Iran conflict transforms secondary plastics markets

The European plastics recycling market has undergone a dramatic reversal in recent months, as geopolitical tensions in the Middle East disrupt global supply chains and reshape purchasing strategies.

After nearly two years of subdued prices and plentiful supplies of low-cost virgin polymers, recyclates are once again commanding attention and, increasingly, premium prices.

The turnaround is highlighted in the latest BIR Mirror by Henk Alssema, president of its plastics division. He notes that PP, HDPE, LDPE, HIPS, ABS and PET have all experienced sharp upward price movements.
‘One point must be made clear, these price developments are the result of a deeply concerning and tragic situation,’ he asserts. ‘The conflict has a profound human impact and once again highlights the vulnerability of global supply chains. At the same time, it is evident that these disruptions are having a direct effect on the plastics industry.’

Emerging shift

Alssema points out that whereas end-producers previously relied heavily on low-cost virgin materials from abroad, a clear shift is emerging. ‘Demand for recycled plastics is increasing rapidly. Companies that once felt comfortable with their procurement strategies are now actively seeking alternatives closer to home.’

Across multiple polymer streams, he adds, recyclers are reporting a marked increase in enquiries, longer negotiations and a growing appetite for long-term supply agreements.
Although price increases for recyclates have been less extreme than those for virgin materials, gains of 20% to 30% are no longer uncommon. More importantly, demand is currently exceeding supply. The imbalance is being intensified by growing uncertainty in the market, leading many companies to stockpile raw materials, driving prices even higher.

Will it last?

‘What is clear is that end producers have woken up, with their focus shifting towards security of supply,’ says Alssema. ‘This is translating into a growing willingness to enter into long-term agreements for the purchase of European recycled materials.’
The key question is how long the shift will last: whether it will prove to be structural or a short-lived surge driven by crisis. But even with resolution to the conflict in Iran, he feels it may take up to a year for supply chains to stabilise and for price levels to normalise.