In early fall, it appeared that plastics markets were poised to bounce off lows. Prices had shown some signs of strengthening after slumping earlier in the year. But as 2012 comes to an end, concern about the short-term outlook for plastic scrap markets appears to be growing.
The significant economic problems sweeping through Europe have played havoc on plastics markets, resulting in a decline in generation of new material. Despite less plastic scrap available, several processors in Europe say prices also have been turning downward, creating the twin problems of less material and lower prices.
Quality issues also are a source of concern. The growing popularity of single-stream programs in the United States, as well as the push by many municipalities in both Europe and North America to increase recycling rates, have resulted in declining quality, sources say.
Plastic scrap quality has deteriorated so much so that Asian countries are considering banning the import of many grades of recovered plastics. For European plastics recyclers, the possibility of losing a significant end market for their recovered plastics is a concern.
One U.K. plastic scrap recycler points out that China, one of the countries that has been more aggressive in its inspections, has been rejecting a growing number of containers of plastic scrap from suppliers in Europe and North America.
In an effort to achieve recycling targets, European plastics recyclers are going after more non-bottle plastics. A source in the U.K. says export markets may consume up to 60% of many of these grades of plastic scrap.
The U.K.-based Packaging and Films Association (PAFA), which represents marketers of film, flexible and thermoformed packaging in the U.K., says China is considering measures that mirror the ban on plastic scrap from the European Union that were recently announced by Malaysia.
PAFA says the potential move to ban the import of plastic scrap from the U.K. to China could jeopardize the U.K.’s ability to meet new government recycling targets.
“The new recycling targets, already heavily criticized as unrealistic due to the lack of adequate collection and recycling infrastructure, will fail even sooner than expected if these new developments in the Far East come about,” says Barry Turner, CEO of PAFA.
China’s Ministry of Environmental Protection, Ministry of Commerce and National Development and Reform Commission have announced that the Chinese government will consider strictly enforcing regulations that prohibit the import of unwashed, post-consumer plastics as well as ban the transfer of imported waste to a company other than that allowed by the import license. The Chinese government also may prohibit companies from selling unwashed plastics that remain after the sorting of imported plastic and paper.
“This will require a significant investment in Europe to fill the size of the hole created which will require time to develop” says Turner. “But such moves would have a huge impact on the waste industry in the U.K., especially when it comes to meeting plastic recycling targets set by DEFRA (the Department for Environment, Food and Rural Affairs).
“With much of the 67% of Britain’s plastic waste being exported to the Far East, particularly China, according to DEFRA statistics, and the U.K. already short of plastic collection and recycling facilities, I believe reaching the target of 57% by 2017 will be even more unrealistic and out of touch,” Turner adds.