PET reclaimers squeezed as bale costs outrun flake pricing

Postconsumer PET bale prices have moved up roughly 4.5 cents per pound nationally since April while washed flake has gained closer to 1.5 cents, according to processors and brokers contacted this week. The result is a bale-to-flake spread that several reclaimers describe as unworkable for any plant running below the high-80s in yield.

“We are buying bales at a number that assumes we run a 72 percent yield and sell flake into a market that will not pay for it,” said Dana Kirchhoff, chief operating officer at Ardent Polymer Recovery, which operates two wash lines in the Ohio Valley. “The arithmetic stopped working in May. We have been eating it since.”

Yield is doing the damage

The spread problem is really a yield problem. Curbside PET bales arriving at reclaimers now routinely carry 12 to 18 percent non-PET material — a mix of caps, labels, sleeve-wrapped containers, opaque and multilayer bottles, and residual liquid. Full-body shrink sleeves remain the most cited offender because they defeat both near-infrared identification at the MRF and float-sink separation downstream.

Two reclaimers said their effective yield has fallen two to three points year over year on the same bale specification, which is worth more per pound than most of the visible price movement. A three-point yield loss on a 20-million-pound line is roughly 600,000 pounds of paid-for feedstock that leaves as residue.

Buyers are not absorbing it

Converters and brand owners buying rPET flake and pellet have generally held their contract structures, several sellers said, and are resisting attempts to reopen pricing mid-term. Spot flake business exists but is thin, and the volumes moving are heavily weighted toward fibre and strapping applications that will not pay food-grade premiums.

“The mandate creates demand for a certificate, not necessarily for a pound at a price that keeps a wash line running,” said Ruth Amoako, a materials analyst at Kestrel Commodity Research. “Those are different markets and people keep conflating them.”

Virgin PET remains competitive on a delivered basis in several regions, which caps how far rPET can run before non-mandated buyers simply switch back.

What reclaimers are doing about it

Three responses are showing up. The first is bale specification tightening — several reclaimers have added deductions for sleeve-bearing containers and are rejecting loads above a stated threshold. The second is run-rate management: at least two plants have moved to a four-day schedule rather than run marginal pounds. The third, and slower, is capital spend on secondary sortation, typically an added optical stage on flake to recover PET currently lost to residue.

None of that fixes the immediate quarter. Reclaimers heading into autumn contract talks say they will push for either a yield-adjusted bale formula or a flake price that indexes to bale rather than to virgin. Whether MRFs and brokers accept a formula that transfers quality risk upstream is the open question, and on current evidence they have little reason to.