The prospect of bans on packaging that is not recycled at scale mean the PET tray recycling industry is in a race against time to boost capacity, but it may also be discouraging investors from a potentially shrinking market.
Participants at last week's Petcore Europe Thermoforms Conference in Valencia, Spain, expressed mixed views, with optimism about potential developments tempered by the need to keep abreast of a host of fast-changing variables, including recycler closures, virgin prices and legislative changes. Presenters highlighted the adverse effects of the Iran war on the recycling sector and the extra pressure it has brought to bear on the tray-to-tray market.
Rising costs, shrinking industrial margins and declining plastics demand are creating strain and hindering development of the tray-to-tray segment this year. Participants also drew attention to Europe's trade deficit with the rest of the world. As Europe consumes more goods not manufactured locally, recyclers face increased risk from imports taking market share from cost-saving end-use applications such as thermoforming, where certification requirements are often less stringent than in the bottle-to-bottle market. This dynamic is adding further pressure to the market.
Delegates heard that Europe cannot compete on cost of collection and recycling, raising concerns that the European circularity market could collapse under these pressures, leaving no local outlet for European waste at scale. In addition to the broader challenges facing recycling, the tray market faces its own specific economic hurdles. Jose-Antonio Alarcon, technical manager of the Petcore thermoforming working group, explained that tray recyclers face a steeper cost curve because PET trays are structurally more complex to process than bottles.
While higher virgin material costs are currently supporting the entire recycled PET market, any optimism from a slight pick-up in demand is offset by recyclers' frustration at their inability to counter the effects of rising feedstock and production costs on margins. While upcoming legislation offers some support for the industry's outlook, participants emphasised that unresolved issues with the new rules are limiting progress. Guidelines are often delayed and vague, and economic institutions lack visibility and clarity. The absence of harmonised and simplified legislation is a significant challenge, affecting the investment landscape.
Devil in the legislative detail
Details of the EU's proposed Packaging and Packaging Waste Regulation (PPWR) were discussed at the event. Under Annex V, Article 25, single-use plastic fresh-produce packaging weighing less than 1.5 kg — such as strawberry punnets, mushroom trays, and tomato clamshells — will be banned from January 2030. From 2030, all packaging must be recyclable and will be graded on a performance scale, at A, B and C. Packaging with a recyclability rate below 70pc will not be considered recyclable and may face restrictions. All contact-sensitive PET packaging must also contain a minimum of 30pc recycled content.
There is concern the tray-to-tray industry is underprepared for these changes, which presenters stressed are less than four years away. Businesses will require more certification, and significant progress in the tray market is needed to meet recyclability and recycled content targets. The main concerns are the Annex V tray ban and the recyclability target. The legislation aims to reduce unnecessary packaging and, according to presenters, is currently targeting tray packaging with holes — something that is expected to have a significant impact on PET tray usage and tray-to-tray demand. Further clarity on guidelines from the European Commission is expected in February 2027.
Participants expressed concern that thermoforms could be grouped with non-circular plastic categories, given current collection and recycling rates. They also highlighted the problem of increased food waste resulting from reduced tray packaging for perishable products such as fruit and vegetables. The consensus at the event was that tray collection must improve.
Spanish market developments
In Spain, delegates heard that PET trays currently account for 20–38pc of PET bale composition. The SDDR (mandatory deposit return system) is planned for November 2026 but is expected to be delayed, with retailers requesting a postponement. Current estimates suggest that yellow bin collections could contain up to 50pc PET trays when the DRS is fully operational because the proportion of bottles is likely to decrease. Tray recyclers are keen to capture tray material more effectively through improved sorting.
The Amorebieta, Biscay, pilot programme is working on additional separation of trays and is expected to be scaled up and rolled out across the country to at least 97 plants, gradually developing the market, although progress is slow. Ecoembes told delegates that the pilot programme yielded 160 tonnes of bottles and 110 tonnes of PET trays in the last monthly tender. The next phase of the project is to expand to Catalonia sorting plants by 2028.
Recyclers fear investment gap
Participants agreed that tray-to-tray sorting and recycling capacity must improve. However, a lack of regulatory clarity and the prospect of a ban are impacting investment. This concern was echoed by Alarcon in an interview with Argus before the event. There was discussion about the possibility of an exemption for trays from the PPWR ban or restrictions but further clarity on the scope and details of any restrictions or requirements is needed quickly to ensure economic confidence for investment. The latest understanding presented at the conference was that sealed trays are out of scope for restrictions, but unsealed trays with holes are at risk and awaiting further detail from the European Food Safety Authority (EFSA). Another meeting is scheduled for July with the European Commission cabinet.
Overall, participants remained hopeful for the future development of the tray industry, but against a challenging market backdrop, optimism was limited. Participants are pushing for stronger advocacy, faster regularity clarity, less legislative complexity and an alignment of rules with operational realities. There is concern that the industry is poised to expand but may run out of time as potential PPWR restrictions approach, while participants continue to face significant market headwinds.
