COVID-19 is having a mixed impact on global recycling markets, according to the Bureau of International Recycling in a new assessment of international trade in secondary materials. The non-ferrous and plastics sectors appear hardest hit.
‘Even though China, the starting point for the pandemic, has passed its peak of infections and is taking tentative steps towards a return to normality, Europe and many other parts of the world are still a long way from that stage, creating a fragmented recycling industry picture,’ BIR says.
As an example, China has boosted import quotas for non-ferrous metals but ‘the appetite is not as it was in the past’ while countries in South East Asia are relaxing their lockdown policies. Shipments to India, however, are minimal and aluminium demand has been hit hard because major vehicle manufacturers in the US have halted production.
Ferrous holding up
On the other hand, ferrous markets continue with scrap reported at reasonable prices. Early closures of stainless steel melting capacity in producing countries such as Spain, Italy and Belgium have been reversed but BIR say the impact on overall demand remains unclear.
‘Many analysts have released forecasts pointing to major contractions, including the International Monetary Fund which has suggested that activity levels are currently falling at their fastest pace since the Great Depression of the 1930s. End demand is expected to remain weak, which will result in low production levels and therefore low stainless scrap collection rates. Needless to say, another consequence will be a reduced demand for raw materials.’
Paper recyclers are also struggling and, although shipments are being made within the EU, those to South East Asiaare ‘proving almost impossible’.
China’s packaging and printing plants have been resuming work but the resumption of normal operations is being hindered by a shortage of workers and logistics. Fixed costs and staff salaries have become the biggest challenges for businesses during the pandemic. BIR notes that the five batches of import quotas for paper announced so far this year amount to more than 4.3 million tonnes although the aim remains to achieve zero recovered paper imports by the end of this year.
‘The main method of bridging the gap left by lower imports is to process recovered paper into pulp outside of China before importing it. This stream is providing a particularly important supplement given the current shortage of domestic recovered paper and more limited imports,’ it concludes.
Very low demand is reported for all qualities of used textiles. Collections in western Europe are down between 20% and 70%, depending on the market.
Circular economy warning
Demand for recycled plastics is very weak as a result of the lockdowns and the low oil price has pushed raw material values to historically low levels, so the sector is struggling with high inventories and poor order levels. Encouragingly, one company in Indonesia resumed shipments of plastic pellets to China in early April and they have almost reached pre-virus levels.
But BIR warns the pandemic has shifted environmental topics from the top of the agenda and this will ultimately have a negative effect on the plastic recycling industry.
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