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 industry. On the one hand, more brand owners were committed to increasing the use of recyclables in new packaging 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 uncompetitive 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 breakeven.

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 recycling 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 markets, 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 economic 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.      

Read more in our upcoming issue >>