Gloomy times for plastic scrap markets

Weak demand for raw materials and fears that higher oil prices will drive inflation are core concerns for plastics recyclers, according to the latest Mirror from the Bureau of International Recycling.

The concern is expressed by Henk Alssema, chairman of the BIR’s plastics committee. ‘Despite interest rates continuing to fall in Europe over recent months, fears of a return to higher levels of inflation have been fuelled by OPEC countries continuing to cut production of crude oil, sending prices for Brent soaring to over US$ 95 per barrel in the last month,’ he writes.

Alssema quotes a report from the European Chemical Industry Council indicating production by the chemical sector was 12.3% down on last year. In Germany and the Netherlands, production fell by more than 15% over the same period.

‘Prices are low and stocks are still high, forcing some recyclers to offer large batches of recycled material at extremely reduced levels,’ he says. ‘At present, these batches are being bought up by major producers at dumping prices and put into stock, thereby applying even more pressure to the market for now and beyond by guaranteeing that prices will remain low and that future sales channels will be blocked because end producers built up massive stocks.’

Weaker China

A significant Asian perspective in the Mirror comes from Steve Wong, executive president of the China Sustainable Plastics Association, who notes thatChina’s economic situation continues to weaken, marked by high unemployment rates and a decline in export as well as domestic demand, notably because of its property market crisis.

‘Market participants are expressing pessimism about China’s economic outlook, with many foreign companies seeking to relocate to countries such as India and to South East Asian nations like Vietnam and Thailand,’ Wong reports. ‘Some recycled materials have mirrored the movements of prime resin but market sentiment remains negative owing to subdued demand.’

He concludes that effective recycling of plastic waste and scraps hinges on mandates such as extended producer responsibility which require collection and the use of recycled content.

Another committee member, Max Craipeau, argues that ‘a critical insight’ is a potential mismatch between increasing demand for rPET and supply of PET bottles, its primary feedstock.

‘While recycling capacities are poised for growth, their efficiency remains constrained by the bottleneck of PET bottle collection. Without a paradigm shift in collection strategies, many recyclers could be running at mere fractions of their capacities. This operational inefficiency could further escalate feedstock prices, reflecting this supply-demand disparity.’

Saudi first

In other observations, Sally Houghton reports it has been a tough year for the recycling industry in the US with an unexpected slump in sales, volumes and pricing. ‘Post-consumer resins are struggling with three major issues: cheap imports, lacklustre markets and depressed commodity prices.

It is hoped that the start of 2024 will see a return of confidence and strengthening prices to the recycling market.

Mahmoud Al Sharif notes that, ‘in the first major development of its type in the Middle East and North Africa region’, Saudi Arabia has successfully converted oil derived from plastic waste into certified circular polymers. The resulting oil was processed at the Aramco Total Refining and Petrochemical refinery, jointly with France’s TotalEnergies, whose target is to produce 30% of circular polymers by 2030.