Demand for recycled material remains at exceptionally high levels. Although this is an extremely positive development for our industry, all that glitters is not gold. Recyclers are struggling to obtain input material and, if available at all, it comes at an extremely high cost. Furthermore, energy prices have surged to exorbitant levels and there is an enormous shortage of personnel.
These are among a number of problems facing our industry at the moment, yet it looks as though recyclers are able to incorporate cost increases into their sales prices and to keep their margins intact.
The enormous demand for recycled materials means prices are at record highs. Final processors are paying through the nose for PP regranulate, with prices for black and natural at around Euro 1150 and Euro 1650 per tonne, respectively. Prices of HDPE extrusion regranulate are at some Euro 1250 per tonne for light grey and Euro 1500 for natural. LDPE regranulate is a little lower, with mixed granulate at around Euro 750 per tonne and translucent at approximately Euro 1200.
Prices are not expected to drop in the short term if demand stays as high as it is, but whether it will is another question.
The tensions surrounding Russia and Ukraine are a cause for concern; should a war break out between these two countries, uncertainty will increase and demand for raw materials may well be corrected. In addition, many economists are worried about the spectre of inflation which is currently high in Europe, with the European Central Bank preparing the market for interest rate increases in order to rein it in. Yet it is also concerned that those interest rate rises will cool the economy to such an extent that a recession sets in, leading to reduced consumption, a drop in demand for raw materials and corresponding price drops.
Chemical recycling is taking off right now, with the number of factories mushrooming. Many chemical companies - including ExxonMobil, BASF and Sabic - have invested or are about to invest in this growing recycling method. Most notably, it was announced in January that Eastman Chemical Co. is to invest US$ 1 billion in building the world’s largest chemical recycling factory in France.
This recycling route is quickly gaining in popularity and the chemical industry is excited by its potential. But is chemical recycling a wholly positive development? Personally, I believe it can be a valuable addition to mechanical recycling, but let us not make the mistake of favouring chemical recycling over mechanical recycling. It detracts from green awareness in consuming more energy and seemingly placing a heavier burden on the environment.