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A Rough Patch for Plastics

Market Reports - Plastics, Plastics

The economic doldrums in Europe are having a spillover effect on plastic scrap.

RTGE Staff May 16, 2012

Plastics markets are finding some challenges moving into the summer. The economic doldrums that are plaguing Europe are having a spillover effect on markets for a host of plastic scrap grades in Europe. Exacerbating the problems with supplying European plastic scrap consumers has been the demand for various grades of plastic scrap by Chinese consumers of the material.

Because of this trend, over the past year a number of European plastics organizations and companies are looking to take steps to reduce the amount of plastic scrap that is being shipped from Western Europe to China.

In the most recent salvo, the British Plastics Federation (BFP) has released a report that looks at many of the unintended consequences to shipping plastic scrap to sources outside of Europe, especially China.

The report found that while incentives to increase the collection of plastic scrap were effective, some secondary problems cropped up, including the financial opportunities to ship lower grades of plastic scrap to developing countries, rather than keeping them in the U.K. Additionally, the report says the cost of disposing of the shipped contamination is not inherited by the exporter, but by the overseas purchaser of the material.

The report also contends that the costs faced by the overseas exporter/reprocessors for disposing of non-target contamination are negligible compared to the costs for disposing of the material in the UK. Also, a U.K. plastics recycler needs to achieve a better than 75% yield to claim a full rebate, yet there is no corresponding requirement for the yield of exported material to be measured, making it more financially effective to export plastic scrap, according to BFP.

Meanwhile, for companies seeking to ship plastic scrap from U.K. sources to domestic consumers, they have to contend with the higher cost of disposing of any contamination (losing the income they would have received for exporting material) and higher sorting and processing costs to meet tighter specifications in the U.K.

The concern over the growing flow of plastic scrap to China, however, could be reduced if the Chinese government continues to crack down on imports of the plastic scrap due to quality concerns. Over the past several months a number of exporters of plastic scrap to China say that Chinese customs officials have been far more stringent with the types of plastic scrap being shipped to ports in the northern part of China. This move is creating some challenges for many recyclers who have been moving different grades of plastic, especially rigid plastics, to Chinese buyers.

Supporting the growth of lower quality plastic scrap being shipped offshore from the U.K., a recent report by the Environment Agency, a U.K. government department, has found that close to 97% of the inspected containers did not contain what the exporting company said it was shipping.

Meanwhile, the European Parliament’s ENVI Committee has given approval to a plan to ban landfilling of waste in Europe through the adoption of a report of MEP Gerben-Jan Gerbandy on the Resource Efficiency Roadmap.

“This proposal is really encouraging,” says Jan-Erik Johansson, programme director for resource efficiency at PlasticsEurope, an association of European companies involved in the plastics industry. “We believe that a landfill ban is a key to managing waste as a resource. Every year 10 million tons of plastics are still buried in landfills in Europe. These plastics could provide a resource for recycling and energy recovery and stimulate the creation of thousands of new jobs.”

Johansson adds, “We support the phasing out of EfW (energy from waste) for plastics that are economically and environmentally beneficial to recycle. However, this waste management option should still be favored for items whose treatment in energy recovery plants is more sustainable.”

The move to ban wastes, including plastics, from landfills has been supported by the European plastics association. In May 2011, Plastics-Europe called on policy makers to promote and enforce zero landfill of plastics by 2020. Seven EU member states, plus Norway and Switzerland, already landfill less than 10% of plastic scrap generated. However, 15 EU member states still landfill more than 60% of their end-of-life plastics. This is a result of poor enforcement of existing European legislation and landfilling still being the cheapest waste management option in many member states, says the group.

In parallel, the association representing European plastic manufacturers has been instrumental in launching initiatives to improve waste management practices in the U.K., Poland, France and Spain. Its key focuses are increased consumer awareness and a share of best waste management practices.

Meanwhile, total plastics production continues to grow. Recent data cited by PlasticsEurope find worldwide plastics production increased to 280 million tonnes in 2011, a 4% increase from 2010, when 270 million tonnes of plastics was produced. It also confirms the return of long-term growth after the economic crisis.

The five largest plastics types (polyolefins, PVC, PS, EPS and PET) account for about 70% of the total global demand, accorrding to figures from PlasticsEurope.

According to Wilfried Haensel, executive director of PlasticsEurope, “These estimates give us confidence as to the market growth and stability over the months to come”. From 2010 to 2016, global plastics consumption is expected to grow by an average of about 4% each year.”

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