As Europe grapples with complications in its plastics recycling industry, could there be a silver lining for rPET in particular? Matt Tudball, Senior Editor for Recycling at ICIS, takes us on a deep dive.
The recycled polyethylene terephthalate (rPET) market has seen its least volatile year since pre-COVID times, with seasonal trends replacing the extreme spikes and troughs experienced in recent years.
- Post-summer seasonal demand slowdown expected
- Europe faces challenges from lower-priced flake, pellet imports and virgin PET
- Regulation remains a grey area, especially for food-contact applications
This relative calmness is expected to continue for the rest of the year, assuming no big surprises are on the horizon, but recyclers still face challenges, particularly for demand from brands and competition from lower-priced imports and virgin PET.
Feedstock bale availability increased during the summer as more beverage bottles were consumed and entered the stream, bringing feedstock bale prices down.
Demand is also expected to follow pre-COVID seasonal norms as beverage consumption drops along with temperatures across Europe, but this will allow for the stock building of bales, flakes and pellets for the start of the bottling season in 2026.
Demand detractors
The European market faces two primary challenges:
- Competition from lower-priced flake and pellet imports from outside the EU and lower-priced virgin PET
- Reduction in recycled content usage among some brands and fast-moving consumer goods companies (FMCG) from targets above 25%
The current trend in prices began in March 2024 when PET fell below the free delivered (FD) northwest Europe (NWE) colourless (C) flake price, with a €200/tonne delta between the two reached by September that year. With such a wide gap, many sheet and thermoform buyers significantly reduced their rPET usage due to the cost savings available.
As the delta widened – to reach over €400/tonne in June 2025 – beverage brands also cut back on recycled content, with some global brands announcing refinements to their sustainability targets.
With PET prices unlikely to rebound for the rest of this year, there are genuine concerns among recyclers that more brands will cut back on flake and pellet volumes due to costs – especially as there has still been no action from any EU member state to enforce the mandatory 25% recycled content target in PET beverage bottles which has been in force since 1 January as set out in the Single Use Plastics Directive (SUPD).
Imports of both flake and food-grade pellet (FGP) from outside the EU have added more pressure to European producers, who are struggling to compete on price due to higher production costs in the EU compared to regions such as North Africa and Southeast Asia.
Producers outside of Europe are attracted to the EU due to demand and high premiums and are willing to take the time and investment required to ensure compliance with EU regulations. This could pose a significant challenge for Europe, especially considering upcoming changes to the SUPD.
Europe also faces the risk of consolidation and the closure of recycling plants across the recycling space as recyclers compete with imports and virgin PET in a very cost-sensitive environment. Whether any potential closures significantly impact Europe’s wider rPET capacity is waiting to be seen, but recent announcements do not help overall market sentiment.
Regulation
The European Commission will adopt a new Implementing Decision later in 2025 that will allow for recyclate made from post-consumer plastic waste from third countries (outside the EU) to count towards the 25% SUPD target.
However, importers may not be quick to celebrate this inclusion as any rPET intended for use in food-contact applications still has to comply with Regulation (EU) 2022/1616, and many European buyers will insist on third party certification, among other things, and with the current auditor of choice being RecyClass, the RecyClass A1 and/or A2 modules on top of their general certification.
Regulation (EU) 2022/1616 also changed regarding the application process for EFSA. The applicant is now no longer the recycler but the decontamination process developer, and it is its recycling process that receives a European Food Safety Authority (EFSA) positive opinion and authorization. Recyclers who submitted their application before the regulation adoption in 2022 were processed following the previous methodology, and have now been evaluated. Since mid-2024, recyclers have no longer received EFSA positive opinions published in the EFSA journal and now need to ensure they register in the Union register.
Currently, the requirements for using non-EU origin rPET in food-contact applications are complex and unclear, and many see the various texts as open to interpretation, although ultimately the decision will be down to the buyer. If buyers have conducted due diligence and are satisfied with their suppliers’ documentation, then the low prices available from producers outside the EU will continue to be adopted, causing continued concern for many recyclers in Europe.
Demand drivers
But all is not doom and gloom for the European rPET market – there are still opportunities for growth, either organically or through enforcement.
Access to better quality feedstocks will increase in the coming months and years as more countries implement deposit return schemes (DRS), increasing bottle collection rates while reducing contamination levels.
The Austrian DRS, which launched at the beginning of 2025, is producing increasing volumes of bottles as it ramps up.
Poland, where current collection levels are below 50%, is due to implement its DRS before the end of the year, and this might remove some of the volatility in bale prices, including the extreme spikes experienced in the summer of 2022.
EU Member States may start to look at the SUPD targets and impose penalties on those brands within their borders who have failed to meet the requirements, stimulating demand for rPET, though there have been no signs of any member states taking this approach to date.
Some have speculated that member states may start this process in early 2026, looking back at bottles placed on their markets in 2025 and calculating where targets have been missed. But at some point, they will have to report to the EU under the SUPD requirements.
Taxation could also be a driver for more rPET demand if countries follow the likes of Spain and the UK in implementing taxes to encourage the use of recycled plastics. While Italy has delayed its own plastics tax multiple times, it is due to come into effect in July 2026, although it is doubtful if this will drive demand in 2025.
In the immediate future, most attention will focus on feedstock bale costs and the expectation that they will soften throughout the rest of H2. This will allow for some margin improvement for flake and pellet producers, who may still face pressure to lower prices due to competition from imports and virgin PET.
Whether more beverage brands decide to reduce the volume of rPET purchased could further impact demand outside of the expected seasonal slowdown in Q3 and Q4, although these reductions are likely to come from brands with higher recycled content targets, and who may bring them closer to the minimum 25% rate as set out in the SUPD.
But recyclers may take a small amount of comfort in that, so far, the year has not delivered any unforeseen surprises and shocks, and look ahead to a more stable second half, even though the environment remains challenging overall.
Additional reporting by Helen McGeough and Carolina Perujo Holland
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