Page 56 from: Recycling International Jan/Feb 2025

56

PLASTICSMARKET ANALYSIS

Prime rise aids
scrap demand

After a depressing end to the year, recyclers hope that higher prices for crude

oil in January will be maintained to persuade more brands to adopt circular

packaging.

2024 was particularly challenging for
the European plastic recycling indus-
try. On the one hand, more brand
owners were committed to increasing
the use of recyclables in new packag-
ing while, on the other, cheaper
prime plastic was holding them back
from using recyclables as they sought
to remain competitive in the market.
The slow economic outlook pushed
many brand owners to choose cost-
effectiveness over circulatory goals.
Recyclers struggled to sell uncompeti-
tive recycled granules. Many medium-
sized brands, in particular, postponed
or slowed down their circular economy
plans in depressing market conditions.

EUROPE’S STRUGGLE
Last year, many European recycling
companies delayed expansion plans
due to low demand for their recycled
granules. Most were struggling to run
their existing plants at optimum
capacity. Lower demand for recycled
granules from customers forced them
to reduce their production capacities
and run the plants at barely breakev-
en. Many struggled to survive, and
some went under because they could
not manage. If business dynamics
remain the same, the industry expects
more recyclers to go out of the recy-
cling business this year.

DEPRESSING H2
The European plastic scrap market had
been positive during the first half of
2024 but then lost ground, especially

in the final quarter. Demand from
export markets had been supporting
the European plastic scrap industry, as
it allowed recyclers to maintain the
movement of the material. Without an
option to move within the export mar-
kets, waste management companies
and exporters would have been forced
to pile up stock in their yards. That
would have meant having to turn to
the depressed European domestic
market. That in turn would have been
very challenging as demand from
European outlets was not good.

NEW YEAR HOPE
Everyone in the industry hopes 2025
will bring positive economic growth and
help to resolve wider issues. Slow eco-
nomic growth and conflicts between
neighbouring countries directly and
indirectly affect economic development
worldwide. The war between Russia
and Ukraine, the Red Sea issue and the
conflict in Palestine have been major
drivers of slower economic growth.
Solutions or agreements to these would
help solve major global problems.
Perhaps the ceasefire in Gaza at the
time of writing can be a start.

SCRAP GAINS
Plastic scrap prices gained some
ground at the beginning of January.
The main reason for the increase was
the low availability of materials and
anticipation of demand once the
export market started buying. Every
year, Asian recyclers await the renewal

of a licence from their national envi-
ronmental authorities, which is usually
granted during January. Due to the
Christmas and New Year holidays, col-
lections in the European market fell,
meaning less material in January.
LDPE Natural film prices in December
2024 were around EUR 335-345 per
tonne and rose to EUR 355-360 per
tonne in January.
Prime plastic prices in Europe started
the year with firmness. Although
monomer prices remained flat, prime
producers floated new prices with
some increment in the market. The
basic reason behind this firmness is
the increasing crude oil prices, rising
more than 14% in a month. NYMEX
listed WTI crude oil prices in mid-
December were at US$ 68 per bbl
and up to US$ 78 by 15 January. Such
an increase in a short period brought
some confidence in the market. It
remains to be seen if this continues.

FREIGHT STABILITY
Shipping freight rates have been sta-
ble in the past two months but avail-
ability of space on vessels is a much
bigger concern for exporters. Rollover
of vessel schedules added more chal-
lenges in meeting the cutoff time for
planning exports. From Europe, most
shipping lines are still using long
routes via the Cape of Good Hope to
avoid the Red Sea. Many shipping
lines were planning to announce blank
selling in February, which will put more
pressure on trade.

CONTRIBUTED BY
Surendra Borad Patawari, ceo of
Gemini Corporation

P H O T O Shutterstock

56_maplastics.indd 56 29-01-2025 11:34