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.
