BIR Autumn Round-Tables: Plastics Starting to Stabilize

Speakers at BIR’s Plastics Round-Table Session see long-term benefits to China’s Green Fence Program.

October 28, 2013
Recycling Today Staff
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During the Plastics Division presentation at the Brusssels-based Bureau of International Recycling's (BIR) Autumn Round-Table Sessions, Plastics Committee Chairman Surendra Borad of Gemini Corp., based in Belgium, touched on three factors that he said he felt were driving the plastic market: Operation Green Fence in China, changes in the political mind-set of European countries concerning the environment to the economy and the impact of the U.S. shale gas and oil on the plastics industry in general.

Echoing statements made by many recyclers over the past several months, Borad said the introduction of Green Fence policies in China was ultimately a good thing. “Green Fence has led to widespread confusion and indecisiveness in the plastic scrap trade,” he noted. “The developed world has mountains of lower-quality plastics scrap, and this situation creates storage and logistics problems. There is substantial drop in the shipment of plastics scrap from Europe to China,” he added.

Reflecting this trend, Borad added that over the first half of the year, shipments from Europe to China have declined by more than 16 percent compared with the same time last year. Even more problematic, European shipments to Hong Kong are down an even more significant 26 percent.

The tightened quality specifications created by the Green Fence has resulted in many shippers redirecting tonnage to other sources. However, Borad continued, even with the shift overall exports of plastic scrap from Europe to non-EU countries are down by more than 14 percent in volume terms during the first half of the year.

Despite these challenges, Borad expressed confidence that the Green Fence will be a net positive for the industry. “Despite the downturn in volume, I feel that in the long run the Green Fence is going to turn out to be a big advantage for China.”

He continued, “China is a manufacturing hub for practically all types of manufacturing industries. Enforcement of Green Fence means there will be more stress on sorting of the goods in exporting countries. Both the U.S. and Europe do not have sufficient capacity to recycle the additional quality that would be generated after the sorting.”

Adding to the opportunity, Borad pointed out that freight rates from Europe to China are at a low level. It costs 1,500 euros to transport goods from Spain to Belgium. That same material could be shipped to Chinese main ports at half that price.

In regard to the changing mindset, Borad pointed out that a number of European countries are looking at the high costs of being environment.

Greg Cardot with Veolia and board member of BIR’s plastics committee touched on the market for plastics in France. While prices for a number of grades firmed during the first half of the year, more recently there appears to be some backsliding of prices through France.

As for collection, Cardot pointed out that French bottlers have reported an increase in sales of 30 percent in July; consequently, the PET bottles collection rate in France was good in September and October. Despite the pickup, he added that since this past January PET is the only virgin resin having accumulated a loss of 60 euros per ton.

For China, Cardot pointed out that with the exception of PET, most plastic scrap prices were improving, with prices up $40 per metric ton for polypropylene to $150 per metric tons for LDPE.

In remarks from Peter Daalder from Daly Plastics, a Dutch recycling firm, he noted, “The market (In the Netherlands) is currently stable and mainly unchanged over the last three months. Sales vary from time to time, but in general the market is good.”

“Looking at today’s situation, we expect that the price for new material will be reasonably steady and there should be hardly any increase in price,” Daalder added.

From the United States, Larry Schipper, International Alloys, a New Jersey-based recycling firm, noted, “The U.S. domestic market has continued to be fairly consistent over the last 12 months. Only recently has there been some hesitancy from consumers to purchase at the same rate as they have the rest of the year, but it appears mostly to be due to years’ end inventory balances.”

“There have been since the summer minor price drops by full time consumers, while other have boosted their production due to increased sales of finished product and have adjusted upwards some buying prices.” Schipper noted that low grades of plastics continue to have the most difficulty being sold, while for better grades of plastics there has been a virtual seller’s market.

In wrapping up the market outlook, Borad noted that after enjoying some strengthening earlier this year the Indian market for LDPE and LLDPE film scrap has started to slow down in volume and even the prices are moving down. “The import restrictions are still there and no new import licenses were issued in recent years.

Added to that, Borad pointed out that there has been one significant change in import-export policy relating to plastic scrap. With immediate effect the import of plastic scrap will be subject to 20 percent physical re-export of processed plastic scrap.

Guest speakers at the plastics roundtable included Simon Peter Dziak Czekan, sales director of Kalman Plastics, Warsaw, who discussed the growing opportunities for plastics recycling in Poland. In his presentation, Czekan noted that Poland is one of the few countries that has shown far better resiliency than many other European countries.

Additionally, Pawel Polonecki with the Polish waste management firm BYS highlighted the company’s operations to extract recyclables, including plastics, from the solid waste stream.

The 2013 BIR World Recycling Convention Autumn Roundtable Session was held in Warsaw, Poland, Oct. 28-29.