In our editorial following last year's PRSE trade fair, we discussed short-term concerns and long-term optimism for the industry. This year's show — held last week in Amsterdam — featured some brighter notes, but conversations also struck many familiar chords of pessimism about the near term.
On the plus side, last year's main reason for long-term optimism — increasingly supportive legislation in Europe — remains on track. The EU Packaging and Packaging Waste Regulations (PPWR) mandating recycled content across almost all plastic packaging by the end of the decade appear set for confirmation in the near future — welcome news for polyolefin recyclers in particular. And the PE films market appears less nervous about PPWR's strict reuse quotas for industrial packaging than it was in spring, with much optimism that future delegated acts will address industry concerns. Importantly for chemical recyclers, the European Commission has continued to support fuel use-exempt mass balance accounting, with member states reportedly largely in line.
For PET recyclers, mandatory recycled content requirements are even closer, with the 25pc minimum for PET beverage bottles kicking in from next year. The weather has not generally supported a strong season for on-the-go beverage consumption in much of Europe this year, limiting the emergence of a peak season for rPET pellet consumption. And there is a feeling that the supply chain is more adequately stocked ahead of next year than it otherwise would have been, even as a reduction in the competitiveness of imports from Asia — the result of higher freight costs — theoretically supports demand for European recyclates. But PET recyclers were quietly confident about future demand prospects because of the upcoming regulation.
Demand for premium blow-moulding grade rHDPE was another bright spot discussed at the fair, with many recyclers operating in that market noting increasing buying interest. This is an encouraging sign, one said, that brand owners are still looking to make as much progress as possible towards their 2025 targets for recycled content in packaging, after a slowdown in new projects last year, despite recent data showing that many are not on track to fully meet them.
But for all the upbeat sentiment, many of the same concerns were raised again at this year's gathering. Polyolefin recyclers complained of low or even negative margins on commodity cost-saving products, such as low-end rPP grades and rHDPE pipe, with virgin PE and PP prices having declined in recent months and underlying demand still slow. There was still a feeling that a challenging period lies ahead, and that this could lead to further consolidation in the industry. And progress towards EU legislation supporting demand for recyclates outside of the packaging industry has been comparatively slow since the previous PRSE — save for a proposal from the commission to mandate 25pc recycled content in automotive plastics.
Aside from concerns about sales volumes and margins, challenges with feedstock sourcing have come tgo the fore again in 2024, particularly in the flexible PE market. Flexible PE bale prices have risen through the second quarter because of reduced production of waste from commercial sites and, more recently, strong demand for exports to southeast Asia. Recyclers have struggled to pass on increases to their pellet customers, resulting in a squeeze on their margins.
Since the last PRSE, the confirmation of EU waste shipment regulations (WSR), which will ban plastic waste exports to non-OECD countries from November 2026, will reassure recyclers concerned about feedstock supply. WSR might turn out to have a similar or even greater impact on the flexible PE recycling market than the more-publicised PPWR. The 27 EU countries exported 33,000 t/month of flexible PE waste to non-OECD countries — mainly in southeast Asia — in the first four months of this year, according to data from Global Trade Tracker. This is equivalent to 15-20pc of the volume of post-consumer PE film waste that is recycled in Europe, according to the latest Plastic Recyclers Europe data. Keeping this material in the European market would naturally be expected to increase feedstock availability for European recyclers.
But it would be an oversimplification to say that cheaper input costs for recyclers will be the only result. European capacity will also need to adapt to accepting more export-quality bales, which are typically seen as lower-specification 98/2 or less transparent fractions. And demand for feedstock in Europe is also likely to increase, including through companies currently involved in exporting bales — many of which are already recyclers or affiliates of recyclers — that are building or expanding European recycling capacity.
It was clear at the last PRSE that the myriad challenges facing the European recycling industry were not going to have evaporated by the time this year's show came around. The mood overall felt more positive than last year, but the hatches remain battened for many recyclers, with a challenging few months or even years still expected ahead.
