Strong UK demand for recycled food-grade PET and HDPE boosts prices

By Mike Stones

- Last updated on GMT

Related tags Recyclable materials Supply and demand

UK demand for food-grade recycled plastics continues to outstrip supply and drive prices, according to a new report from the UK government-funded Waste Resources Action Programme (WRAP).

Marcus Gover, the organisation’s director of market development, told “There is strong demand for recovered clear PET and natural HDPE ​(high-density polyethylene) bottles. And as domestic demand for food-grade recycled plastics currently outstrips domestic supply, there are believed to be significant imports, largely from the EU, to meet this demand​.”

Reflecting high demand, prices for food-grade rPET and rHDPE are currently comparable with virgin polymer prices, he added. Prices for high-quality sorted materials (such as clear PET and natural HDPE bottles) increased further in the first half of 2010, reaching or exceeding their late 2008 peak levels.

Chinese reprocessors

One of the main reasons is strong demand from Chinese reprocessors compounded by the depreciation of sterling against the US dollar, the currency in which plastics prices are typically set.

Other factors include strong domestic demand for food-grade recovered plastics, tight domestic supply – which may reflect lower consumption due to the recession – and higher virgin plastics prices. Although historical prices are not available for mixed packaging plastics, WRAP’s market contacts indicate that prices typically range up to £40/t.

Demand for food-grade recycled plastics has increased in recent years as retailers and brand owners seek to increase the recycled content of their products,” ​said Gover. “For example, a number of brands active in the UK have introduced high rPET content and/or are looking to increase the​ (recycled) rPET content into their packaging.”

One example is the UK Milk Roadmap initiative which includes a commitment to increase the (recycled) rHDPE content in new milk bottles to 10 per cent by this year, 30 per cent by 2015 and 50 per cent by 2020. To meet the 2020 requirements of the Milk Roadmap, the dairy sector will need about 60,000t of rHDPE per year.

Demand for rPET and rHDPE is likely to increase further due to the second phase of the Courtauld Commitment; the voluntary agreement aimed at improving resource efficiency and reducing the carbon impact of the grocery retail sector. One of the ways in which signatories can reduce the carbon impact of their packaging is by increasing its recycled content.

Plastics market

Previous WRAP research estimated the value of the UK recovered plastics market at between £250 - £500m.

But WRAP notes that some processors may be discouraged from entering the market by the capital expenditure and risk; particularly security of feedstock.

Prices for other grades of recovered plastics have been stable since the middle of last year.

Meanwhile the WRAP report concluded that there have been rapid increases in the amount of plastics recycled in recent years, and estimated that about one quarter of plastic packaging is currently recycled. The recycling rate for plastic bottles is more than 40 per cent.

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