rPET market

ICIS: Private equity tightens grip on Brazil’s rPET sector

2026-01-23 2:15 min Strategies & Market Analysis, America

Gustavo Kruger, ICIS London, United Kingdom

Private equity continues to dominate Brazil’s recycled polyethylene terephthalate (rPET) market as public petrochemical producers retreat from the segment.

Global petrochemical weakness accelerates divestments
Near‑term softness masks improving long‑range outlook
Private equity embraces long‑horizon, higher‑risk assets

A wave of recent exits of recycling assets — including shutdowns across multiple regions — highlights a widening divergence in investment strategy.

The pattern mirrors broader petrochemicals, where prolonged weakness is driving listed producers to divest non‑core, low‑return assets, while private equity steps in to acquire or scale platforms that can be optimized for eventual exit.

Thailand‑listed Indorama Ventures shuttered its rPET facility in Minas Gerais, Brazil, in September 2025 and has since divested an additional rPET asset in the Czech Republic.

Mexico‑listed Alpek also announced the closure of its rPET plant in Pennsylvania, US, by March, after shutting down its Cedar Creek site in North Carolina in July 2025.

Amid the downturn, public companies are prioritizing balance‑sheet resilience and cutting exposure to cash‑negative recycling units.

Private capital fill the gap

Brazil’s rPET fundamentals magnify this strategic split.

Chronic infrastructure constraints, fragmented collection systems and high operating costs squeeze recyclers’ financials, lengthening the time needed for assets to become profitable or attractive for sale.

For listed companies under quarterly scrutiny — and already contending with bearish petrochemical markets —tolerance for prolonged underperformance is limited.

In a mature sector like petrochemicals, their returns typically rely on consistent cash‑flow generation.

Private equity, however, is built to absorb early losses.

Its returns typically derive from improving operations and capturing valuation gains when market conditions recover, rather than from near‑term cash flow.

Longer investment horizons also allow private equity funds to scale and integrate operations without short‑term earnings pressure, with the prospect of valuation uplift of recycling operations amid evolving regulation and rising brand‑owner demand.

Subdued demand and elevated feedstock costs have created conditions where patient capital can consolidate and reposition assets while public players retreat.

Private capital nearing their expected exit window are also deferring sales amid weak valuations, choosing to reinvest and extend timelines until the cycle improves.

Long‑term prospects for Brazil’s rPET market remain attractive, particularly with the new decree setting packaging recovery and recycled‑content targets from 2026 to 2040.

Although short‑term implementation challenges persist, private‑equity‑backed recyclers are better positioned to navigate the transition and benefit from underlying improvements in market dynamics that public players are unwilling to wait out.

Indorama’s recent closure contrasts with significant capacity expansion by privately owned recyclers — notably Cirklo, backed by private equity firms eB Capital and Circulate Capital.

Mexico's integrated, brand driven model

In contrast, Mexico’s rPET market, the largest one in Latin America, follows a more integrated, closed‑loop model.

Most capacity sits either within vertically integrated beverage bottlers or recycling assets backed by major brand owners, giving the system steady feedstock access and more predictable offtake.

This structure has shielded some bottle-to-bottle recyclers from the volatility seen in Brazil, where open‑market competition amplifies pressures.

By locking in supply and demand, Mexico’s model reduces the investment risk that has driven public petrochemical companies to retreat from rPET elsewhere in the region.

Not all segments benefit equally, however. Recyclers serving non‑packaging downstream sectors, such as fibers, face high competition for feedstock without the protection of captive demand.

As costs escalate, many of these operators have been squeezed out of the market, forcing plant closures and accelerating consolidation.

Author: Gustavo Kruger, ICIS

www.icis.com

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ICIS: Private equity tightens grip on Brazil’s rPET sector

Private capital fill the gap

Mexico's integrated, brand driven model

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