Report for India, Europe and Turkey
At the time of writing, the global economic landscape has suddenly changed. Following renewed military strikes and US President Donald Trump’s announcement ending the ceasefire with Iran, energy markets have reacted sharply. Global Brent crude oil immediately jumped by over 7%, briefly crossing the US$ 80 per barrel threshold.
Just a few weeks ago, market expectations of political calm were keeping oil prices lower. As a result, polymer prices had been falling steadily, giving buyers more control over LDPE, HDPE, PP and other plastics. However, these new strikes have provoked a “wait-and-see” approach. Operating in this environment has become very difficult; customer decision-making is frozen and buying is strictly on a need-to basis. This uncertainty is a double-edged sword for the recycling sector.
The PVC market faces a major challenge of heavy oversupply, ruling out a long-term price recovery any time soon. China is still exporting prime PVC for as low as US$ 740 per tonne CIF to Asian ports, putting huge pressure on the profits of European and US producers. As a result, recycled and scrap PVC prices are currently 30% to 60% lower than prime, depending on grade, colour and quality. In this climate, it is very hard for PVC recyclers to survive, let alone grow.
For LDPE and LLDPE, basic packaging demand is continuing to keep recyclers alive. In fact, recyclers have seen better profits over the last three months owing to high virgin plastic prices. However, with the recent sharp drop in these virgin prices, the near future is uncertain. Historically, high virgin prices give a slight bump to recycled polymer values but, more importantly, they increase the overall demand for scrap. How this plays out in the coming weeks will be critical.
In India, HDPE is seeing a sudden, local jump in demand. This is driven by renewed government funding and the recent extension of the Jal Jeevan Mission 2.0 – India’s massive drinking water pipe project now extended through 2028. While cash flow and contract sizes are not quite as strong as during the boom a few years ago, this government funding remains a key driver for demand. Traders supplying this region must buy carefully to get the right quality at the right price.
In Europe, export rules have become much stricter. The May 21 launch of the revised EU Waste Shipment Regulation and the new Digital Waste Shipment System (DIWASS) has hit traders and recyclers hard. Port checks have sharply increased to ensure compliance, causing serious financial pain for exporters through heavy detention, demurrage and inspection fees. If a shipment is rejected, the extra costs can easily erase the profits of the next several containers. For example, the paperwork now needed to export LDPE film scrap to Turkey is enormous.
Furthermore, these laws are not applied in the same way across Europe; for example, industry sources say ports in the Netherlands are currently more flexible than others, thus giving Dutch companies a big advantage and making them one of the main outlets for these exports. As a result, they can buy cheap scrap from yards across Europe and export it at a good profit to Turkey and other OECD nations. Turkish factories, which still need massive amounts of raw material, are willing to pay higher prices to reliable suppliers just to secure their volumes.
The UK has also followed along, starting its own strict Green List waste export reporting rules via the Environment Agency on July 1.
Overall, the industry is operating in a tough environment shaped by wild price swings and strict new rules. However, for companies that stay strong, follow the rules closely and are successful in obtaining their permits from European environmental authorities, the rewards are clear. Those who can navigate this maze will face much less competition and can enjoy strong profits.
