Recycled PET: Coca-Cola's target change delays additional demand of 400,000 mt/y

The recent change in Coca-Cola's recycling targets delays the creation of an additional global demand of at least 400,000 mt/year of recycled PET resin, according to an analysis by S&P Global Commodity Insights. In Brazil, recyclers say there is already an impact on demand, although there is no consensus.

Coca-Cola, one of the world's main consumers of polyethylene terephthalate, announced new targets for 2035 that push back the ambitious mandates previously set for 2025 and 2030. The company now aims to use 35% to 40% recycled material in primary packaging (plastic, glass, and aluminum), including increasing the use of recycled plastic to 30% to 35% globally, according to a company statement on Dec. 2. Previously, the goal was to achieve at least 50% recycled content in packaging by 2030.

However, there is no consensus on the impact. "Demand has cooled, and it's not Coca-Cola's demand; it's market demand," a second recycler said.

Sources indicated that, seasonally, demand for rPET resin is lower in the first quarter, while the supply of bottles increases.

"You have a lower need for bottles during a time of year when there is higher generation, which is the holidays. In the summer, water consumption heats up, and 44% of the bottles are for water," the second recycler said.

Regional differences

The additional demand of 400,000 mt per year represents nearly 10% of global rPET production and practically all currently installed capacity in Brazil.

But Coca-Cola's target is global. With this, the company can adapt its resin mix and regional approaches based on cost efficiency and local regulatory requirements. "The company will continue to comply with local regulations, including where higher percentages of recycled content are required," Coca-Cola stated in the Dec. 2 announcement.

The first Brazilian recycler said that, given one of the largest price differentials between recycled and virgin PET resin in Brazil and the absence of regulations mandating a minimum amount of rPET usage, the country becomes a less attractive market for companies like Coca-Cola to meet their recycling targets. "If it's more expensive here, Coca-Cola will meet its target in China," the source said.

Platts, part of S&P Global Commodity Insights, last assessed post-consumer PET clear bottle bales at Real 5.80/kg DDP São Paulo on Jan. 17, up Real 1.30/kg since Aug. 12, 2024, when the assessment was launched. Recycled PET clear flakes were last assessed at Real 10.35/kg DDP São Paulo, up Real 3.35/kg since Aug. 12.

Price indications for virgin PET bottle-grade resin were last heard at $1,490-$1,520/mt DDP Southeast Brazil, while recycled clear food-grade pellets were last heard at Real 11.50/kg ($1,900/mt) DDP Southeast Brazil.

"Those regulating the rPET market are the prices of virgin resin," the second recycler said.

Platts asked Coca-Cola in Brazil if there is any target specifically aimed at the local market. Platts also inquired about the percentage of recycled material used by the company in Brazil and requested comments on reports of a lack of competitiveness in local recycling. The company's public relations department stated that they would not comment.

Latest numbers

Coca-Cola revealed in the report The Global Commitment 2024 that the company used a total of 3.4 million tons of plastic packaging in 2023. Notably, plastic packaging accounted for 47% of the total packaging units in 2023, an increase of 2 percentage points compared with 2018.

The Global Commitment, launched in 2018 by the Ellen MacArthur Foundation and the United Nations Environment Programme, mobilized more than 1,000 organizations, including companies responsible for 20% of global plastic packaging production, to enhance the circular economy for plastics.

In its 2023 Environmental Update, Coca-Cola reported using 27% recycled materials in its primary packaging globally, with 17% of the PET used being rPET.