The year of RPET: has it decoupled from virgin?

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26 November 2019

The year of RPET: has it decoupled from virgin?

Report summary

The continued war against plastics and the heightened awareness of plastic pollution has driven an unprecedented level of interest in RPET this year. There is momentum behind regulatory and voluntary commitments to collection and recycling, driving increased demand for RPET; yet collection today remains a bottleneck, resulting in intense competition among reclaimers for bale feedstock material driving high feedstock costs. While in some cases there has been a decoupling of RPET from virgin prices, other core market segments remain highly susceptible to substitutive effects from low virgin prices, which fundamentally impacts recycling margins. In this insight, Wood Mackenzie reviews the price drivers within the RPET value chain, key trends in 2019, and highlights the risks and implications for the industry in 2020. The analysis has been performed with a focus on Western European RPET prices, however, similar dynamics have been observed in the United States and Chinese RPET markets.

Table of contents

    • Key takeaways:
    • Momentum behind collection and recycling commitments
    • The first step in recycling is collection, which remains a challenge but is key to meeting any recycling commitment
    • The bottleneck in collection drives high feedstock bale prices
    • RPET flake has traditionally provided savings when compared virgin polyester
    • Virgin prices continued to fall in 2019
    • and thus, clear flake prices have exceeded parity with virgin PET resin, driving substitution
    • The substitutive effect between virgin polyester and RPET flake sets a cap on recycler revenues, yet bale remains highly coveted driving high feedstock costs, which means that reclaimer spreads have eroded to new lows
    • Food grade RPET pellet prices reach 60% premium despite continued VPET resin weakness
    • Savings from reduced virgin PET resin prices can facilitate increased RPET content while maintaining the overall packaging procurement cost
    • Was 2019 the year of RPET and has it decoupled from virgin?
    • Key definitions:

Tables and charts

This report includes 9 images and tables including:

  • EU single-use plastic directive timeline
  • Progress in plastic packaging, recycled content and future commitments
  • Key activities in PET recycling
  • Blow moulding container collection volumes
  • Blow moulding container collection rates
  • Clear RPET flake and VPET resin price ratio
  • Reclaimer spreads eroding on weak flake prices and continued high feedstock bale costs
  • Food grade RPET pellet and VPET resin price ratio
  • VPET resin and food-grade RPET pellet sourcing costs example

What's included

This report contains:

  • Document

    Insight - The year of RPET Has it decoupled from virgin.pdf

    PDF 417.23 KB

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