests a complex set of factors influencing the pricing dynamics of R-PET, pointing towards a potential upward trend.