Modest improvements across markets

The tumultuous plastic scrap market may have caught a bit of a breather. The conditions in the market seem to be steady to stable with a modestly upbeat outlook for later this year.

Many European countries are starting to see economic improvements, which also should help strengthen the plastics and plastics recycling industry.

A potential trouble spot, however, is the outlook for the Asian market, especially China. As a significant consumer of a host of plastic scrap grades, China’s buying patterns drive markets throughout the global plastic scrap chain.

One large plastic scrap broker notes that at the present time China has been buying fairly healthy blocks of most grades of plastic scrap with the exception of polyethylene terephthalate (PET). He notes that much of the recycled PET traditionally goes toward the clothing industry. But with the shifting dynamics of the manufacturing business, there is a shift toward more of this industry heading to lower-cost countries such as Vietnam.

Meanwhile, China is reporting that it has been seeing steadier growth in the domestic collection and utilisation of plastic scrap, which may slow the demand for plastic scrap from sources outside the country.

Speaking at the recently held Chinaplas 2014 Expo, Ning Hongtao, president of the Plastics Recycling Committee (PRC) of the China Plastics Processing Industry Association, suggested that the drop in imported plastic scrap resulting from last year’s Green Fence initiative was not as significant as many claimed. Out of last year’s 24.9 million tonnes of recycled plastics consumed in China, 30% was imported, with the EU being China’s largest overseas source, according to PRC data.

Within the Chinese plastics recycling industry, more than 40% of the total volume is handled by medium-sized or large companies that are mostly located in the coastal regions, according to Hongtao. China’s plastics recycling rate has been on a steady uptrend over the past five years, reaching 30% in 2013.

Hongtao added that the biggest challenge for the future of plastics recycling in China is to promote better regulated and larger recyclers. More than 3,000 companies in China are registered to import and process plastic scrap while the total number of plastics recyclers in China exceeds 10,000, he added.
 

Also adding to some potential concerns with plastic scrap markets in China have been the closures of a number of scrap plastic consumers, with the likelihood that additional plastic scrap operators may follow suit with shutdowns.

In regards to China, a large exporter of plastic scrap says that many of the challenges of Green Fence have dissipated recently. “Most companies have figured out what needs to be safely shipped to the country. And, he adds, for grades such as mixed plastics, including grades 3-7, “We are able to move the material to Hong Kong where it is then sorted and then shipped into China.”

Another source notes that his own firm had been able to ship the plastic scrap into China without any problems, even when inspections were tightest. One handler of high density polyethylene (HDPE) in Europe says there is healthy demand for the grade, especially in the U.S.

On the legislative front, several European-based plastics organizations are expressing concern about the EU’s call to ban the use of lightweight plastics carrier bags. The groups, PlasticsEurope, Europen and other industry associations point out that a ban on the product would weaken a recycling success story in the European Union.

“A ban on plastics bags is not the solution to tackle the problem of irresponsible disposal. The Parliament’s plan leads to a situation in which some countries ban plastic bags, while others allow them. Such a patchwork of rules is against the idea of the existing legislation and detrimental to the free movement of goods in Europe. Is this the beginning of the end of a success story?” says Karl Foerster, executive director of PlasticsEurope.

The European market for polyvinyl chloride (PVC) is seeing some modest improvements over the past several months. Supporting the steady growth, the association VinylPlus reports that 444,468 tonnes of recycled PVC was used last year, boosting the overall market for the material.

Despite the improvement, VinylPlus notes that EU regulations could have a significant impact on the recycling business in Europe because of the legacy additives in PVC scrap. This, the organization notes, could create a situation that would ultimately reduce the amount of PVC that can be recycled. This concern is valid for PVC recycling but also for many other recycled materials.

The plastics market in Italy is showing some modest improvements. According to the trade association Corepla, plastic scrap usage in the country has increased, despite an overall sluggish Italian economy.

The German recycling association BVSE reports that last year was fairly healthy for the plastics sector in Germany. Production increased by 1.7% to 19.8 million tonnes and sales by 5.8%.

Meanwhile, 12.2 million tonnes of plastic, which is 1.9% more than in the previous year were exported from Germany, and the country imported 8.5 million tonnes of plastic, an increase of 1.8%. The trade surplus amounted to 3.7 million tonnes, or €8.2 billion.

Despite these positive numbers, Dr. Josef Ertl, chairman of Plastics Europe Germany, notes there are plenty of risks on the horizon. He sees the increasing energy costs in Germany and the uncertainties surrounding the political crisis in Ukraine as creating uncertainty for plastic.

The recycling market in Poland also is improving. At a recently held conference in Warsaw, representatives discussed some of the opportunities available for recyclers.

While overall plastics figures in Poland are growing, a big challenge is the lack of ample plastics recycling in the country. In his remarks at the conference, Antonino Furfari, advocacy manager of the Plastics Recyclers Europe, noted that despite greater attention to the environment, as much as 62% of the plastics stream in Poland is landfilled.

To remedy the situation, attendees at the conference offered a number of initiatives included increasing environmental awareness in the country, improving the collection system and introducing higher landfill fees.

Alexandre Dangis, managing director of the EuPC (European Plastics Converters) underlined the need for the Polish plastics industry to further research and develop new technologies to maintain quality standards within the country.