Little optimism in the recycled polyethylene sector

Players in the recycled polyethylene market anticipate some improvement in trading conditions this year although they expect the current tough trading conditions to continue.

According to Mark Victory, senior recycling editor at Independent Commodity Intelligence Services (ICIS), it may not be until 2025 before the market sees a full-scale recovery, depending on the economic situation and pressure to use virgin polymers.

‘Some players in the recycled high-density polyethylene (R-HDPE) market are hopeful of a slight bounce in Q1 – particularly players in packaging grades – as a result of restocking after the year end, and due to the resumption of several previously suspended packaging projects,’ Victory writes in a New Year review.

He points out that the packaging sector is more cost sensitive than it has been for several years while vital end-use markets remain heavily negatively impacted by the cost-of-living crisis.

‘While R-HDPE has remained largely decoupled from virgin market movements, low virgin values have seen continued substitution pressure away from recycled material in 2023, especially for non-packaging grades. Because of this, virgin price movements are expected to have an outsized impact on the R-HDPE market in early 2024, compared to what is typical.’

Subdued outlook

Victory says recent conversations with those in the recycled low-density polyethylene (LDPE) market suggest a subdued outlook with participants not anticipating any major surprises in the first part of 2024.

He notes that higher-quality grades such as transparent pellets, often used in packaging and for its aesthetic qualities, may hold up better despite lower virgin prices. This is because a certain percentage of recycled content is sought by manufacturers and brands either to meet self-imposed sustainability targets or to market products as containing recycled material.

‘Regulation will play a part in discussions in the first part of the year as the draft Packaging and Packaging Waste Regulation is expected to pass into EU law in February, putting in place mandatory recycled content targets for all plastic packaging from 2030, as well as setting out laws for collection and sorting, and banning the use of certain plastics in the EU.’