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Chairman's Report

The early weeks of 2023 have produced not only a slight increase in demand for raw materials but also the European Parliament’s almost unanimous approval of controversial changes to the EU Waste Shipment Regulation. Meanwhile, energy prices have dropped and latest research has once again underlined the environmental gains from using recycled material.

January saw a slight improvement in demand for secondary raw materials following the steep drop at the end of last year. Plummeting demand led to a significant supply of raw materials and resulted in falling prices. PP was the big loser with prices are under enormous pressure, but HDPE and LDPE also saw substantial price drops. Demand for HIPS and ABS stayed reasonably level and so the prices of these qualities remained fairly stable. Primary raw materials also witnessed steep price declines in response to a significant reduction in demand.

At present, it is still difficult to work out which way the market is going, with the threat of a possible recession still looming over it. Uncertainty is being fanned by the Ukraine conflict as well as by tensions between the USA and China. Even so, many economists are predicting the recession will be mild, if there is one at all.

The EU aims to impose a ban on plastic waste exports to non-OECD countries as soon as possible. On January 17 this year, the proposal to amend the legislation on waste shipments was passed with an overwhelming 594 votes in favour and only five votes against. The reasoning is to provide better protection for humans and the environment, and to use Europe’s waste better towards achieving its circular economy targets. According to the European Parliament, the export ban to non-OECD countries is to come into force as soon as possible, which is likely to be three years after the EU Waste Shipment Regulation review becomes effective.

Opinions on amendments to the Regulation are strongly divided. European players in the market see it as a game-changer as it creates a massive impetus to design plastics that can be recycled and reused better and to increase the recycling capacity within the EU in the short term. Global players, meanwhile, view it as a serious restriction owing to the anticipated red tape it will bring; they see recycling as a global trade that should not be hampered by national or regional boundaries. The proposals ignore the fact, they say, that recycled materials are international raw materials which make a global contribution to saving primary resources when used in the processing industry.

Compared to last year, our industry has noted a significant drop in energy prices although inflation continues to be an issue despite a downward trend. The higher wage costs confronting the recycling industry are fuelling fear of a wage spiral, which comes about when increases in wage costs per product are passed on in prices, with these higher prices leading to higher wage demands. It means inflation would remain elevated and would lead to central banks raising interest rates to cool the economy.

CE Delft, a research institute in the Netherlands, has calculated that use of mechanically recycled plastics generates significant climate gains. This research was carried out by NRK Recycling, an umbrella body for the plastics industry in the Netherlands. Despite the fact that the use of recycled plastic produces major benefits for the environment, recyclate is still not used on a major scale. It is crucial we have legislation that makes the use of recyclate compulsory.