Scarce Supply Amid Overshooting FMCG Demand Bolstered Recycled Bottle Grade PET Resin Market in Europe
- 20-Jan-2022 12:57 PM
- Journalist: Henry Locke
With expediting government attempts and spurring legislation for the establishment of a circular economy in plastics, Europe has become one of the first regions to have seen widespread commercial success in the recycled plastic market. Europe had been continuously experiencing elevation in the bottle grade R-PET resin prices since last quarter owing to the energy-intensive bottle bale-to-flake conversion process amid critically tight energy and gradually rising pressure from demand. Entering January, the R-PET resins market has reached prominent heights with prices gaining more than 100% rise surpassing the prices of its virgin counterpart.
The astoundingly high rise in prices has resulted from the acute shortage of raw materials amid soaring demand from the FMCG sector. The recycled-content commitments in food packaging by giants like Coca Cola, Danone, Nestle, Keurig Dr Pepper, PepsiCo have led to a flood of enquiries in the recycled market. The beyond expectation growth in demand has raised the fear of losing contracts among the manufacturers as they struggle to procure the raw materials. The supply tightness of post-consumer bottle bale has been haunting the European region for around a year owing to the lack of efficiency of the existing model of plastic collection and sorting. The domino effect of rising R-PET consumption in the packaging sector has outstretched the prices of bottle-bale which have elevated 3X in the past few weeks. The consequent upheaval in the market is being heard to slow down the projects of the clientele who are growing more uncertain by the day towards the long-term surety on sustainability in commercial packaging.
As per ChemAnalyst, the demand for R-PET in the European countries has outstripped supply to such an extent that the existing inventories are nowhere near the consumption rate. With the FMCG sector adamant on achieving their sustainability goals, the pressure on the R-PET manufacturers is going to be immense in the upcoming months causing them to succumb to making transactions at premium prices. A possible solution could come in the form of revolutionizing the plastic raw materials collecting techniques to maximize its supply. Additionally, more recycling plants are required to be established in the region with support from the government to boost growth in the recycled products market.