POLYMERS

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AFRICA TWO DECK SPOT HEADING PRICES UP TWO IMPORTS FOR DECK HEADING
50 words for NIB. 275 words Spot prices ina southern Africa for a fullby column of NIBs includclimbed $50100/tonne ing headline (3773/tonne) for February business, as importers raised their offers on stronger sentiment and high feedstock costs. The strongest increases were in polypropylene (PP). Homopolymer PP prices rose by $70100/tonne to reach $1,5001,600/tonne CFR (cost and freight) southern Africa, while the even shorter availability of copolymer PP forced values up by $100/tonne, leaving the range at $1,6501,700/ tonne CFR southern Africa.

POLYMERS IVAN LERNER NEW YORK

Recycled PET going strong

The use of recycled polyethylene terephthalate (R-PET) is increasing rapidly

Improved demand and rising feedstock costs are expected to support February price increase initiatives for US acrylonitrile-butadiene-styrene (ABS) copolymer. INEOS ABS and Styron are seeking price increases of 6 cents/lb ($132/ tonne, 95/tonne) as of February 21, or as contracts allow. US domestic ABS prices were assessed by ICIS at 135 147 cents/lb for extrusiongrade material and at 126145 cents/lb for injection-grade.

Tight supply of PET has been driven by low collection rates following severe winter weather Recycled polyethylene terephthalate (R-PET) is not just a salve to quiet the eco-conscious. Nowadays it is a growing big business with strong demand and tight supply. The move towards green products, whether bio-based or recycled plastics, is a signicant and important issue, particularly for the developed world, noted Darrel Collier, business manager for PET for UK-based consultancy Tecnon OrbiChem. In the US and Europe, there is a considerable consumer demand for this sort of thing, Tight supply, especially in Europe, is the result of low collection rates because of the severe winter weather conditions in the northern hemisphere. These lowered the consumption of virgin PET bottles which accounts for the bulk of post-consumer material collected for use in R-PET production. According to a report released late last year looking at 2009 by UK-based consultancy Applied Market Information (AMI), 46% of PET bottles were collected in Europe, and 30% recycled. Of this, 20% went back into bottle production. R-PET accounts for 7% of PET used in blow molding.

This steady climb in the PET recycling rate illustrates a continued commitment to recycling
SCOTT SAUNDERS APR chairman and general manager KW Plastics Recycling

STYRON TARGETS PS HIKE

Styron is targeting a rise of 110/tonne ($153/tonne) for its February polystyrene (PS) business in Europe, and Styrolution and INEOS NOVA have made similar announcements. This months styrene barge contracts were settled on February 1 at 1,320/tonne and 1,267/tonne FD (free delivered) NWE (northwest Europe), up 105/tonne and 78/tonne from January, respectively. A third contract was agreed on February 2 at 1,310/tonne, up 105/tonne from the previous month. PS buyers had already paid increases of 100-130/tonne in January. They are killing their own market, said one buyer.

The primary driver behind the development of R-PET in Europe has been cost reduction and the value saving per tonne achieved within large-scale conversion. The eco-commitment to R-PET is a minority driver and conned to ethically inclined brands and companies, said Carole Kluth, senior project manager for AMI. She added: The test of mettle occurs when R-PET prices exceed that of virgin material, related to oil pricing and availability.

PRICE DETERMINANT Consequently, the key determinant of future demand for R-PET in Europe will be its price in relation to virgin material, noted Kluth. The recycled PET bottle market does not seem to have

much effect upon the production of new bottle-grade PET resin, noted Matt Windt, analyst for USbased consultancy Nexant. While the recycling of bottle grade PET has continued to increase in recent years, the majority of growth and activity takes place in China specically for use in the ber industry not packaging, said Windt. Globally, the quantity of recycled PET used in packaging applications remains below 1m tonnes per year and is focused on sheet end-uses. Leveraging the recycling capabilities of PET is an integral element of its value propositions and will gain momentum in the years to come, said Nicholas Barakat, managing director of the Oman-based PET producer OCTAL. Recycled bottles also will create demand for PET as opposed to other polymers. According to OCTAL, food and beverage accounts for roughly two-thirds of the $433bn (317bn) global packaging industry, and the company is predicting dramatic sales growth for PET and R-PET in 2011 and 2012. It is estimated that PET makes up roughly 67% of all packaging. The reality is we do not recywww.icis.com

18 | ICIS Chemical Business | February 14-20, 2011

Rex Features

STRONG DEMAND SUPPORTS ABS GAIN

PHA ready for takeoff

FEATURE P30

cle enough of our bottles on a global basis to have them signicantly impact the virgin molecule market as of yet, said Collier. The R-PET market is still affected by supply and demand, and often the cost of recycled polyester will be higher than the cost of virgin material. It happens particularly because China uses a lot of recycled product some in the bottle market, but most of their recycled polyester is really used in the ber market, said Collier. They use a lot of it, especially when the prices for recycled material are lower than it costs to produce virgin polymer.

EUROPEAN MIXED-COLORED R-PET VALUES BENEFIT FROM HIGHER CONSUMPTION

/000 tonnes, spot FD NWE 500 400 300 200 100

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SOURCE: ICIS

CARPETING AND CONCRETE The Chinese sometimes buy at least 50% of the bulk recycled bottles that come from the US. When prices are low, they buy a lot of it and that raises the prices. When the prices get above virgin prices, they stop buying, and the prices fall again, noted Collier. [The Chinese] inuence the market a lot. Products made from recycled PET bottles include caR-PETing, concrete, insulation and automobile parts. At the end of January, tight supply and strong demand pushed European R-PET prices to record highs across all grades. And market participants expect prices to further increase, especially with current high consumption and demand rates. Players expect prices to rise by 2030/tonne during February. Demand for R-PET traditionally increases in the second month of the year, as Januarys holidays make it a short-trading month. Factors driving demand include sustainability initiatives among large corporations, increasing R-PET buying interest as companies look to enhance their green credentials. AGGRESSIVE TARGETS Several bottled drinks manufacturers have set aggressive R-PET content targets for 2011, such as Coca-Cola, which has targeted 25% R-PET content in its European bottles for 2011. Coca-Cola was there at the beginning of R-PETs relationship with soft-drink bottles: in 1991,
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the soda giant, working with Hoechst Celanese, introduced a PET bottle with 25% R-PET. The next year, Coca-Colas primary rival, Pepsi, began using R-PET in bottles. Meanwhile, due to the global cotton shortage, synthetic alternatives are in great demand for textiles. High and increasing virgin PET prices are driving substitution demand for R-PET. PET prices are expected to increase in February, pushed by increases in feedstock paraxylene. Prices for R-PET colorless bottles increased by 50/tonne ($68/ tonne) to 550600/tonne FD (free delivered) NWE (northwest Europe), with some players seeing prices as rm as 620/tonne. Prices for R-PET mixed colored bottles rose by 1050/tonne, to 400500/tonne FD NWE. Mixed colored bottle prices are expected to increase again by 2030/ tonne in February because of higher consumption. Colorless ake prices are stable at 9501,100/tonne FD NWE, as the market has become increasingly regionalized. The highest

prices were representative of material from Switzerland, Germany and Italy. Upstream R-PET bottle costs are expected to rise in February, driving up ake prices. Some market participants say the gap between colorless ake and virgin PET prices is now at a minimum of 300/tonne, causing many traditional virgin PET play-

by 2050/tonne, to a new record high of 9001,000/tonne FD NWE. The gap between colorless and mixed colored material prices usually around 200/tonne decreased because traditional mixed colored ake producers preferred to produce food-grade pellet material because of stronger margins, limiting mixed colored ake supply. Food-grade pellet prices increased by 50150/tonne, to a new record high of 1,4001,450/ tonne FD NWE. This took foodgrade pellet prices to parity with virgin material, which it traditionally competes with on cost.

We do not recycle enough of our bottles to have them signicantly impact the virgin molecule market
DARREL COLLIER Business manager, PET, Tecnon OrbiChem

ers to turn to the R-PET ake market as a lower-cost substitute. During the second quarter of 2010, the spread between R-PET ake and virgin PET prices was as low as 50/tonne. Mixed colored ake prices rose

R-PET COLORLESS PRICE CONTINUES TO MAKE GAINS

/000 tonnes, spot FD NWE 600 500 400 300 200

F M 2010

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THE US RECYCLES In October 2010, the National Association for PET Container Resources (NAPCOR), the Association of Postconsumer Plastic Recyclers (APR), and the PET Resin Association released their 2009 Report on Post-Consumer PET Container Recycling Activity. They said the 2009 PET recycling rate for the US was 28% the sixth year in a row where the US recycling rate has increased, despite a 4% decrease in the total PET bottles and jars available for recycling, by weight. The report notes that 937m lb of recycled PET was utilized in manufacturing applications. This steady climb in the PET recycling rate illustrates a continued commitment to recycling, said Scott Saunders, APR chairman and general manager of USbased KW Plastics Recycling. Recycling PET bottles and reprocessing them for next-life use captures and re-purposes the valuable energy resources inherent in the material. This exemplies responsible, energy-efcient raw materials resource management, he added. Capturing the value of recycled PET material and using that material in the manufacture of new packaging and other goods is a key element of sustainable practice, said Tom Busard, NAPCOR chairman and vice president, global procurement and material systems for US-based Plastipak Packaging. O
Additional reporting by Mark Victory in London

SOURCE: ICIS

February 14-20, 2011 | ICIS Chemical Business | 19