Cold weather hinders PET consumption, scrap collection in Brazil
Colder weather in Brazil’s Southeast region in recent weeks has hindered the collection of post-consumer polyethylene terephthalate bottles and decreased feedstock supply, according to multiple market participants.
Prices for PET scrap in Brazil have slightly rebounded in recent weeks after a prolonged period of demand weakness that pressured prices lower.
Lower price levels compared to April-May, however, have not yet yielded the expected demand improvement among market participants, with many reporting stable demand levels.
As the market ponders whether recent price increases indicate improved demand conditions or simply the anticipation of such an improvement, some sources have pointed to weather conditions as a factor reducing supply.
A polar air mass has resulted in lower temperatures and frost in the South and Southeast regions of Brazil since late May, according to the National Institute of Meteorology (INMET). Temperatures are expected to remain low in the week ending June 20.
“Temperature levels have decreased a lot [in the Southeast],” a scrap dealer said. “As a result, there is less consumption and scrap collectors are unwilling to go out and collect scrap.”
The source also said that their scrap suppliers have been facing very low PET scrap inventory levels in recent weeks as a consequence.
An R-PET packaging seller shared a similar perspective, noting that lower temperatures have resulted in decreased demand for packaging due to reduced consumption of water and soda.
“When temperatures begin to rise, we will see consumption and demand levels improve,” the packaging seller stated. “That coincides with a seasonally strong period in the second semester for other downstream markets, such as cosmetics and food.”
Platts, part of S&P Global Commodity Insights, last assessed post-consumer PET clear bottle bales (95/5) at Real 4.00/kg DDP Sao Paulo on June 17, up Real 20 cents/kg from June 9.
R-PET clear flakes were last assessed at Real 7.00/kg DDP Sao Paulo on June 17, up Real 20 cents/kg from June 9.