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Secondary plastic prices ‘detached from virgin’

A marked growth in demand for recycled plastics, with secondary prices no longer dictated by the cost of virgin, is being noted by sector experts.

Mark Victory, senior editor recycling at UK-based market intelligence provider ICIS, told the latest BIR plastics webinar that across the material spectrum virgin values were ‘no longer acting as a price cap’ on recycled price. An example is colourless PET flake for which prices have been trading above virgin for the last two years.

Victory told the global recycling organisation that this demonstrated the strength of demand for recycled materials and ‘the willingness of companies to pay above virgin values to meet sustainability targets because of the pressure on them from both the regulatory and the consumer point of view’. Recycled material prices were reflecting supply/demand factors in their own markets, he said. In Europe, rPE and rPP prices had achieved record heights ‘because of the imbalance between supply and demand, particularly from the packaging and fast-moving goods markets’.

On the issue of supply, Victory calculated that rPET collection volumes would need to expand by a third to satisfy the EU’s 2025 single-use plastic targets, while a 60% increase will be required to achieve the 2029 goals – but average annual growth in collections over recent years was nearer 2%. The shortfalls in rPE and rPP are even more pronounced, he noted.

Chairman Henk Alssema of Netherlands-based Vita Plastics agreed that prices were now at unexpected levels. ‘There is a growing shift from using prime materials to recycled materials, driven by an increasing number of companies switching to circular business models. The question is whether we, as the recycling industry, can continue to supply sufficient recycled material to the plastics industry as more companies move to the use of recycled materials.’

Sally Houghton of the Plastic Recycling Corporation of California spoke of a ‘great appetite’ to become involved in the post-consumer resin (PCR) market in order to achieve mandated recycled contents. However, she warned that recycled material procurement problems may persuade some companies to pay the taxes on virgin use rather than engage in the PCR market.

Max Craipeau of China-based Greencore Resources, pointed out that larger brands were signing recycled material supply contracts for the next two years, making it difficult for smaller players to enter the market. Victory agreed that some businesses would struggle to obtain the supplies needed to meet their own sustainability targets.

But the optimism is being undermined by the continuing disruption to supply chains, according to logistics expert Theo van Ravesteyn, non-executive chairman of MSC Nederland. Freight movement issues were particularly acute at ports where the time gap between anchoring vessels and unloading containers can be up to 12 days, largely because of worker and truck driver shortages.

Two out of three ships worldwide are now said to be suffering delays to their schedules. But he predicted a return to more normal differentials between contract and spot rates in 2022, with the latter likely to ease.

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