Standard recyclate producers are struggling to pass higher raw material costs onto converters because of ongoing low demand and competition from low-priced imports.
The R-PET sector has seen the largest price increases, but input costs increased at a faster rate in May, thus squeezing recyclers’ profit margins. R-PET clear flake prices increased by €150/tonne in April and have gained a further €40/tonne this month. R-PET clear food-grade pellet prices have increased by €100/tonne over the two months with coloured flake prices up by €60/tonne over the same period. R-PET is benefitting from an upturn in volume calls and the higher cost of virgin material.
The price upturn for other classes of standard recyclate over the last two months is much lower. R-LDPE prices have increased widely from just €10/tonne for black extrusion pellets to €60/tonne for natural film. R-HDPE prices have increased by €20-30/tonne and R-PP prices are up by €20-40/tonne. R-HIPS prices have risen by €40/tonne.
In most cases, the price increases for these classes have been insufficient to cover the increased purchasing cost, and hence recyclers’ profit margins are squeezed further.
While volume calls across all standard recyclate types have picked up slightly over the last two months, demand remains well below normal levels. Recyclers continue to run their plants at rates just sufficient to meet demand and to avoid a build-up of stocks.
Recycled polyethylene terephthalate (R-PET)
In April, R-PET clear flake prices soared €150/tonne with clear food-grade pellet and coloured flake prices each up €50/tonne. The upward price trend is driven by robust buying interest from converters, plus, the European Commission’s proposed recycled content goals pushed more converters to use R-PET. Lower collection rates are keeping post-consumer bottle bale prices under upward pressure, which corresponds into less R-PET output and higher pricing.
In May, R-PET clear food-grade pellet and clear flake prices increased by €40-50/tonne because of an increase in the cost of bottle scarp and good seasonal demand. Coloured flake prices were up by €5-10/tonne with just a modest rise in coloured bottle scrap costs. An increase in imports of recyclate from Asia meant that producers were mostly unable to pass through the cost increase in full.
Recycled high-density polyethylene (R-HDPE)
R-HDPE prices continued to rise slowly in April with gains of €20/tonne. Producers insisted on a price rise given higher costs and a small pick-up in volume calls, particularly from the cosmetics and personal care sector.
In May, R-HDPE producers were largely unbale to pass through the price increases they called for due to growing competition from low-priced imports of virgin material. Producers maintained production curbs but there was still sufficient material to meet contractual obligations. Volume calls by the construction and automotive sectors remained low.
Recycled low-density polyethylene (R-LDPE)
The upward price trend moderated slightly in April with gains of €20/tonne for natural film and translucent film grades and a rise of €10/tonne for black extrusion pellets. The sharp uptrend for virgin LDPE prices in recent months has prompted some converters to order more recycled material.
R-LDPE prices continued to gain ground in May with prices for natural film up by €40/tonne and translucent film prices rising by €20/tonne, which just about covered the increase in the cost of scrap. There was more than sufficient material to cover demand despite ongoing production curbs. Volume calls remain at a low level.
Recycled polypropylene (R-PP)
In April, R-PP copolymer prices edged €20/tonne higher with homopolymer material up by just €10/tonne. R-PP prices were supported by a modest recovery in seasonal demand and further switching from virgin material to recyclate.
R-PP prices nudged higher in May, rising by €10-20/tonne on the back of higher raw material costs. Recyclers continued to produce just enough material to meet the low level of demand. The only positive demand push appears to come from the horticulture market.
Recycled high-impact polystyrene (R-HIPS)
R-HIPS recyclers raised prices by €30/tonne in April; quite a modest rise considering the soaring cost of virgin material. Recyclers hope to pass on larger price increases over the coming months, bearing in mind the widening price gap between R-HIPS and virgin material.
There was a wide disparity in R-HIPS prices in May with some recyclers offering a discount and others raising prices in line with higher purchase costs. On balance, R-HIPS prices gained around €5-10/tonne. Recyclers reduced their production rates in line with the low level of volume calls.