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Trade headwinds make chemical recyclers think again

Henk Alssema: 'Shell has concluded that its goal of chemically recycling one million tonnes of plastic waste into pyrolysis oil annually by 2025 is not achievable.'

Pioneering chemical recyclers are re-thinking their strategies, with regulations and environmental standards seen as major challenges to development.

The view comes from the Bureau of International Recycling in its latest quarterly Mirror. Division president Henk Alssema of Vita Plastics in the Netherlands, reports that companies in the chemical recycling sector are reassessing their ambitions.

‘Several reasons can be cited for this, with a significant factor being the uncertainty surrounding regulations and environmental standards which play a crucial role in corporate decision-making,’ he writes. ‘Additionally, many organisations face challenges such as the availability of suitable feedstock, rising technology costs and the complexity of the recycling process itself. This has led many companies to re-evaluate their strategies and set more realistic timelines and goals.’

Alssema quotes the oil giant Shell Shell as among those scaling back its chemical recycling ambitions in expectation of a shortage of suitable feedstock. Slow technological progress and uncertainty about regulations are also said to influencing the company’s thinking.

‘As a result, Shell has concluded that its goal of chemically recycling one million tonnes of plastic waste into pyrolysis oil annually by 2025 is not achievable. This is evident from Shell’s sustainability report for 2023.’

Weak economies

More generally, he notes that,with a ‘stumbling’ European economy, the plastics recycling market remains under pressure with both structural and short-term factors playing a role

‘The economic climate in which Europe currently finds itself cannot be described as positive. High energy prices continue to plague businesses, leading to elevated production costs. Furthermore, the transition to green energy and sustainable business models requires significant investment but yields little profit in the short term.’

Political uncertainties, such as the conflict in Ukraine and tensions in the Middle East, continue to influence current developments. ‘The manufacturing industry in Europe is struggling, which in turn affects our recycling industry. Prices, margins and sales are under immense pressure, sentiment is poor and the tonnages currently being traded are low.’

The markets face rising inventories and lower profits, leading some companies into liquidity issues. Prices of new materials remain low, further pressurising the prices of recycled material.

‘If sentiment does not change soon, this could put an end to the operations of many recycling companies within Europe, resulting in the failure to meet sustainability goals,’ Alssema concludes.

Cheaper freight

Fellow division board member Max Craipeau, of Greencore Resources in Hong Kong, notes that, although shipping costs from south-east Asia to Europe and the US Gulf have stabilised, the impact has not been sufficient to stimulate trade.

‘While no longer on the rise, freight rates remain high and continue to weigh on the competitiveness of south-east Asian exports. Benefitting from both lower production and freight costs, Indian exports continue to outperform south-east Asian cargoes in global markets.’

Next months ‘pivotal’

A US perspective comes from Sally Houghton of the Plastic Recycling Corporation of California. ‘Overall, the plastics market is mixed, with PET and colour HDPE facing significant headwinds whereas materials such as natural HDPE, clear LDPE and EPS have more stable or growing demand,’ she reports. ‘The next few months will be pivotal, particularly with factors like the upcoming US elections and the recent change in federal interest rates influencing market confidence.’

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