Demand Shocks and Availability Constraints Upswing R-PET Prices in the US, 6% Rise in Q1 2022 Forecasted

The Recycled Polyethylene Terephthalate (R-PET) prices in the US market, which had remained buoyed since the second quarter of 2021, plunged further high in December causing the discussions to settle at USD 2247/MT for R-PET Pellets Food Grade FOB Los Angeles and USD 1773/MT for R-PET Pellets Clear Flakes FOB Los Angeles. According to the ChemAnalyst database, the current prices for R-PET Food Grade and Clear Flakes registered a 10.6% and 11.6% hike from the average prices assessed in November, and a whopping 51.9% and 70.8% raise from the prices that remained active during the end of the first quarter, respectively.

The rising R-PET futures is a reflection of a robust demand-driven market. The demand fundamentals for food-grade R-PET in the packaging sector remained bullish throughout 2021 following the sustainability goals set by major beverages brands like Coca Cola and PepsiCo who are in plans of introducing recycled packaging in select brands. On the other hand, the conventional end-use of R-PET flakes in the fabric and fibre industry, which had always gathered a fair amount of share since the historic years, also witnessed demand shocks with the arrival of the winter season when the sales for winter clothing is high. Meanwhile, the production rate of R-PET in the USA has not remained up to scratch as the sporadic supply and production challenges arising from Covid19 resurgence, disruptions by the Ida hurricane, spiralling freight costs and crude oil crisis, slowed down the recovery in productions.

As per ChemAnalyst, the total plastic recycling volume in the US in 2021 is expected to reach 3.25 million, out of which R-PET constitutes 30.92% volume share. With brand majors vouching for R-PET in the packaging of their products, the thirst for R-PET is not likely to cease down soon. Moreover, the winter-driven higher R-PET consumption on top of its demand in conventional clothing is expected to push an exacerbated pressure on the manufacturers during the peak seasons. The combined push from the demand side is anticipated to keep the prices to rise incessantly in the coming weeks which might make room for the hike of around 6% in the prices in Q1 2022. A sole chance of relief lies only in increasing future R-PET production volumes which is likely to take time.