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Column: The Fluctuating Demand for rPET in the Changing Seasons


The availability of rPET, a recycled material used in plastic bottles, is closely tied to seasonal consumer habits. During summer, there's a surge in the use of PET bottles as people often prefer cold drinks and are more mobile, making these bottles ideal for travel. Consequently, rPET reaches its peak supply by summer's end, leading to a drop in its price. Come winter, the situation reverses. With less travel and lower consumption of cold beverages in PET bottles, the supply of rPET dwindles. This seasonal pattern leads to a supply-demand clash every first quarter of the year. As the feedstock for rPET reduces, the demand for creating preforms (used for summer's plastic bottles) starts increasing. Emily Friedman, a senior editor and plastics specialist at ICIS, notes that February and March mark the peak season for preform production. During these months, with a tightening supply and growing demand, rPET prices are expected to be at their highest.


Friedman explains that the rPET market usually follows a predictable trend, but 2023 stood out with its unusually low demand. Analysts estimated a 15% decrease in rPET demand that year, with prices remaining low throughout, not just in late summer as is typical.


So, what caused this anomaly? A significant factor was the reduction of excess stock accumulated during the COVID-19 pandemic. During this period, the uncertainty in supply chains and the heightened need for single-use PET led to an overpurchase of rPET materials by reprocessors, converters, and brands. This surplus had to be managed to return to more efficient inventory practices, impacting demand negatively. Additionally, the global economic shift from growth to recession in the past year led to tighter consumer spending. Although the excess stock issue has largely been resolved as of 2023, consumer spending continues to be cautious, according to Friedman.


Friedman highlights a dilemma facing consumer brands: balancing sustainability commitments with financial pressures. As post-consumer recycled (PCR) materials become costlier than virgin alternatives, brands are forced to reconsider their sustainability goals. This has led to a decrease in raw demand for recycled plastics, with companies potentially delaying or scaling back initiatives to use recycled content.


However, when asked if this signals a broader trend of brands prioritizing profit over sustainability, Friedman cautions against generalizing. Brands and consumer packaged goods (CPG) companies vary greatly in their approaches. Friedman notes that while some companies have reduced or cancelled their rPET orders, others are sourcing rPET from international markets, which affects the domestic rPET market. This suggests a complex and varied response among companies to the challenges of maintaining sustainability commitments in a financially constrained environment.


Importing cheaper foreign rPET can be a cost-effective strategy for brands aiming to meet recycled content targets, especially when freight costs are low and reliable. However, the environmental impact of transporting materials from regions like Asia or Latin America raises questions about the overall sustainability of this approach. Recently, fluctuations in global freight, particularly through Panama and the Middle East, have led to rising import costs, potentially benefiting local rPET suppliers.


As 2024's preform season begins, a tightening in rPET supply is expected, which should drive up prices. However, according to Friedman, the demand remains surprisingly weak, affecting bale prices across both the east and west coasts of the U.S., which typically function as separate markets for PET and rPET. This stagnation in demand and pricing is unusual and indicates a lack of uniform commitment to increasing PCR content among consumer brands. If there was a harmonized effort towards sustainability, the market would likely experience higher prices and demand.


On a positive note, ICIS economists suggest that the anticipated recession might be less severe than expected, with a brighter economic outlook projected for the second quarter of 2024. Nevertheless, this situation underscores a sobering reality: the pursuit of circularity in plastics is often seen as a luxury by brands, especially in tighter economic times. When budgets are constrained, sustainability initiatives may be regarded more as optional rather than essential.

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