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Staging a Comeback

Features - Commodity Focus

With quality improving and recycling targets going up, secondary plastics markets look promising for the months ahead.

Lisa McKenna October 30, 2013

European scrap plastic markets appear to be making a slow but sure recovery. That is the apparent finding of members of the industry association PlasticsEurope, based in Brussels.

In October 2013 the trade group representing European plastics manufacturers released its latest annual industry report, “Plastics—the Facts 2013,” during a press event held at the 2013 K Show, an international trade show for plastics, held in Düsseldorf.

The report indicated that about 4% more post-consumer plastics were recycled or recovered for energy in 2012 than in the year before, up to a level of about 62%. Additionally, world production of plastics has increased around 2.8% to a level of 288 million tonnes in 2012.

While European production and demand fell by about 3% each, according to the report, recycling and energy recovery of plastic scrap in the region increased by about 5% and 3%, respectively.

“Confronted with a changing and often difficult economic context, the European plastics industry has shown great resiliency and adaptability,” says Dr. Wilfried Haensel, executive director of PlasticsEurope. “However the lower prices of energy and raw materials in other regions of the world are a substantial challenge for our industry in Europe,” he adds.

Other plastics industry sources say the markets for secondary plastics are promising and the industry appears to be headed in the right direction.


Shortage Situations
Demand for plastic scrap appears to be healthy, with brokers and collectors describing a shortage of plastic scrap in Europe. A portion of post-consumer plastics there are being diverted to energy-from-waste plants, to the dismay of reprocessors and brokers.

Dr. Michael Scriba, CEO of MTM Plastics GmbH, based in Niedergebra, Germany, agrees that more municipalities are directing household plastic to incineration rather than to recycling, and he points out it’s not only municipalities that are to blame for this trend: Economic factors are also at play.

“Incineration is far too cheap on the German market due to massive overcapacities not only in municipal incineration but also in industrial energy from waste plants,” he says. Scriba says that with the current low prices being charged for incineration—around £50 per tonne—there is no economic incentive for material recovery facilities (MRFs) to spend time and money to sort plastics for recycling. He says this price issue exists in Germany as well as in the Benelux region, Switzerland and Scandinavia.

“As far as countries with lesser or no capacity in incineration are concerned, the problem is the same,” Scriba adds, “because landfilling is still common practice and extremely underpriced.”

A European Perspective on plastics

PlasticEurope’s recently released report, “Plastics—The Facts 2013,” contains many details about the state of the industry throughout Europe. Published annually, the document includes statistics on plastics production, demand and waste management and how these differ from country to country. Overall the most recent report seems to tell a story of recovery.

Patrick Thomas, president of Brussels-based PlasticsEurope and CEO of Bayer MaterialScience, observes, “2013 could well be viewed as a year of stabilization in the European plastics sector, and in 2014 industry predictions suggest a slight recovery; although we will still be far from pre-crisis level.”

According to the report, the region comprising the European Union plus Norway and Switzerland accounts for about 20% of global plastic production, making it the second largest plastic-producing region, behind only China, which produces 24%.

In Europe, plastic production dropped 3% and demand fell 2.5%, attributed largely to decreases in demand for consumer products and automobiles. The association notes, however, that there are differences in plastic demand within the Western and Central European regions. Demand in Western Europe dropped by 3%, while demand in Central Europe increased by 0.6%.

According to the report, post-consumer plastic scrap generation for the EU27 nations plus Norway and Switzerland remained at the same level, but recycling increased about 5% to 26.3% (which represents 6.6 million tonnes), and energy recovery increased by about 3% to 35.6%.

However the situation varies significantly by country, the association says. Some countries recycle or recover virtually all of the post-consumer plastic scrap generated (for example Switzerland, Germany and Austria), while others are recovering or recycling less than 30%. To view the new report, “Plastics—The Facts 2013,” visit www.plasticseurope.org.

Even in the United Kingdom, where energy from waste (EfW) continues to face a public perception problem, some post-consumer plastic still gets diverted to recovery, says Stuart Foster, CEO of the UK-based plastics industry organization Recoup. The nonprofit group consists of members from throughout the supply chain, including polymer producers, brand owners, retailers, local authorities, waste management companies and reprocessors.

Foster says in some European countries there tends to be a more standardized approach to recycling as well as greater public acceptance for recovering EfW plastic.

“Elsewhere in Europe there’s an overcapacity in energy from waste,” he says. And, he notes, some UK waste material has been processed in European EfW plants. “They’ve got EfW capacity in Europe and have a requirement to utilize these facilities, including using waste from the UK, where it makes financial sense.”

But when post-consumer plastic gets diverted in this way, it can lead to shortages. Foster notes that in both the UK and in Europe there is a shortage of plastics to meet high reprocessor demand, particularly for bottles at the moment, as well as clean films from the commercial sectors. He also says plastic that can be recycled should be recycled, wherever viable.


Green Fence Factors
China’s Green Fence initiative implemented in February of 2013 has undeniably affected the markets for plastic scrap throughout the year. The Chinese policy adopted to increase the quality levels of imported secondary commodities has arguably led to greater good for the industry, inspiring recyclers to pay more attention to quality, many processors and traders say.

Foster says the Green Fence has encouraged MRFs and plastic reclamation facilities (PRFs) to consider more sorting and to strive for higher quality irrespective of the end market destination, but it also has exposed the need for further European market development for some plastic fractions to prevent an over-reliance on export.

Likewise, Surendra Borad, chairman of plastic collections and trading firm Gemini Corp., Antwerp, Belgium, says the collection and quality of recycled plastics in Europe has actually improved in the last few months as a result of issues arising from China’s Green Fence policy.

“Recyclers are taking good care to make sure that plastics do not get contaminated,” says Borad, who also serves as chairman of the Bureau of International Recycling’s Plastics Committee, a role he has held since 2006.

On that point, Scriba agrees. “For our raw materials, the availability of high-quality plastics at reasonable prices has improved due to the Chinese Green Fence policy,” he says, noting that those materials rarely appeared on European markets previously.

Borad also says quality levels have improved in recent years among European recyclers, and he notes that local recycling has come a long way.

“A lot of materials are being recycled in the European markets like PET (polyethylene terephthalate) bottles, HDPE (high-density polyethylene) bottles and thick LDPE (low-density polyethylene) film,” Borad says.

In terms of trade flows, the effects of the Green Fence also served to open up other markets. Scriba says that in recent weeks, export market flows have reversed somewhat from the beginning of 2013. “Exporters seem to have redirected exported plastic scrap streams to countries neighboring China, like Indonesia and Malaysia, Vietnam and the Philippines,” he says. He notes that because recyclers in Europe face such comparative restrictions as minimum wage requirements, more bureaucracy and rising environmental requirements, recyclers in importing countries are usually able to pay higher prices for their feedstock.

In terms of exports to China, lower quality plastic scrap is no longer imported there, says Borad. However, he states, “Chinese customers are buying good-quality scrap.” This situation is an effect of the Green Fence, he adds.

A few of the grades in demand throughout Europe and beyond, Borad says: high-quality LDPE clean film and thick films as well as injection-grade polypropylene copolymer.

Similarly, Foster says that even though China’s Green Fence may be restricting exports of lower quality secondary plastics, “by and large they have still taken a proportion of UK plastic scrap together with other far eastern markets.”


Ambitious Targets
As the PlasticsEurope report indicates, there is room for improvement in the amount of plastics that can be recycled in Europe. In 2012 about 38% of post-consumer plastic scrap was landfilled in Europe, while about 34% were sent for each recycling and energy recovery. Of the plastics that get recycled, about 82% comprises plastic packaging products, according to PlasticsEurope.

Many industry insiders have increasingly called for higher recycling rates throughout Europe and the UK. Foster says the current recycling target for plastic packaging in Europe has been fixed at 22.5% for some time.

“By 2017 in the UK, we need to recycle about 42% of plastics packaging, but this may well be surpassed by more ambitious EU targets and policies in future years,” he says. He notes that in 2012 about 25% of plastic packaging was recycled in the UK. That accounted for about 600,000 tonnes of material. That amount is expected to increase to 1.2 million tonnes in 2017, Foster says. “The UK needs to effectively double the amount of plastic we are collecting and recycling within a five-year period,” he says. Applying the current collection ratios, he says, about 70% of that material is likely to come from household collections.

The biggest jump, Foster says, is expected to be in recycling household pots, tubs, trays and tubes. Currently, only about 20% of this rigid, non-bottle material is being collected for recycling in the UK, and questions remain over sustainable and auditable end markets for some of the plastics in this fraction, Foster says. Over the last five years, Foster notes, the UK collection of household pots, tubs and trays has gone from trace amounts to about 125,000 tonnes, in part because of consumer demand for recycling and the fact that service providers and MRFs can accept and handle most of these materials. But, he cautions, while some of this material is perfectly recyclable, the non-bottle plastics are a complex mix of polymers. For instance, some food packaging has multiple layers or additives that can make recycling difficult or impossible.

Most importantly, Foster says, is the fact that plastic can be a misleading term when it comes to recycling.

“Plastic is popular for so many applications, but it is these wide-ranging applications and unique characteristics that can also create potential issues to finding practical and cost-effective recycling solutions,” he says. “However by working in collaboration with the entire supply and recycling chain, many of these challenges can be overcome.”

 


The author is an editor of Recycling Today Global Edition and can be reached at lmckenna@gie.net.

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