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102

PLASTICSMARKET ANALYSIS

Prices still high but
trade issues remain

Recyclers face triple challenge of regulation,

regional variation in prices and high freight

costs.

The recycling of plastic – and the
growing need to do so – is increasing-
ly being drawn to the attention of
people around the world. It is now
such an issue that it is not just on the
agenda of the waste management
industry or relevant authorities; it has
reached out to individuals who under-
stand how it affects our lives. Plastic is
as an essential item in the modern
world and, without it, it’s impossible
to imagine our routine lifestyles con-
tinuing in the same way. The focus has
to shift from banning all plastics to
improving their collection and recy-
cling.
Use of recycled plastic in the packag-
ing industry is increasing across
Europe and demand has been grow-
ing this year. As prime plastic prices
have risen considerably because of
more expensive oil, the price of recy-
cled plastic has also increased sub-
stantially. In March, Nymex-listed
crude oil prices jumped over 30%
because of the Russian invasion of
Ukraine. Sanctions and trade restric-
tions on Russian goods raised fears of
an imbalance in the supply of crude
oil supply and that led to higher pric-
es.

EXPORT CHALLENGE
High demand for recycled granules
and the higher cost of prime have
boosted plastic scrap prices in

Europe. Some grades hit historically
high prices, almost to the level of
2008 when we had the global financial
crisis. LDPE natural film traded in the
EUR 600-700 per tonne range,
depending on quality and delivery
destination. Bales of PP hard fractions
such as crates, bumpers and buckets
were sold at EUR 500-600 per tonne.
HDPE bottles also achieved EUR 600-
700 per tonne. Trade is taking a differ-
ent shape and most of material is now
sent to nearer recyclers instead of
travelling to more distant destinations.
The export of plastic scrap is becom-
ing more difficult and there are sever-
al reasons behind it. One is the
European Union’s new waste shipment
regulation. Consignments of plastic
waste to India and Pakistan come
under the notification process while
Bangladesh is in the red channel
which means shipments are not
allowed. India has very strict and clear
import regulations that only licensed
recyclers registered in special free
zones can bring in plastic – including
shipments from Europe that have
cleared the more complicated notifi-
cation process. Applying and getting
approval for notification is a lengthy
process.

PRICE CHALLENGE
A second reason hampering exports is
viability. Prime plastic prices in Asia
are very low in compared to European
levels. This is mainly due to the high
availability of prime plastic in the
Asian region and the increase in
capacity is such that Asia is becoming
more of an exporter of prime plastics.

As the price of recycled granules is
linked to and follows prime plastic,
the realisation of recycled granules in
the region granules is lower. It means
Asian recyclers are not willing to pay
the higher prices of plastic scrap pre-
vailing in Europe. This imbalance with
prime plastic prices affects the trade
in plastic waste.

FREIGHT CHALLENGE
A third reason is shipping costs which
prevent exporters matching price lev-
els between Europe and Asian coun-
tries. Sea freights rates have soared
because of the trade imbalance fol-
lowing the Covid-19 pandemic. Many
shipping lines are either giving less
priority to the plastic scrap business
or not allocating containers for such
shipments. Some have even
announced they are discontinuing the
service and this is another hurdle in in
the movement of plastic waste from
one country to another. A shrinking
trade in plastic scrap may bring down
recycling rates further. After the Basel
convention agreement, all participat-
ing countries agreed to a new set of
rules for trading plastic waste to over-
come the various issues which they
were facing but many factors keep
recycling on the back foot. So, despite
increasing efforts globally towards
better collection and treatment, recy-
cling rates continue to fall.

CONTRIBUTED BY
Surendra Borad Patawari, ceo of
Gemini Corporation

102_maplastics.indd 102 02-05-2022 16:36