War in Iran reshapes Europe's PET industry amid supply chaos and recycling shifts

The European PET industry began 2026 expecting a quiet year. But the outbreak of war in Iran disrupted supply chains from March, reshaping market conditions. By June, shifts in pricing and material availability had altered the landscape once more. At the start of 2025, the sector faced weak demand across Europe. The cost-of-living crisis pushed businesses to cut costs rather than invest in sustainability. Between 2024 and 2025, four recycling projects closed, removing nearly a fifth of the region’s PET recycling capacity.

The Iran conflict triggered supply shortages and panic buying, driving up PET prices. This surge increased demand for recycled PET (rPET) flakes, particularly in sheet and thermoforming applications. Meanwhile, the EU’s Packaging and Packaging Waste Regulation (PPWR) set new targets, requiring 1.7 million tonnes of rPET annually by 2030 to meet recycled content mandates.

Six new recycling projects are now planned between 2025 and 2027, more than offsetting the lost capacity. Yet challenges remain, including securing high-quality feedstock for tray-to-tray recycling and attracting investment to scale operations profitably. The European Commission also announced that imported rPET could soon count towards the 25% recycled content target for bottles—but this rule has yet to take effect. By mid-2026, virgin PET prices had begun to drop, while supplies of post-consumer PET bottle bales improved. The industry now faces balancing regulatory demands with economic pressures. Success will depend on overcoming feedstock shortages and making recycling processes both scalable and cost-effective.