European recycled polyethylene terephthalate (rPET) will be the same price or more expensive than virgin PET next year, according to market data firm S&P Global Platts Analytics. A report by Materials Recycling World (MRW) says the warning raises questions over whether plastic waste can be curbed.
S&P Global Platts Analytics found that virgin PET prices had “plummeted”, with the material currently being cheaper than rPET for the first time since 2008. The firm forecast that the total cost of rPET content in UK packaging would increase by $250 million (€226.7 million) in 2020, relative to 2018. According to MRW’s article, S&P’s research found that during 2018, the average price of European virgin PET was $1,464/mt (€1,327/mt) and the average prices of rPET was $1,205/mt (€1,092/mt). This provided an average $259/mt (€234/mt) incentive for using recycled PET over virgin PET. However, recent changes have seen rPET prices rise to around $72/mt (€65/mt) above the virgin PET price.
According to S&P Global Platts, the price change is a combination of new virgin PET capacity coming online, high stocks, bearish feedstock prices and a delayed start to the summer season, seeing demand for virgin PET resin decrease and thus driving down prices, while rPET costs stayed strong. Despite the economic incentive to use virgin materials, larger companies that had committed to using 25% rPET content were expected to stick with it, as growing sustainability commitments took precedence over financial costs, according to the report.
To balance rPET supply and demand, S&P Global Platts suggested the recycling industry expand processing capacity to meet the growing demand for food-grade rPET. MRW reports the company as suggesting “Recycled PET prices need to provide the economic incentives to balance the limited food-grade rPET supply with the increasing demand and also provide a return on the required recycling expansions”, adding: “both of these market actions require higher rPET prices relative to virgin PET in the near term”.
The price change is likely to challenge consumers, should they need to shell out for more sustainable products using rPET.