Freight, Oil Volatility Pressure Asia’s rPET Market Amid Mideast Tensions
Asia’s recycled polyethylene terephthalate or rPET market is beginning to feel the ripple effects of escalating Middle East tensions, with participants pointing to rising crude prices, freight disruptions and shifting procurement strategies as key emerging risks.
Brent crude futures jumped to $79.86/bbl on Monday, advancing $8.35/bbl from Friday, data from the Intercontinental Exchange shows. The price maintained its upward trend, closing at $80.61/bbl on Tuesday, 4.30 p.m. Singapore time.
Prices for both premium and regular rPET flakes and pellets exported from Asia were understood to have increased since Friday. Premium rPET flakes were heard to have increased by $20 per metric ton FOB, regular rPET flakes were heard to have increased by $10/mt FOB, and pellets were understood to have increased by $50/mt FOB, amid growing demand.
While direct trade exposure between Asia and the conflict zone remains limited, the region’s integration into global energy and container shipping networks means the impact is unlikely to be isolated.
“We’re seeing a three-way impact developing,” said Alvaro Aguilar, founder & data lead of Ekologis, head of business development with rPET flakes and pellets manufacturer Polindo Utama, and head of collection center operations with Prevented Ocean Plastic Southeast Asia. “Oil, ocean freight and procurement behavior are all moving at the same time, and that creates volatility.”
Oil Price Swings Stir Resin Cost Uncertainty
Crude benchmarks have risen sharply in recent weeks, climbing more than 10% amid escalating geopolitical tensions and concerns over potential supply disruptions. Market participants said the higher oil price directly influences virgin PET or vPET production economics, though the impact is not always immediate or linear.
Higher upstream energy costs can narrow the price spread between vPET and rPET, potentially improving recycled resin competitiveness. However, if oil-driven price swings persist, downstream buyers may delay commitments until clearer pricing direction emerges.
War-Risk Surcharges and Route Adjustments Add Friction
Shipping remains the most immediate source of risk for Southeast Asia’s rPET trade. According to market sources, carriers servicing Asia-Europe and intra-Asia routes have introduced war-risk surcharges and, in some cases, rerouted vessels to avoid high-risk areas near the Red Sea and adjacent Middle East corridors. Major container lines, including Maersk and MSC, have communicated route adjustments and surcharge mechanisms tied to regional instability.
The impact spans multiple operational layers, with higher freight costs per mt, reduced transit time reliability and ongoing container repositioning challenges adding strains to logistics planning.
“All of this adds friction to both virgin and recycled supply chains,” Alvaro said.
Southeast Asian exporters of rPET flakes and pellets are actively monitoring booking reliability and container availability.
India Trade Channel Faces Structural Uncertainty
Market sources also pointed to potential disruption risks involving trade flows between Iran and India, which could have broader implications for regional polymer sentiment.
Due to constraints from sanctions, Indian buyers typically do not transact directly with Iranian suppliers. Instead, shipments are routed through ports in the United Arab Emirates, where cargoes are de-stuffed and re-stuffed into new containers before being shipped onward to India. Financial transactions are generally handled through intermediary trading entities located in the UAE, Qatar or Turkey, with payments settled in U.S. dollars.
Industry sources said the intensifying conflict has strained relations between Iran and the UAE, raising concerns that re-stuffing and intermediary trade activities at UAE ports could face disruption.
“There is fear that de-stuffing activity of Iranian material at UAE ports could stop,” one source said. “India does not want to transact directly with Iran, so if this channel is affected, it creates uncertainty.” Market participants said any disruption to established regional trade routes could amplify caution across polymer procurement in Asia, indirectly influencing recycled resin sentiment.
A Convergence of Pressures
Market participants described the current environment as a convergence of multiple headwinds, including geopolitical instability, freight volatility, sharp oil price swings and weak consumer confidence. At the same time, margin pressure across the recycling value chain, particularly in the pricing dynamics between vPET and rPET, is further complicating procurement and trading decisions.
For Asia’s rPET sector, near-term supply fundamentals, including bottle collection and regional trade flows, remain stable. However, confidence and liquidity are emerging as key variables that could determine how the market navigates the coming quarter.
“The fundamentals of recycling haven’t changed,” a source added. “But confidence and liquidity are the real variables right now.”
—Reporting by Xin Nee Chua, xchua@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com