Saudi Arabia R-PET Prices Approaching Freefall on Muted Demand from FMCG Sector
- 19-Jan-2022 2:34 PM
- Journalist: Peter Schmidt
In the times when a lot of FMCG industries are introducing recycled plastics in the packaging of products in countries like the USA, Japan, India, Germany, under mounting pressure from environmental advocates, the FMCG companies in Saudi Arabia are still opting for 100% virgin plastic packaging. In line with the stagnant demand pattern, the Saudi Arabian R-PET market continues to project bearishness with prices falling incessantly since the previous month. A further fall of around 7-8% in the prices of R-PET is likely to be seen in a span of two weeks.
The ease of availability of raw materials and the improving supply dynamics in the previous weeks have encouraged the manufacturers to expedite R-PET productions. However, with the demand falling gradually after a small hike in beverages and packaged food demand during New Year celebrations, the market has fallen prey to supply abundance. Contrary to the expectations of demand picking up in the new year the R-PET cargoes remained stranded at their home locations, meanwhile the virgin PET offtakes increased considerably.
Another picture of the story is that the Saudi government is frantically increasing attempts to reduce the annual solid municipal waste generated every year which is nearly 15 million tons. Out of the total wasters generated, plastics account for 5-17% depending on the region. To popularize circularity in plastics, the government has plans of investing USD 6.4 billion by 2035 as it moves to establish an efficient waste management system.
As per ChemAnalyst, recycling in Saudi Arabia is still in its infancy, and therefore requires a boost from the packaging sector in order to bring sustainability into practice. As no major recycled-content commitments seem underway from the beverages and other FMCG industries in the country, the R-PET market is expected to stay underwhelmed for some time. Furthermore, the competition from virgin-PET is also expected to support negative price revisions by the manufacturers in order to attract demand and save a fair margin.