BIR World Mirror on Plastics – Issue October 2024: Optimism in short supply as markets fail to relaunch after summer break
A concise summary of the BIR World Mirror on Plastics – Issue October 2024. Full version with detailed market reports available in the Members Only section of the BIR website.
The conundrum surrounding plastics recycling is made crystal clear in the latest Mirror publication from the BIR Plastics Division. Recyclers have been entrusted with an important role in the push to achieve circularity and have invested heavily in processing capacity, and yet a significant proportion of this capacity is not being used and many companies are struggling to achieve all-important profitability.
Low virgin prices have impacted the commercial attractiveness of using recycled materials. As noted in the Mirror, some hope lies in upward price pressure on virgin plastic following reduced output because of summer maintenance and cutbacks, as reflected in the spot markets. Overall, however, the markets are characterized by a lack of optimism.
In Europe, the plastics recycling market has remained under pressure long after the conclusion of the summer holiday period, with business suffering under the burden of low demand, high energy prices and still-elevated interest rates which are stifling investment.
Prices, margins and sales are under immense pressure, sentiment is poor and the tonnages currently being traded are low. If sentiment does not change soon, it is argued, this could put an end to the operations of many recycling companies within Europe, resulting in the failure to meet sustainability goals.
In terms of specifics, Eastern Europe’s rPET market has been slow to rebound after the summer holidays, with bale supply on the increase as post-summer peak bottle consumption feeds into the recycling chain. At the same time, substitution back to virgin PET is becoming increasingly common, driven by the comparatively lower prices for this material.
As a further complication for the sector, the EU’s revised Waste Shipment Regulation prohibiting exports of polyolefins to non-OECD countries is said to be having a major impact, with the larger volumes of material available in the marketplace resulting in lower prices.
Pessimism is also reigning in China’s recycled plastics market amid signs of deflation while recyclers in South East Asia are continuing to face tight feedstock availability owing to seasonal monsoon disruption as well as high - and rising - production costs. Achieving profitability is a major challenge as recyclers’ selling prices are low, thus making for an uncertain future. India’s rPET prices have seen fresh drops to present tough competition for South East Asian cargoes, with Indian bottle-grade flakes trading significantly lower than those from South East Asia.
In the USA, meanwhile, supply shortages and strong bale prices in the rPET market are creating pressure on domestic reclaimers to meet demand, while the market for coloured HDPE remains sluggish in the face of weak demand from industries such as construction and piping.
Polypropylene markets are flat owing to the absence of regulatory mandates and competition from cheap virgin material. Indeed, some material recovery facilities in California have stopped sorting polypropylene in response to the poor market conditions. By contrast, there is a healthy export market for expanded polystyrene, with Malaysia a major buyer.
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With contributions from its members, BIR publishes periodical commodity reports under the label "BIR World Mirror". These detailed reports exist for Non-Ferrous Metals, Ferrous, Stainless Steel / Alloys, Paper, Plastics and Latin America and provide BIR members with up-to-date information on the respective commodity or market segment.
The report on Non-Ferrous Metals appears once every two months, whereas Ferrous, Stainless Steel, Paper and Plastics are published quarterly. Latin America is covered twice per year.