Plastics

It was all going so well – and then, quite suddenly, it wasn’t...

In early 2022, plastics recyclers were in largely uncharted territory, experiencing not only massive demand but also extremely high prices for their products. Never had their position seemed so secure: whereas recycled plastics had once been unfairly dismissed by many potential consumers as substandard compared to primary resources, they had now morphed into highly-desirable raw materials whose use would help propel a host of blue-chip consumers towards fulfilment of their increasingly ambitious environmental pledges.

Momentum had been built by the ongoing proliferation of recycled plastic content mandates worldwide.
In Europe, indeed, there has even been the added encouragement of a proposal to extend recycled content targets from plastic bottles to all plastic packaging.

But of course, these generally healthy conditions in the opening months of 2022 were not without challenges, most notably the struggle to source sufficient feedstock to satisfy this welcome demand boom; in the Far East, for example, most factories were operating at less than 20% of capacity owing to this dearth of suitable input. And naturally, the available tonnages came with a lofty price tag.

Other business impediments included hugely elevated shipping costs, lack of labour, market tensions over the Ukraine conflict and ongoing trading uncertainties
resulting from the Basel Convention amendments. Lurking too in the background were fears that interest rate rises would lead to cooling economies and thus reduced consumption, ultimately hitting demand and prices for raw materials.

Nevertheless, recyclers were generally able to incorporate cost increases into their sales prices and so preserve their margins.

But then it all started to go wrong. During a 2022 also featuring the FIFA World Cup in Qatar, recyclers played out the proverbial game of two halves. By the time we met in Dubai last October, high demand had turned into low demand almost at the flick of a switch – a suitable metaphor given the blow of soaring electricity prices which meant full production was no longer viable for many of our consumers. Similar considerations afflicted recyclers too: in Europe, for example, where energy
had normally accounted for around 15-20% of their production costs, this figure suddenly careered to nearer 70%.

The above-mentioned recycled content mandates provide tangible recognition of plastics recycling as a key industrial and environmental sector – one which is so essential, surely, that it should merit compensation for these astronomical power costs. If this is not forthcoming, then mechanical recycling of some waste streams will become uneconomical and the far less environmentally- friendly incineration option will be preferred, thus undermining the hard work already invested in building a circular economy.

In difficult times, the resilient and forward-looking recycler will not stand still but, rather, will remain alert to new ideas. One of the many benefits of BIR Conventions is that they provide a platform for new concepts, and so it proved in Barcelona last May where Doug Woodring of Ocean Recovery Alliance outlined the Rebound Plastic Exchange initiative intended to enhance global flows of quality recycled plastics and to drive the innovation and investment required to boost circularity.

Our meetings also provide glimpses of the future. In Dubai, for example, Xavier Lhoir of Valipac in Belgium explained how his organization was currently the only one in the EU covering extended producer responsibility (EPR) for commercial and industrial packaging. However, this is an EPR path that other member states will have to follow by 2024.

At that same meeting, Bashar Ehsan Gadawala of Ala Group explained the UAE’s development of an action plan for plastics management and recycling based on the EU and OECD life-cycle approach, thus re-emphasizing the key role that legislators can play in nurturing the best environment for recycling.

But of course, the value of our Plastics Committee and of BIR membership as a whole is not confined to our twice-yearly meetings. Day after day, BIR
is representing our interests at the ground floor of developments that will shape our industry’s
future. A notable example came late last year
when Alev Somer and Ross Bartley from the BIR Secretariat attended an initial United Nations meeting in Uruguay that will ultimately lead to a new Global Plastics Treaty addressing their entire lifecycle. There will obviously be profound ramifications for our industry and we should take great comfort from the knowledge that our views are being expertly conveyed.