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The price of new plastic materials has dropped and the recycling market has been squeezed again
Time: 2020-5-11 16:41:45 Source:绿凯思科GETRECYCLING Author:GET营销中心 Hits:157

According to foreign media plastic recycling updates, the new crown epidemic has intensified the competition in the existing plastic recycling market, making the price of recycled plastic fluctuate, and causing uncertainty on how end users can fulfill their sustainable commitments.


In the past few years, the recycling market of almost all materials has been challenged due to changes in overseas demand. Tariffs on recycled materials and other goods, as well as ongoing disputes in the freight market, put additional pressure.



Now, the new coronavirus epidemic has increased health and safety concerns, job shortages and a general slowdown in manufacturing.


"This is every possible challenge you can imagine," Joe Pickard, chief economist at the American Institute for the recycling industry, said last week at a webinar organized by several recycling stakeholders. He said the current situation may be the most difficult period for many recycling companies.


For plastics, the impact of coronavirus has been accompanied by a historic drop in oil prices, which means that new plastics may be much cheaper than recycled resins for the foreseeable future.


"We're going to see a test of sustainability and development goals for some brands," said Joel Morales, senior director of polyolefin Americas at IHS Markit, a market research firm



Plastic recycling companies are facing similar pressures from other industries: they are adjusting workplace safety procedures to prevent the proliferation of covid-19, adjusting their operations to changes in supply and demand, and seeking federal financial assistance programs.


But according to oilprice.com, they also face an additional obstacle, namely, the free fall of crude oil price, so that the price of some oil futures contracts was negative last month, "making American oil not only worthless, but also a liability".


The sharp drop in oil prices is the result of a decline in global oil demand caused by the coronavirus and a surge in production following differences between major oil producing countries. Although major oil producers agreed last month to cut production, the oversupply continued until the end of April. Only in recent days has the market rebounded.


As petrochemical products are important raw materials for plastic production, the pricing of new plastic materials often follows the price of oil and natural gas. The pricing of recycled plastics follows the trend of new plastics.


"The premium we have to be willing to pay for recycled PET will be huge and higher than we expected," said tison keel, head of pet operations at PTA & EO derivatives at IHS Markit.


Kiel explained that the low price of new plastics means that end users face challenges in choosing to use recycled plastics, especially PET.


"It will be very difficult," he said. You have too many raw materials and too many products. Your crude oil price is very low, which will further reduce the price of oil. "


According to IHS Markit, the recycled plastics market will be under pressure from commodity prices for at least the next two years. During this period, "even in the most optimistic scenario, our forecast crude oil price will not return to the level of the past few years," Kiel said.


In addition, the price of recycled plastics cannot fluctuate as easily as the price of new materials. Whether the price of new plastics is high or low, the cost of producing high-quality recycled plastics remains basically the same, Kiel explained.



The situation of pet is similar to that of PE and pp. the price of raw materials has dropped to a level that has not been touched in more than ten years, but the cost of producing recycled resin remains unchanged.


"Before that, we thought the environment for recyclers was challenging, now it's even more challenging," said IHS Markit's Mr Morales


Before the influence of coronavirus, the production capacity of polyethylene and polypropylene new materials has been greatly improved. But now for PP and PE, "the new crown epidemic has made demand in the global market much lower than expected," Mr Morales said. This means that resin producers' margins will be challenged, he said.


However, in some markets, the new crown epidemic has led to an increasing demand for resins.


Morales pointed out that the plastic bag ban had been delayed or suspended in many communities across the country, explaining that it was another unexpected change in the plastic market. Affected by the ban, the market for plastic bags was expected to decline by 5% to 8%, but now the ban is postponed and the plastic bag market is "booming" again, Morales said.


"The recent investment in disposable plastics will increase, but we are not sure how long it will last," Morales said


IHS forecasts that sustainable development measures will play a new role in the future, but it is not clear whether this will restart later this year or whether priorities will change until the impact of covid-19 has been long gone.



The plastics recycling sector is already facing supply difficulties and experts say the pet currently collected is not enough to meet the expected demand. Kiel noted that efforts are being made to improve recycling and that more attention has been paid to this area in the past 12 months.


But that momentum has stopped, and in some cases, the collection of plastic recycling has been slow by suspending roadside projects and redemptions of container deposits.


"Covid-19 is really a problem for the project," keel said. As a result, more and more pet enters the landfill. " Kiel said. He predicted that it would be difficult to restore pet collection to the original level in the short term, let alone to a new level.


Kiel said recycling stakeholders need to further promote public concern about the importance of plastic recycling as a way to reduce plastic and marine waste.


In addition to collection, compared with the original production, the recycling capacity is also insufficient. Nina Butler, chief executive of more recycling, highlighted new data showing that post consumer polyolefin recycling plants recycle only 5% of the material produced by the 10 largest original polyolefin producers each year.


This shows a clear need for greater recycling capacity, Butler said. But in the current environment, Mr Butler said, it was a difficult sales target to achieve: lower recycling, fewer markets, oversupply of raw materials, and "real evaporation" of value propositions.


Butler said the entire recycling system, from collection to final market demand, felt squeezed. But she said the current conflict was an opportunity for stakeholders working on these issues to redouble their efforts.


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