Legislative developments that would be supportive of increased recycling give participants in the European recycling market reason for positivity in the long term, although concern about the short-term outlook sat heavily over the recent Plastics Recycling Show Europe (PRSE) conference and trade show.

Demand for recyclates in Europe is closely linked to the construction, durable goods and packaging industries, all of which have come under pressure in the past 12 months in Europe as high inflation and energy prices have reduced consumer and corporate spending power. The seasonal pickup in demand that many recyclers had hoped for in the spring has largely not materialised. A common observation of exhibitors at PRSE was that they had come to find new customers, but found visitors to their booth were often more interested in making their own sales, rather than buying material.

Recyclers are also contending with increasingly stiff competition from virgin plastics, which have become cheaper in the past 12-15 months after two years of historically high prices following the outbreak of Covid-19. Cheaper virgin polymer prices have had a direct impact upon the significant portion of recyclers’ demand that traditionally relies on converters using second-generation materials to save money. And urgency to develop more products utilising recycled content has unquestionably waned in the past 6-9 months as focus on costs has intensified and the price gap between virgin polymers and more expensive packaging-ready recyclates has widened.

Trepidation would therefore be the word that best characterises recyclers’ short-term demand projections. Many economic forecasts (including those used by Argus) project global GDP growing slowly in late 2023 and into 2024. But, after failing to see a pickup in recyclate demand this spring, the industry will wait for a solid indication of higher demand before getting overexcited.

Unfortunately for the recycling industry, significant global capacity additions are likely to keep pressure on virgin PE and PP prices and margins for at least the next 1-2 years. In PET, imports from Asia remain a concern owing to the overcapacity in the region, with more new additions scheduled to come on line this year. This is despite the threat of the ongoing antidumping investigation into Chinese imports. French recycler Veolia’s very recent announcement that it would close its Rostock PET recycling site at the end of this year as “it has not been possible to secure sales of rPET in co-operation with the beverage industry and/or retailers” gives one indication of the mood in the market.

Legislation offering long-term hope

 Plastic Recyclers Europe president Ton Emans, speaking to Argus, acknowledged the difficult situation that recyclers face in the short term in Europe. But he was one of several industry participants remaining bullish about the impact that legislative developments can have on the long-term future of the market, which he said should give recyclers the motivation to navigate the tough times.

Policy makers in Europe have been among the most active globally in putting into place recycling targets and measures to support the industry towards reaching them. They have enacted a tapestry of extended producer responsibility (EPR) schemes and deposit return schemes to encourage investment in recycling. And they have moved towards “guaranteeing” demand by way of fiscal penalties on virgin plastics in packaging, and minimum recycled content requirements for plastic packaging.

The first two countries to enact fiscal measures have been the UK – with a tax slightly over £200/t ($247/t) on plastic packaging with less than 30pc recycled content – and Spain with a €450/t ($484/t) virgin plastic packaging tax. Initial reports of the impact on demand have been mixed. Recyclers have noted a diversification in the enquiries that they receive, with more coming from outside of the traditional large companies. But the true impact has been obscured by the overall slowdown in the packaging market, and dampened by lower virgin polymer prices that have often made it less expensive for converters to use virgin material and pay the tax than to secure recyclates of sufficient quality for their requirements.

Meanwhile, recycled content requirements have been announced EU-wide, with all PET beverage bottles required to contain 25pc rPET by 2025, and all beverage bottles of any material to use 30pc recycled content by 2030. The Packaging and Packaging Waste Regulation (PPWR) that the EU proposed late last year would — if adopted in its current form — extend minimum recycled content requirements to nearly all packaging by 2030. And Emans highlighted Dutch aims to introduce a minimum 30pc recycled content target for all plastic products (packaging and otherwise) sold in the Netherlands towards the end of this decade as another important potential development.

Recycled content requirements, including outside of packaging, are generally strongly supported from within the recycling industry. Many believe them to be necessary for the recycling industry to break free from a cycle in which low virgin polymer prices cause recyclate demand to collapse. Emans said that he expected measures such as PPWR and the mooted 30pc recycled content requirement in the Netherlands to significantly benefit demand for recycled plastics towards the end of the decade.

He also pointed to the growth of PRSE as a sign of momentum in the recycling industry. The show doubled in size compared with 2022, and plans to add an extra exhibition hall next year. By that time, recyclers will hope that their short-term demand picture has also improved.

Author Will Collins, Recycled Polymers Editor

This article is created using data and insight from Argus Recycled Polymers service. Get more information and request a free trial here.