Why did Platts create a recycled PET price service in the United States?
Demand for recycled plastics is growing quickly. We've got legislation coming into force in 2025 in the United States and company commitments on using minimum recycled plastics content. The market is moving forward quickly, but lacks transparency and granular data for participants. Part of the reason for this is the market is not particularly commoditized. We seek to bring transparency to the market by giving participants access to prices and market information. As demand grows and markets become more commoditized, we are following that journey and providing information. PET is the most advanced recycled plastics market. It is the most prevalent in terms of commitments that are being made and the legislation coming into force.
Is this the first time Platts has offered such a service in the United States?
There is some surprising [pricing] information within the United States, but we're seeking to provide a bigger scope of the United States as a whole and a more global reach. We are building this information out of our three hubs, in London, Singapore, and New York. We assess markets daily. Our data are not available anywhere else. We are the first to provide this information daily.
How do you collect and determine prices?
We talk to a range of participants in the market every day and throughout the day. We get information about trades on that day, bids that are open, or offers in the market, and verify that information. We check when material will be loaded or delivered, then we test that market information. We publish pricing levels we hear in the market and send them around to market participants and invite people to come back to us and corroborate trades. At the end of the day, we take a snapshot of the market and form a formal assessment of what's happening at that time of the day.
Will price data be relevant to all of North America?
These assessments are focused on North America. Recycled plastics markets are localized. Waste is collected, processed, and sold locally. We have quite a few recycled PET assessments in London that cover the U.K. and northwest Europe, and we introduced two more on May 6, one for mixed colors and one for flakes. All of our data go into a global report that is published every Wednesday called Polymerscan. This information is local, but in the context of what's happening globally.
What do you seek to achieve for users and industry?
Our key reason for existence is to bring transparency into these markets as they become more commoditized and to bring fairness to market participants. So those participating, no matter what their position is in the market, have access to unbiased, transparent information, whether pricing, market trends, or key things to look for in coming years.
How do you standardize bale data?
We always launch assessments with strict adherence to methodologies, weight, specification, quality, and location. The assessments for Los Angeles and Chicago are based on standard truck trailer loads of 35,000 to 40,000 pounds, in 51 - or 43-foot trailers. We even specify the minimum amount of PET found in bales as well as the colors. This reflects the most actively traded sections of a market and provides a clear benchmark of what we are assessing. Someone can look at this assessment and at the price every day and know exactly what it refers to. They can use this price and say, "My material fits this exactly," or "My material fits that specification, but I'm selling slightly smaller quantities, or larger quantities." The price becomes a benchmark for negotiation. It's very important to have standard terms in markets we assess.
What colors are acceptable in PET scrap?
It's based on what we see as most actively traded in each market. For Los Angeles, we look at bales with 80 percent clear bottles in them. They're able to achieve that level because they have a deposit-based redemption system. In Chicago, it's more mixed-color bales. There is no redemption service there, collection is all curbside, so there's more mixed colors. But we look for bales that consist of transparent green or transparent light blue. We exclude bales with high content of black or solid colors. This comes from feedback from customers, who say this scrap doesn't fit the specifications of buyers and sells at steep discounts. We are clear about what we are assessing.
Why analyze Los Angeles and Chicago?
These are two actively traded markets. There are many more buyers and sellers there and much more liquid markets with buying and trading. Los Angeles is a pricing hub for the West Coast and Chicago is the pricing hub for the Midwest.
Is recycled PET pricing volatile?
In comparison to the virgin market and more upstream markets, recycled PET is less volatile. Typically, in petrochemical markets, as you get downstream from feedstocks like naphtha you see less volatility. The added thing with recycled markets is that there's often a lag from when supply comes through to the market or when demand is seen, and, therefore, when pricing shifts. Post-consumer bottles, containers, or whatever they may be take a long time to be disposed of and reach sorting and recycling centers. There's always a time lag, which irons out some volatility. And on the buyer's side there is a desire to lock in purchasing and volume in what is a tightly supplied market.
How do you see this service affecting the circular economy in the United States?
Buyers sort through a huge volume of recycled plastics. They are dealing with waste and with a product that's not as standardized as the virgin market. They're not sure what is a fair price and what is going to impact that price moving forward. That is the service Platts provides: aiding transparency and creating a fair market so everybody has access to it, to what influences the market, and what the price is on any given day. [Our assessments] are the basis of spot negotiations, which grow into physical benchmarks that people link their purchasing and sales contracts to. And as we see in much more qualified markets, they become the benchmarks for financial trading as well.
How can Platts' price data be accessed?
All our price assessments for PET bales and information on how we reach our assessments are available for free on our web page (www.spglobal.com). We publish price assessments and rationales forforming these assessments every working day in the United States and publish a weekly commentary every Wednesday.
By Pat Toensmeier
ABOUT THE AUTHOR
Pat Toensmeier is a Hamden, Conn.-based freelance writer and reporter with more than 35 years of business journalism experience, much of it with Modern Plastics and Aviation Week. Over the years he has specialized in writing about manufacturing, plastics and chemicals, technology development and applications, defense, and other technical topics.
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|Title Annotation:||AS I SEE IT; Ben Brooks, head of plastics recycling price reporting at S&P Global Platts|
|Date:||Jun 1, 2020|
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