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Aug 23, 2023

Parts of Europe seeing ‘pressure’ on recycled plastic prices

The Bureau of International Recycling (BIR) has said that recycled plastic

The Bureau of International Recycling (BIR) has said that recycled plastic prices are coming under "heavy pressure" in parts of Europe, as high inflation and uncertainty in the financial markets hit consumer confidence.

In a quarterly update, Henk Alssema from the Dutch company VITA Plastics and chairman of the BIR's Plastics Committee, said the difficult economic times are leading to a "high supply and low demand" scenario with prices and demand falling.

This was echoed by Kay Riksfjord from the Norwegian firm REVAC AS, who said the "geopolitical situation and banking crisis" are making a "tense situation even more difficult".

However, this is not the case across the continent. Stephanie Kötter-Gribbe from German company Best Plastic Management GmbH said "overall market developments are positive and the plastics value chain remains intact", while Spain's Natalia Cruz Cayuela pointed to regulatory developments in the country which have boosted the market.

From the UK's perspective, while not included in the report, the prices of recycled plastic has remained high in 2023. Growing domestic demand for recycled material and a PRN prices in excess of around £300 in recent months has propped up the price per tonne of recycled natural HDPE to around £1,000.

While there is uncertainty in the market we will remain in the same situation

Mr Alssema reported that polypropylene plastic in particular has been hit, with prices falling "substantially" year-on-year to below €900 (£783) a tonne.

He added that HDPE plastics have also been hit by a drop in demand for new products, falling to around €950 (£826) a tonne.

Mr Alssema explained: "The prices presented above are not expected to recover in the short term; in fact, they may drop even lower. While there is uncertainty in the market and consumers are not consuming, we will remain in the same situation."

He added: "Prices for prime material have also fallen substantially. As a result, many companies are deciding to use prime material again rather than recycled, thus making the sale of recycled material much more difficult at present. Calls are becoming louder for regulation to make use of recycled material compulsory; this is the only way to create stability in supply and demand, as well as stability in terms of price."

Mr Riksfjord said that virgin grades are still cheap and this is dampening demand for recyclates, he added that waste incineration costs in Norway "are at their lowest levels for a long while, resulting in a very quiet secondary plastics market".

He explained: "Although price falls are still being reported for some recyclates, other commodities are now stabilising. Prices reported in certain instances may be different from what can actually be achieved in the marketplace."

On a more positive note, Ms Cruz Cayuela stated that two new regulations in Spain have been positively affecting the plastics market. One surrounds a new tax on non-reusable plastic packaging, while the other has excluded VAT on the delivery of plastic scrap.

She said while this has helped, current energy costs are creating problems for recyclers as their elevated production costs are making recycled plastic prices high compared to virgin plastic.

Germany's Stephanie Kötter-Gribbe, said that the industry "continues to be generally stable", but warned that energy costs are impacting orders from manufacturers. She also painted a positive light on upcoming regulatory changes, highlighting a new tax from next year on single-use plastic packaging.

"Thus, from 2024, manufacturers will have to register and, from 2025, will have to pay the levy into a fund in accordance with the volume of single-use plastic products placed on the market. This fund is then to be used to reimburse the costs of cleaning public areas in Germany's municipalities and cities," she explained.

Pricing remain static with little fluctuation

Outside of Europe, Mahmoud Al Sharif, of Sharif Metals Group, said the Middle East is reporting higher demand for recycled plastic.

He said there has been an increased adoption of recycled plastic in construction activities and increased demand has been seen for PET over recent months.

China's Dr Steve Wong said that the recycled plastic market is being hit by low prime prices in China, which "continues to weaken amid oversupply and high stock levels".

Sally Houghton from the Plastic Recycling Corporation of California (USA), said the post-consumer plastics markets in the USA has made a steady and consistent start to this year.

"Pricing remained static with little fluctuation while demand was stable to sluggish," she explained.

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