21/05/26
Market disruption reshaping PET tray recycling: Petcore
London, 21 May (Argus) — Despite improvements in tray-to-tray recycling capacity
and technology, the sector's biggest constraint is commercial, Jose-Antonio
Alarcon, the technical manager of Petcore Europe's thermoforming working group,
told Argus . Rising raw material costs, geopolitical disruption and increasing
regulatory pressure are reshaping the outlook for Europe's virgin PET (vPET) and
recycled PET (rPET) bottle and tray recycling sectors and improving the outlook
for tray recycling. While the rPET tray market remains complex, there are signs
of growing momentum. Ahead of the upcoming Petcore Europe Thermoforms Conference
in Valencia, Spain on 18-19 June, Alarcon shared his view on the evolving
landscape, the challenges facing tray recyclers, and what is needed to scale
tray-to-tray recycling in the years ahead. What are the most significant market
changes since last year? Over the past year, external shocks have transformed
the PET market and fundamentally altered market dynamics. At the beginning of
the year, we were essentially rolling over from last year — prices were stable,
but demand was uncertain. Then the events in the Middle East changed the
situation dramatically, with virgin raw material prices skyrocketing. It's not
just PET, this is affecting all raw materials. But the implications for vPET are
significant, especially because Europe still depends on feedstocks like MEG and
PX coming from those regions. This surge in feedstock costs, combined with
rising logistics pressures, has reversed the price gap between vPET and rPET.
Before, there was a big discussion around whether virgin or recycled was more
cost-effective and whether it was worth using recycled due to the price
difference. Now that gap has turned around, which is changing the whole dynamic
of the market and the whole conversation. rPET, and particularly rPET flake is
no longer a niche or premium option, but is increasingly viewed as a viable and,
in some cases, preferable alternative. How have these changes impacted recycled
PET demand and pricing? As virgin prices have increased, recycled PET has become
more competitive, supporting stronger demand. We are seeing more interest in
recycled content because, relatively speaking, prices are more reasonable. From
that perspective, the situation for recyclers is more positive than it was last
year. However, this improvement has not translated into as rapid or steep price
increases for rPET largely due to the availability of supply and still low
end-use demand. There is enough material in the market, not only from internal
production but also imports, so supply is covering demand. While vPET prices
have increased very quickly, recycled prices are moving slowly. And margins
remain tight. This creates a balancing effect in the market. On one side, demand
is improving, but on the other, recyclers are still under pressure from costs.
So the situation is better, but it's not easy. Why are tray recyclers under
greater cost pressure than bottle recyclers? Tray recyclers face steeper cost
curve. PET trays remain structurally more complex to process than bottles,
creating additional economic pressure. Tray recycling is more complicated than
bottle recycling — this is a given. Compared to bottles, trays are more
difficult and costly to process. Bottle recycling is well-established and more
standardised. The conversion cost [for trays] is significantly higher due to the
nature of the material. PET trays often contain a wider variety of additives,
multilayer structures, and contaminants, making them more difficult to process
and requiring more advanced recycling techniques. That complexity translates
into higher operational intensity. You need more resources, more additives, and
you have higher losses. Recycling trays is simply not the same as recycling
bottles. As costs rise across energy, logistics, and processing, these
challenges are amplified. Whatever is affecting bottle recyclers is also
affecting tray recyclers — but more so. On conversion costs, the impact is
clearly higher for trays. Bottle recycling benefits from scale and established
collection systems, tray recycling is more exposed to cost increases and
operational challenges. What is holding back growth in tray-to-tray recycling?
Despite clear progress in technology development and recycling capacity, the
biggest barrier to scaling tray-to-tray recycling is demand. Insufficient demand
from downstream stakeholders, particularly retailers and brand owners. The
biggest constraint is not technical, it is commercial. While parts of the value
chain, including recyclers and converters, are increasingly prepared to scale up
production, the market pull required to support that growth is still limited.
The real driver is demand. If there is no demand for tray-to-tray solutions, the
system will not move forward. Many retailers and brands are currently adopting a
cautious approach, weighing sustainability goals against cost pressures, supply
security, and broader economic uncertainty. This "wait-and-see" position has
slowed the further increases in tray-to-tray. Without the downstream commitment,
it becomes difficult to push the whole value chain. It is not something one
player can solve alone. There are improvements being made in upstream areas such
as collection and sorting. Initiatives like deposit return schemes (DRS),
extended producer responsibility (EPR), and eco-modulation which are supporting
better collection and sorting, but they are not enough on their own. It is not
one single factor; it is the whole equation: collection, sorting, recycling, and
demand. Ultimately, growth in tray-to-tray recycling will depend on a more
active commitment from end-users to incorporate recycled content into their
packaging. Can the industry meet upcoming regulatory targets such as PPWR? The
introduction of the EU's Packaging and Packaging Waste Regulation (PPWR) is
expected to accelerate the progress of tray-to-tray, but it is difficult to rely
on regulation alone to drive progress. Regulation is an important driver, but
it's not enough on its own. If it's not economically viable, nobody will do it.
Investment confidence is a key concern, particularly in the current uncertain
economic conditions. If I'm an investor, I need to know that at least my
investment will be returned. Without that certainty, it becomes very difficult.
The [PPWR] targets are highly ambitious and will be challenging to meet with the
current market. The industry risks underestimating the scale of the challenge.
We need to wake up. Sometimes everyone is focused on short-term survival, but we
are not fully looking at what is coming in the next five years. While they
provide a clear direction for collection and recycled content, they do not
ensure that the necessary systems, investments, and behaviours will fall into
place automatically. While Europe is leading on tray recycling, delivery will
depend on stronger alignment. We need a system that works both environmentally
and economically. Otherwise, the targets will be very difficult to achieve.
Meeting these targets will require substantial progress across multiple fronts.
Collection systems must capture more tray material, while sorting infrastructure
needs to be upgraded to handle more complex waste streams. Recycling capacity
also needs to scale further, with further technological innovation to ensure
material quality, particularly for food-grade applications. But without more
economic certainty, there is a risk that progress will stall, leaving the
industry struggling to meet these targets within the timelines. What needs to
happen to scale PET tray recycling effectively? The system must work together,
and scaling European rPET tray recycling further ultimately comes down to
co-ordination across the entire value chain. Recyclers are there, converters are
there, the technology exists. But we need the final driving force — the
retailers — to say, "yes, we will use this." Improving collection is a key part
of the puzzle, starting with consumer behaviour. Consumers need to understand
that trays are recyclable and should go into the yellow bin. That's fundamental.
If we don't collect the material, we cannot recycle it. At the same time,
system-level incentives must evolve and each stake holder must play a role. We
need the right signals with EPR, eco-modulation, support for recyclability, but
we also need demand to pull everything together. Ultimately, retailers and brand
owners will play the decisive role. If they commit, the whole system will
follow. If they don't, progress will be very slow. Everyone needs to move in the
same direction, EPRs, recyclers, converters, retailers. Without that alignment,
progress will remain incremental. It's like a chess game. Every player has to
make the right move. Only then can the system work. Send comments and request
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