The R-PET market has turned bullish in Q1, with increases in the free delivered (FD) northwest Europe (NWE) colourless (C) bale and flake prices in March ahead of the onset of peak preform production season during Q2, which could push R-PET demand higher still.
At the same time, PET prices have seen some upward movement but are increasingly coming under downward pressure from cheap imports, which could see the spreads between virgin and recycled material widen further.
Freely negotiated FGP prices for material available on the open market are currently between €1,600-1,680/tonne FD NWE, while contact prices – prices linked to feedstock bale and/or flake and usually subject to a formula calculation – have been heard at well over €1,800/tonne in some parts of Europe.
This is in stark contrast to the current price of virgin PET which still represents a significant cost saving in comparison to R-PET flakes and pellets.
Several participants in the R-PET market, including beverage brands, have said some brands and fast-moving consumer goods companies (FMCGs) are cutting back their use of R-PET to the minimum contracted volumes, which for beverage bottles is often between 25-30%. This is either to meet the mandatory recycled content target for beverage bottles as set out in the Single Use Plastics Directive (SUPD), which came into effect on 1 January 2025, or in line with internal company targets.
The Coca-Cola Company announced in December 2024 significant changes to its 2030 sustainability goals, in some cases delaying and minimizing targets – which has led to comments from European R-PET market participants that some brands now feel more emboldened to reduce previously announced R-PET content targets, often set anywhere between 50-100%, to a more manageable, and more cost-efficient level.
Many brands went big on R-PET content targets at the start of the 2020s after the SUPD was passed in 2019, as shown in the chart below. The spread between R-PET FGP and virgin PET rose significantly from 2019 onwards showing an increased level of demand for R-PET, and though the market has been volatile in recent years, the spread between R-PET and PET remains higher than before the Directive was passed.
Prices peaked in June 2022 but the cost-of-living crisis in 2023 and 2024 saw a much sharper focus on cost savings, and recyclers started to come under much more pressure to try and make R-PET more competitive as consumers in parts of Europe focused more on the money in their wallet than the amount of R-PET in their beverage bottle.
PET buyers entering into the R-PET market for the first time sometimes struggle to understand the relationships between feedstock bale and flake and the R-PET FGP they want to use in their preforms or bottles, with some approaching price discussions based purely on where PET prices are rather than taking into account the cost of production through the R-PET chain.
Member states have yet to put in place any significant financial or economic penalties for non-compliance for brands not hitting the SUPD’s 25% target, leading some PET bottle producers and brands to continue to use the minimum R-PET content, or are even stick with 100% PET until forced to make the change.
This is particularly true of small and medium-sized brands, and particularly in parts of central and eastern Europe, though it has also been noted in other parts of Europe too.
Put simply, many brands do not want to pay high prices for recycled material made from post-consumer plastic waste when they can get prime virgin material at lower prices.
The chart below shows the spread between the midpoint of the FD Europe PET bottle grade resin price and the FD NWE food-grade pellet price, which currently stands at €590/tonne.
This reduction in the use of R-PET FGP in particular has resulted in some higher-than-expected stock levels leading some suppliers to offer FGP below market price in order shift volumes or free up working capital.
There is still hope that 2025 will see better FGP and R-PET demand compared with the previous two years, and the annual Plastics Recyclers Show Europe (PRSE) in Amsterdam on 1-2 April will be a good opportunity to gauge the feeling of the market for Q2 and into the rest of the year.
In the days head of the key industry event, while there is optimism in the market right now, it might not be at the levels that some FGP and preform producers would like to see for the time of year, especially with the prospect of even lower virgin PET prices on the horizon.
