Asia’s rPET Prices Rise as Higher Costs Pressure Margins: Sources

Asia’s recycled polyethylene terephthalate sellers have seen prices for flakes and pellets rise, supported by higher upstream costs, although demand remains cautious as rising energy and logistics costs continued to pressure recycling margins.

According to OPIS data, regular rPET flakes were assessed at $817 per metric ton FOB for the week ended Sept. 18, increasing $4.00/mt from the previous week. Premium flakes rose $5.3575/mt to $915.3575/mt FOB from $910/mt over the same period. rPET pellets increased by $33.00/mt to $1,196/mt FOB, from $1,163/mt the previous week.

Market sources said higher energy and transportation costs continued to put pressure on recyclers, with demand and purchasing volumes not increasing at the same pace as operating costs.

Higher diesel costs have increased expenses across collection, inland transportation, drayage, warehousing and final delivery. Higher bunker costs have also added pressure to shipping costs.

“Costs are increasing, but demand has not increased at the same pace,” said a Malaysia-based seller.

Market sources said enquiries have increased, but actual purchasing volumes remained low as buyers continued to resist significant increases in purchase prices. Higher virgin resin and energy costs therefore have not translated fully into stronger recycled PET demand.

“Buyers remain very resistant to increasing their purchase prices,” said an Indonesia-based seller.

Logistics costs remain mixed by destination. Europe-bound ocean freight continue to soften amid relatively limited demand, while U.S.-bound freight remained firmer following weather disruptions in North Asia and ahead of China’s Golden Week blank sailings.

Broader energy and shipping disruptions are also keeping transportation costs elevated. Market sources said higher fuel and logistics expenses are being felt throughout the recycling supply chain, from collection and processing to transportation and final delivery.

Recyclers are therefore looking to reduce domestic feedstock costs to protect margins, particularly as export volumes remain limited and domestic offtakers have less capacity to absorb additional material.

With rPET prices moving higher against a backdrop of rising energy and logistics costs, sellers have maintained firmer price ideas across the market. However, demand remains cautious, leaving recyclers to absorb a larger portion of the higher costs and placing continued pressure on margins.

“We don’t believe it will be easy to pass another major price increase to manufacturers or buyers if energy logistics costs continue rising,” said another Indonesia-based seller.

—Reporting by Xin Nee Chua, Xin.Chua@dowjones.com; Editing by Mei-Hwen Wong,mei-hwen.wong@dowjones.com