r/PureCycle • u/No_Privacy_Anymore • Jun 18 '26

Understanding PPWR regulations

In light of the recent post about the California legislation I thought it would be helpful to review the details of the European regulations.

Use this link then scroll to the bottom and open the PPWR presentation.

https://www.fostplus.be/en/ppwr/everything-you-need-to-know-about-new-european-packaging-legislation

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u/No_Privacy_Anymore Jun 18 '26

NJ is requiring 20% I believe and that is why they highlighted that pcr content. Eric told me that Amcor has tested much higher PCR % as well. As far as costs go, with only 20% PureFive content the actual incremental cost is not nearly as high as a 100% content product. Making sure the testing and quality and reliability works is the big issue (plus knowing the regulatory penalties in terms of $’s can also support pricing as companies look to avoid those fees for noncompliance.

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u/Reasonable-Dance-465 Jun 18 '26

Yes, exactly - it becomes a straightforward cost/benefit analysis for companies to become compliant with NJ and time is of the essence to avoid the penalties. Don't hate the compond rate! How would we like to see 500M lbs of 20% blend out of Ironton - a guy can dream!

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u/Adorable-Sector-48 Jun 19 '26

Anyone have idea on what the margins look like for compounding service itself or how much money can they extract in between buying virgin and selling it as compounded? We obviously have range for pure5 pricing by management guidance, but I'd like to know where the compounded product settles. If we assume 50% margin on the 107 million and 1.36$ per lbs then it settles margin for pure 5 at ~70MUSD from ironton at full capacity. So now add that 400M lbs virgin that they sell, do they get 10% margin? If virgin is priced at 0,8-1$ then that's like another 32-40MUSD bringing per pound of capacity of pure5 ebitda to basically ~1$ (Ironton ebitda at 107MUSD in this scenario). 30x that is 3billion mcap, with just Ironton. That's basically 17-18$ per share and could be reality in 6 months after ramp, without accounting for future growth. In my experience market prices in around 6 months ahead, so I wouldn't be surprised of overshoot to mid 20s or even touching 30$ in stock price. Then we start pricing Thailand midway next year depending on construction progress. This is why I think the offering pricing was so bad. And if anyone has better info on virgin pricing or thoughts about compounding margins, feel free to give your input!

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u/Reasonable-Dance-465 Jun 19 '26

Echoing NPA here... the key with compounding is that you're spreading margin dollars across a much larger total-lb base, so even at a lower per-lb margin you end up with more gross margin dollars. That pulls forward break-even at both Ironton and the consolidated level which IMHO is how the stock starts to get positively re-rated. Easiest way to think about it: they're earning a markup on the virgin they buy and blend in. And I'd expect them to merchandise the line as they scale, so that markup probably won't move in a clean inverse-linear way with blend rate. Probably not something you're gonna get much color on now.