Despite fine words from leading brands, demand for recycled plastics continues to be too low in most parts of the world.
Although financial experts may believe the European Union will avoid recession, the same cannot be said of the secondary plastics market. Demand is heavily affected by low production because of fewer orders for finished goods. No one has much confidence in the market at the moment and there are no predictions for a growth in orders, even in the short term.
It may only be May but industry experts are already saying they do not expect any changes to the market until after the summer holidays. Production units are ticking over at 50-60% of capacity to keep the factories running. Stock holdings of finished goods is high so demand for raw materials is low.
LDPE film scrap prices have remained stable over the last two months. On one hand there is less demand while, on the other, the availability of scrap is also low, balancing prices which are not fluctuating too much. Natural LDPE film remains in the region of EUR 400-420 per tonne.
Nymex-quoted West Texas Intermediate crude oil fell significantly in March from a peak of US$ 80 per bbl to US$ 66 per bbl. This brought some negativity in the market at the time but it then jumped back to US$ 80 by the end of the month. Crude oil prices have been moving between US$ 70 and US$ 80 per bbl since the beginning of the year.
Under pressure from the public, press, and politicians, several big corporations have been making commitments and other assurances about promoting recycling. But there is a massive disconnect between ambition and action. Some leading brands have publicly committed large amounts to pay premium rates for recycled materials.
But that message hasn’t reached the commercial teams in charge of purchasing. In many developing countries, purchasing teams routinely ask for a discount on recycled granules compared to virgin materials. This leaves little incentive to collect and sort plastic waste for recycling. The current scenario of seeking discounts is counterproductive.
Even in the developed world, demand for recycled materials is very low. The discount between virgin and recycled materials has increased to about 30% in the case of polypropylene. This gap would not exist if recycled materials were being used to match ‘green’ commitments.
Most production units are again shifting to virgin material because prices have fallen. Ultimately, low virgin prices hit demand for recycled granules.
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