EVENT REVIEW PETplanet Insider Vol. 22 No. 11/21 www.petpla.net 42 Icis PET Value Chain Virtual Conference The 2021 edition of the PET Value Chain Conference from Icis was held on September 8-9. The virtual event shed light on the most pressing issues in the PET value chain and the market dynamics that are influencing it. In a first presentation ‘Global macroeconomic outlook: Challenges and opportunities from the end of ‘business as normal,’ Mr Paul Hodges, Chairman of New Normal Consulting, highlighted five mutually reinforcing paradigm shifts which are transforming the polyester industry: Demand patterns, reshoring supply chains, energy abundance, circular economy and advanced manufacturing. According to Hodges, changing patterns of demand arose due to lockdown, WFH, or the EU Green Deal. Also due to lockdowns but as a result of volatility in demand patterns, too, supply chains have proved fragile. In terms of Hodges’ third point, energy abundance, it refers to the shift from fossil fuels to renewables. ‘Cost-advantaged feedstock’ may no longer be a critical success factor when considering new investments. The Circular Economy was the fourth point that Hodges focused on: Reshoring supply chains could accelerate a circular economy. Locally-based business models, which cover the value chain from collection through processing, manufacturing and distribution must be built up. The last point was ‘advanced manufacturing’: technology is becoming safer, greener, faster and cheaper, and businesses should take advantage. In the second presentation, Jimmy Zhang, Senior Analyst Icis, highlighted the challenges facing the global virgin PET market. Growth is expected to be 5% over the next five years, and competition will continue between virgin PET and recycled PET. The increasing use of rPET and continuous capacity expansions will lead to a lower operational increase in the PET industry in the long run. High freight costs have become a hot topic. The main reason for the rising costs is still the pandemic, Zhang explained: incoming cargoes have to be checked more carefully, which leads to much slower ship handling. A shortage of containers and shipments has also led to rising freight costs. High freight costs have made domestic supply more important in western markets. On the other hand, Europe in particular is heavily dependent on imports of PET, MEG or PTA. Companies are facing volatility in supply. Simon Hardy, Commercial Strategy Manager, Supply Chain, Icis talked about building resilience in the PET value chain, which has to balance price, availability and social responsibility. He also addressed the freight situation: average rates for a 40-foot container (FEU) (20,185 kg) from the Far East to Northern Europe rose from US $ 10,000 in May to US $ 14,000 in mid-August - a US $ 4,000 difference in freight costs per container (US $ 200 per tonne) in just three months time. Hardy pointed out that it is difficult to forecast how long the situation will remain this tense. A value chain resilience requires a constant consulting and analysing of data and a close cooperation between all suppliers and customers. In terms of supply capacity, there is just over 19 million tonnes of recycled PET available globally, spread across three key regions (Asia Pacific, Europe and North America), according to Helen McGeough, Icis Senior Analyst and Global Analyst Team Lead, Plastics Recycling. Of the global PET capacity in 2020, recyclate accounts for 15%. This is one of the biggest challenges for the market, which has ambitious targets for a high share of recycled material. In Europe, a more mature market, recycling accounts for 36% of the global PET industry. But even in Europe, where rPET capacity is above average, supply is a challenge due to the lack of raw materials. To reach a 50% recycling share, the market would need to double the amount recycled by 2025. What about collection and sorting? According to McGeough, the current infrastructure is not sufficient, either in terms of quantity nor quality. The lack of harmonisation of collection systems leads to a very wide range of qualities. Even the DRS by Gabriele Kosmehl
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