Will Europe Run Short of PET Scrap?

Thomas Probst, a plastics recycling industry consultant in Germany, recently took part in a question and answer session with BVSE, an association of recycling companies in Germany. In the Q&A, Probst talked about the challenges facing the German plastics recycling industry.

BVSE: Dr. Probst has the economic crisis hit the PET recycling?

Probst: It's unfortunately so. PET recyclers have had to cope with a massive price collapse. We have been attempting to find a bottom, but from the level that we had before the crisis, we are still far away. Prices for recycled PET [are] still relatively low, but availability of scrap will be limited for new goods. In addition, however, are also structural problems that have to do less with the current economic crisis.

BVSE: What are the structural problems companies have to fight?

Probst: We are struggling with overcapacity in Europe. We believe that recycling capacity in Europe lies somewhere between 1.24-1.37 million metric tons per year. The total amount collected, however, is only about 1.3 million metric tons. This quantity is not only kept within Europe, but between 210,000 and 390,000 metric tons are exported, which greatly exacerbates the problem.

BVSE: But has the economic crisis also led to a decline in exports?

Probst: The export of recycled PET bottles has actually declined. However, the trend is clear: The share of exports will increase in the future.

BVSE: Does this make you worried?

Probst: Yes, this trend is not good. The problem is not that there is competition for the secondary PET bottle waste. The problem is that competition is not fair.

BVSE: Should there be an export ban?

Probst: No. But we have a problem that not only affects PET recyclers. It's not just that the working, social and environmental conditions, such as in China, are at a lower level, and the local recycling industry has a sharp comparitive advantage. China actively intervenes in markets, thus controlling its raw materials. That does not make the situation easier for the recycling industry in Europe. So we have to search here for a European dialogue and work for comparable initial conditions.

BVSE: And what is the situation in Germany?

Probst: Germany is in a tough situation. Since the bottles collected are of high quality, competition for the material is fierce among German recyclers. They not only have to compete with Asia, but also with European companies for material.

BVSE: What are the consequences?

Probst: The German PET recycling industry has been struggling. In the last two years now, some companies have left the market or simply had to file for bankruptcy.

BVSE: But we hear again and again about the intention to build new recycling capacity?

Probst: Anyone can try. The fact is, however, that any new investment in this area will lead to more excess capacity and recovery and market distortions.