R-PET Pricing Stable for Now

WEB EXCLUSIVE: Recycled PET orders are starting to pick up, and prices are beginning to stabilize. At some point in the not too distant future, R-PET could be selling for the same price as virgin resin. Some sources predict that on the West Coast, reprocessed material may sell at even higher prices because California offers incentive payments for using recycled product.

Fall is the season when R-PET inventories start to run low, but that situation began four months early this year. “Everyone was looking at the falling market and no one was willing to continue to buy and build inventory in such an uncertain situation,” one reprocessor said. By early August, pricing had hit bottom. On the West Coast, R-PET bale prices sank as low as 22¢/lb. By mid-September, inventories had been depleted to near-record levels, and prices had rebounded to 28¢/lb.

“I’m not saying we are on the road to recovery, but I think we’ve hit bottom,” an East Coast recycler said.

In the face of what remains a buyer’s market, virgin PET suppliers have announced price increases, though they are considered unlikely to stick. Analysts say prices should be stable for a while and then slowly start to increase.

While the PET bottle business is flat, the fiber business is still strong this time of year. “Fiber demand increases when you are making bulkier winter clothes rather than summer clothes. Consumers are still spending a lot of money, which also leads to a greater demand for plastics packaging and wrap,” one source said.

West Coast reprocessors say Chinese buyers have backed away from the market, “but if they get hungry again, then watch out!”

As for green flake, there is little or no market on the West Coast, but supplierssay East Coast demand is strong. One processor explains, “People get better at sorting. Everyone is trying to capture the clear flake. When you do a real good job capturing the clear, what you have left is green, and most of the time you don’t have as much as you thought. All of a sudden, you are creating a shortage on the green, and the demand stays the same.”

Demand for green pellets is not a strong as for flake. “Anybody that uses green flake is not going bottle-to-bottle. They are not willing to pay a big premium for green pellets. If you are using the material to make strapping or to make black fiber, why pay for extra processing?”