By: Sakthi Prasad --
15 December, 2015
In collaboration with Pavithra M, Associate Principal – Chemicals
There was a time when procurement organizations focused mainly on quality and cost. However, as environmental concerns became prominent, most major corporations have started focusing on achieving “Sustainability” through various means. And procurement has become an important vehicle to achieve a company’s sustainability goals.
Many companies, especially in the Consumer Products Group (CPG) space, are beginning to promote recyclable plastics such as RPET in their packaging/bottling applications as part of sustainability targets.
When procurement is tasked with sourcing RPET, their main focus area is supply, demand and price. As 2015 draws to a close, what does the New Year hold for RPET market?
The global demand for recycled PET is estimated to grow at 7-8% through 2016, and would be mainly driven by demand in the western markets like the U.S. and Europe. Asia is also catching up on efficient waste collection and processing techniques thereby contributing to the demand.
Amongst various end uses, Packaging is likely to be one of the largest growth drivers of RPET beginning next year followed by textiles and fibre. Food contact applications have also been driving the growth of RPET in the Western markets while the Asian market has been focusing on non-food grade applications.
When faced with the task of procuring RPET, the first question faced by sourcing managers is the supply/demand situation. Going by the numbers in the below table, it is clear that with an average recycling rate of 30-45% in each of the major regions, the availability of RPET in 2016 shouldn’t be a concern.
|Region||PET PCR Available for Collection (MMT)||Recycling rate (rPET)||rPET Resin Available (MMT)|
|Region||PET PCR Available for Collection (MMT)||PET PCR Collection rate||Amount of PET PCR Resins Collected (MMT)||Recycling rate (rPET)||rPET Resin Available (MMT)|
When compared to virgin plastics, recycled plastics helps reduce carbon emissions by at least 40%, while preventing pile up of garbage in landfills. Recycled polymers also offer other benefits like almost doubling the shelf life of a product to 10 days through modified atmosphere packaging.
Continued support by local, state and federal governments have been playing a pivotal role in boosting the demand for RPET in a wide array of applications. Most of the top companies now have a target of utilizing an average of 15-20% of RPET content in their packaging applications.
As recycling gains more traction, procurement teams may have to end up securing supplies of RPET – and the ball will be set rolling beginning 2016.
Join us on Feb 1; Rethinking Procurement Operating Model to Drive Stakeholder Success