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Chairman's Report

Freight costs are on the rise owing to the situation in the Red Sea and demand for raw materials remains limited. The new revision of the EU Waste Shipment Regulation is not without consequences and poor market conditions are starting to take their toll.

This year has begun much like 2023 ended, with the difference being a slight price increase in February. However, we cannot speak of a market recovery just yet.

The price increase has been caused primarily by the issues in the Red Sea. The International Monetary Fund has reported that container shipping through the region has decreased by almost a third in 2024 owing to the attacks on commercial vessels and to the decision by many shipping companies to avoid the area, leading to higher freight costs and longer voyage times as alternative routes are taken.

As mentioned above, it is too early to talk of a market recovery. Despite the slight price increases for HDPE, PET, PP and HIPS, demand for recycled materials has still not returned to previous levels. Many recyclers attribute this to cheap imports of prime materials, although a survey of European traders has revealed that trade in these prime materials has also witnessed a significant decrease owing to the worsening economic situation in Europe.

With the revision of the EU Waste Shipment Regulation in November last year, there will be a need to work hard on building more recycling capacity in Europe over the coming years. The restrictive measures on exports will mean more materials staying in Europe that will require processing. However, recycling companies are hesitant about investing heavily in recycling capacity owing to the uncertain times and to the volatility of recycled materials. Therefore, there is a growing demand from our industry to make it mandatory to incorporate recycled materials into end products as soon as possible. As it stands, this will be mandatory only by 2030 - but it needs to happen faster if we want to be prepared for the future.

Unfortunately, the future does not look promising for many recycling companies: the combination of low prices and high costs is taking its toll. Many recycling companies are struggling and some have already had to close their doors; in the Netherlands, one of the leading recycling companies filed for bankruptcy last month. Such capacity losses are in contradiction to the need for greater capacity in the upcoming period. European policies need to be better aligned to ensure the achievement of circular goals.