PET bottle chip consumption≠recycling volumes of PET flakes

One customer recently asks a question, which is also the most prominent and deep experience recycled chemical fiber plants have had this year.

Q: According to the data, the consumption of Chinese domestic PET bottle chip was about 7 million tons in 2022, and the production of recycled PSF was about 4.3 million tons and that of recycled PFY was 800,000 tons. Why is there still a shortage of PET flakes?

At first, our thoughts are the same as the customer's. Even according to the consumption of PET bottle chip, theoretically there should be an oversupply of PET flakes. However, this year the situation is as follows:

a. The supply of recycled raw materials is tight generally, both coastal and inland.

b. Recycling chemical fiber factories generally have low raw material stocks, especially the recycled PSF factories, with local raw material inventory as low as one week or even two to three days.

c. It is already the traditional peak season for the supply of PET flakes with the hot weather and high consumption season, but the market supply has not improved significantly.

We can only speculate that there are two reasons for this: 1) insufficient recycling, and 2) increased usage in other applications.

Let's first look at the consumption trends of PET bottle chip over the past five years.

It can be seen that over the past five years, the export and sheet + other categories have shown astonishing growth rates of 53% and 209% respectively. Especially, the volume of the sheet + other category has tripled compared to 2018, and although there have been reductions i, the overall base has significantly increased. The growth of soft drinks and edible oil has been relatively mild, with only a 13% increase.

The recycling rates vary for different categories. Previously, beverages had a high proportion, accounting for about half, and the recycling rate in this area was extremely high. Now, there is a rapid increase in other applications, especially in the demand for sheets and other packaging materials. As a result, the proportion of beverages has dropped by 10%, but there is relatively less recycling of sheets. Therefore, the consumption of PET bottle chip does not equal the recycling volumes of PET flakes.

At the same time, the application of PET flakes is increasing. High-value-added utilization directions such as high-end 3A-grade white flakes, sheet, and bottle-to-bottle production are becoming more and more common, with increasing volumes. High-quality PET flakes are sorted out continually. Consequently, the supply of PET flakes for conventional recycled chemical fiber is becoming increasingly tight, while their influence is diminishing. During the pandemic and the period of low oil prices, recycled chemical fiber factories could still purchase PET fiber chip or PET bottle chip. However, in the era of high oil prices, there is no purchasing window for them, and due to higher PET bottle chip and PET fiber chip, quality PET flakes are even used for sheet. Since 2020, the production of recycled chemical fiber has gradually recovered to over one million tons, while the consumption of PET bottle chip for soft drink and edible oil increases by less than 500,000 tons. The shortage of raw materials and difficulty in selling products have become the biggest challenges for recycled chemical fiber factories this year.