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Chairman's Report

Demand for recycled material has hit unprecedented highs while recyclate prices are remaining high owing to a pronounced scarcity. This is happening at a time of ambitious plans for increasing recycled material within Europe. Meanwhile, container transport prices are levelling off but problems with delivery times are persisting.

The world economy is running at full throttle and the strong demand for raw materials has continued unabated. Over the past few months, demand for recycled materials has also remained at unprecedented high 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.
An equally interesting question is what this will do to price developments. A trend can be observed whereby the price of recycled material is approaching that of prime materials. The expectation is for prime and recycled prices to become decoupled, with the real possibility that prices of recycled material will exceed those of prime.

That would be a great development for our industry, but it is also fraught with danger. Our industry is experiencing increasing difficulties in obtaining feedstock material; as mentioned, availability is becoming ever more limited and prices for recycled PP, HIPS, ABS, HDPE and LDPE are extremely high. High prices are attractive when margins rise accordingly but, given the battle for feedstock, this is generally at the expense of margins. Some companies are experiencing liquidity problems because capital is being tied up as a result of these high prices.

To create some breathing space in supply, there needs to be more focus on design for recycling over the coming period. It remains essential that more plastic waste is recycled; all the plastic waste that continues to go for incineration will be required to create a sustainable circular economy in the future, particularly when bearing in mind that the objectives for creating a circular economy are tough.

For example, the Circular Plastics Alliance (CPA) recently updated its recycling plan with the aim of creating 10 million tonnes of recycled material in 2025. This ambitious target requires an estimated investment of Euro 7.6 to 9.1 billion. In the context of the European strategy for plastics, the European Commission has expressed its support for the design for recycling plan. In order to achieve the ambitious target of 10 million tonnes, Europe will need to produce an additional 3.4 million tonnes of recycled plastics in 2025 when compared to 2020; to achieve this, sorting capacity will need to increase by at least 4.2 million tonnes and recycling capacity by at least 3.8 million tonnes, according to the CPA. To achieve the plan’s targets, design for recycling guidelines will be developed as well as input for European standardization. The next step would be to turn those guidelines into standards for products that are marketed in Europe.

Global freight rates appear to have reached their peak and prices have stabilized a little. This does not change the fact that there are still massive delays in the supply of containers. Apparently, more than 70 vessels are off the coast near Los Angeles waiting to be unloaded, meaning that tens of thousands of containers are stuck and cannot be used to transport goods. The delays will continue for a while, and expectations are that there will be many empty shelves in shops during the Christmas period.