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Plastic 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 increasingly 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 continuing in the same way. The focus has to shift from banning all plastics to improving their collection and recycling. Use of recycled plastic in the packaging industry is increasing across Europe and demand has been growing this year. As prime plastic prices have risen considerably because of more expensive oil, the price of recycled plastic has also increased substantially.

In March, Nymex-listed crude oil prices jumped over 30% because of the Russian invasion of Ukraine. Sanctions and trade restrictions on Russian goods raised fears of an imbalance in the supply of crude oil supply and that led to higher prices.

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 different shape and most of material is now sent to nearer recyclers instead of travelling to more distant destinations. The export of plastic scrap is becoming more difficult and there are several 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 prevailing 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 levels between Europe and Asian countries. Sea freights rates have soared because of the trade imbalance following 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 participating 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, recycling rates continue to fall

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