A Slow Turn

September 10, 2013
RTGE Staff

There is no doubt that plastic scrap markets throughout Europe have gone through a significant shake up. During the past several quarters, as the continent slumped into an extended recession, plastic scrap markets were one of the hardest hit recyclable commodities.

During the economic doldrums that swept through most of Europe, prices for plastic scrap declined as demand for the material from European plastic scrap consumers dropped. At the same time, the difficult economy also reduced the overall generation of material. The combination of low generation and low prices created a crisis mode for many plastics recyclers who have been struggling to remain solvent.

Another factor that has created some concerns for plastics recycling markets in many European countries has been the incineration of more plastic. In a recent interview, Eric Roebuck, chief executive of Germany’s Federal Association for Secondary Raw Materials and Waste (BVSE), says that while the recovery of plastics has been good, having the collected material steered toward incineration has worked to the detriment of the plastics recycling industry.

While acknowledging that in Germany higher collection rates have been met due to the Duales System Deutschland (DSD), the country’s primary organisation responsible for collecting and recycling post-consumer packaging waste, Roebuck notes that it hasn’t truly benefited plastics recycling. “It’s not about recycling, but to dispose of (the plastic) as cheaply as possible.”

The result, Roebuck adds, is that with the growth of DSD, plastics recycling levels are relatively stagnant, while the combustion levels have sharply increased. “We have made no significant progress in recent years,” he says.

Finally, China, which had been the destination of a growing amount of plastic scrap, implemented a much more stringent inspection program to prevent the flow of suspect shipments of plastic scrap into the country. The introduction of China’s Operation Green Fence resulted in many mixed loads of plastic scrap and rigid plastics being rejected.

Problems with plastic markets were not limited to recyclers in Europe and the United States. According to the South China Post, since the implementation of Operation Green Fence, more than 100,000 tonnes of plastic scrap in Hong Kong that was intended for the mainland have been trapped at various locations in Hong Kong.

Sources have noted that the market for plastic scrap in Europe continues to be challenged by legislative, economic and market-oriented roadblocks, which ultimately affects recyclers’ profitability.

However, the earlier problems may be easing. The European economy has more recently begun showing signs of strengthening, and several plastic scrap recyclers say that there are some appreciable improvements in plastics markets.

One European-based plastics recycler says that the restrictions on the flow of plastic scrap to China has led to improvements. Plastic producers had previously expressed alarm about a lack of supply. However some loads now are being redirected to European sources.

For those companies that are still maintain export markets, there is good news and bad news. The bad news is that with the U.S. economy improving, the U.S. dollar has strengthened, while the currencies of many Asian countries have been devaluated. One source says that India, for example, “has a big currency program.”

He continues, saying that there are other Asian countries that are struggling with devalued currencies.

The more positive news is that the freight rates on container lines are low. “There is good mobility throughout the world from Europe,” one source says. “The transportation costs are low and people can move material anywhere at a good price.”

Despite the difficult market seen for plastic scrap over the past several years, the recycling of PET plastics continues to grow. The European association Petcore recently reported that in 2012 about 60 billion bottles were recycled in Europe in 2012. In a statement following the release of the figures, Petcore’s Chairman Roberto Bertaggia said, “Despite the poor economic situation in the European region, the consumption of PET bottles is still showing clear trends of penetration into new market segments through innovative packaging and the recognized capability of PET to be recycled.

Casper van den Dungen, PET chairman at Plastics Recyclers Europe, added, that “The overall European collection of PET bottles to 1.68 million metric tons reflects an increase of 5.6 percent compared to the previous year. This has helped to ease the overcapacity situation of recyclers with an average plant utilization of 80 percent. In 2012, the fibres market was still the single largest end market for recycled PET, but strong growth in the sheet and bottle market are putting these three markets at similar levels. ”