Lower crude oil and natural gas prices have led to declining prices for virgin plastics and secondary plastics alike. In some cases, prices for secondary plastics have exceeded those of virgin plastics, as sources in the USA noted in the late summer.
Patty Moore of Moore Recycling Associates, Sonoma, California, United States, says PET (polyethylene terephthalate) pricing has been slower to recover than other recyclables from declines seen at the start of 2015. She attributes this to the global oversupply of virgin PET, adding that pricing for recycled PET will “remain a little soft until global oversupply is normalized.”
According to PetroChem Wire, the entire PET industry in the U.S. is showing signs of weakness, with recycled PET prices declining in late September and early October. The situation could grow worse for recyclers in the U.S. as the M&G Chemical plant in Corpus Christi, Texas, is scheduled to start producing PET in early 2016.
Lower prices for recycled plastics mean that plastics reprocessors will have to tighten their margins and better control their stock, says Stuart Foster, CEO of RECOUP, a plastics recycling organisation that says it promotea good practices, provides information and aids the sustainable development of plastics recycling in the United Kingdom.
He comments, “Oil prices do not change the practical recyclability potential of any plastics and are just one of the financial influences on plastic reprocessing. Just as important is the capex and processing costs, specification of output, feedstock supply levels and quality and, as with any business, managing margins and costs to maintain the activity.”
Stuart says the U.K. has been “comfortably ahead” of European Union recycling targets for plastic packaging “for some time now.”
However, he continues, “The financial drivers need to exist for manufacturers to actually use recycled instead of virgin plastics in their products, but there are more brands and manufacturers promoting sustainability agendas than ever before, including recycled content considerations for their products.”
Stuart adds, “I expect some are having their resolve tested when the finance and the sustainability policies provide different answers to the question: Should I use recycled content?”
Despite this scenario, demand for recycled plastics persists. “European demand for scrap plastic has remained relatively consistent despite the drop in virgin prices experienced throughout the course of the year,” Paul Mayhew of MBA Polymers, Worksop, U.K., says.
He adds, “One of the key challenges for European plastic reprocessors is to ensure sufficient supply of raw material when market conditions tend to favor the export market.”
Mayhew says processing costs in the Far East are lower in most cases, allowing buyers in that region to offer more competitive prices for material. “Demand for recycled plastics is still largely driven by the Far East and in particular China, which has seen a drop in demand over the past three months due to the falling price of virgin material.”
Rakesh Surana of Antwerp, Belgium-based Gemini Corp. N.V., says overall demand for recycled plastics is low in light of the global economy’s present state. “We think this will continue to stabilize for the rest of the year,” he says, forecasting an increase in the first quarter of 2016.
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