Low-Grade Problems

June 27, 2013
RTGE Staff

Moving into the summer, the European plastic scrap market is of two minds. For high-end grades of plastic scrap decent markets appear to be found throughout Western Europe. Several sources point out that movement to end sources is fairly decent and prices for some of the industrial-generated grades of plastic are stable.

A key reason for the relatively firm market for industrially generated plastics is the consistency of the material. Consumers are seeking much better quality material, which is more likely to be achieved by recyclers who handle scrap from industrial sources.

For lower grades, however, markets are more challenging. And, from discussions with a host of recycling operations, the market is getting worse, with a combination of increased scrutiny of shipments, less material available and soft end markets for material creating further challenges.

The problems are not limited to European countries. The Asian market also is playing a significant role in the overall shaky low-grade plastic scrap market. On the global side, the well-documented tightening of scrap plastic shipments to China in light of quality problems is shutting off a significant amount of plastic scrap from throughout Europe. With the cost of a low-value container of plastic scrap being rejected far exceeding the profit potential of the sale, many shippers are being even more reluctant to ship material into the country.

While China has generated the most press about its heightened inspection levels, other countries also have tightened up their specifications for scrap material imports. Several sources note that Indonesia and India are two countries that have cut back their intake of plastic scrap, which is adding to the overall malaise in the market.

How long the trend will continue is still uncertain, although there have been reports that China’s Operation Green Fence will run through at least November 2013. If other countries continue this trend, markets will likely struggle through most of this year.

On the domestic side, the environment is not much better. Publicity over quality problems has filtered through to many governments, with more agencies rigorously inspecting shipments to prevent the transshipments of loads deemed to be of lower quality.

According to one source, the Dutch government has passed legislation that will require contaminant levels of less than 2% for incoming shipments of recyclables. Previously, Dutch customs officials used this 2% level as a guideline.

Another issue that is creating challenges for plastic scrap processors in Europe is the push by some countries to increase their use of incineration, with reports indicating that some companies are shipping low-value plastic scrap to incinerators.

The growth in incineration throughout Europe is causing concern for the recycling industry. Reflecting these concerns, Herbert Snell, the vice president of the BVSE, the German recycling association, called for a greater focus on recycling of the material before using incineration.

Also posing problems for European plastics recyclers is the growth in difficult-to-remove materials, such as film wastes. In addressing the issue, the European Recyclers Europe (EuPR) association, during its annual meeting earlier this year, introduced a plan for a standard plastics recycling label.