Enhanced procurement of recycled polyethylene terephthalate from drinks maker Coca-Cola for its UK market is expected to lend limited support to the product's demand in the country, trade sources said this week.
Coca-Cola said last week it would raise its goal for using recycled plastics in its bottles to 50% by 2020, double the current 25%.
Coca-Cola produces 97% of the bottles for its UK market from within the country.
The company consumes about 40,000 mt/year of all grades of PET, with and 25% of this R-PET. This will double by 2020, it said.
"This is a considerable figure as an average R-PET buyer in the UK buys just 3,000-5,000 mt/year," a R-PET producer said. Countries across Europe including the UK consume a total of 225,000 mt/year of R-PET to produce bottles.
"Demand remains strong across the board and the announcement by Coke [Coca-Cola] to move to 50% R-PET by 2020 will only service to keep this pressure up," the R-PET producer added. R-PET demand has recently been strong in the UK and mainland Europe as converters procure higher volumes to produce packaging material.
S&P Global Platts last assessed R-PET prices in the UK Wednesday at GBP 740/mt FD, flat on the previous week. Prices in the UK have stood higher than GBP 700/mt FD for the past four months.
They stood at levels below GBP 700/mt FD from November 2014 to March 2017.
Trade sources, especially recyclers, expect Coca-Cola's decision to support R-PET demand but some warned the support could be limited because of lower demand for aerated soft drinks across Europe.
"Most of our demand comes from companies that bottle drinking water instead of Coca-Cola," a trader said.
An R-PET producer said: "For the past 5-10 years, companies bottling water have emerged as larger buyers of R-PET as compared to soft drink manufacturers."
Coca-Cola does not have immediate plans to further raise R-PET procurement beyond the 50% target.
"Our target of 50% is based on current supply available within Great Britain, more packaging needs to be recovered and recycled for us to go beyond 50%," a Coca-Cola spokesperson said in a statement Thursday.
R-PET prices in the UK have recently been supported by tight supply among other factors.
Essex-based company Ecotech shut its 15,500 mt/year R-PET plant and went into administration in the middle of last year, leaving consumers looking for alternative supplies.
Platts reported in June that recyclers were buying sheet manufacturing machines and needed more R-PET as feedstock, also supporting demand.
