2019 was a challenging year for the plastics recycling industry. The US/ China trade war, stricter legislation and other global political issues combined to create a climate that may well lead to a recession.
The many uncertainties in 2019 meant a drop in confidence in the economy, which has led to a global reduction in demand for commodities. A recovery in that demand was anticipated for some of our materials after the holiday months but this turned out to be much weaker than had been hoped. This put great pressure on prices, which fell by between 30% and 50% for general commodity plastics and engineering plastics.
Last year, many other Asian countries joined China in halting imports of plastic waste, leading to a drastic decline in exports and a significant drop in prices for these qualities. For many businesses, this has meant that it is no longer worth separating materials and a great deal of plastic is now going to local incinerators.
Owing to the stagnation of the Chinese economy, sales of European recycled material into Asia are under pressure, resulting in relatively large stocks for recyclers within Europe.
The European automotive industry is also in a bad way, with production of new cars thought to have dropped to their lowest levels since 1997. This malaise has put many suppliers of recycled material under increasing pressure because the recycling industry is a major supplier to the automotive sector.
As discussed in detail at our meeting in Budapest last October through our guest speaker Rob de Ruiter of TNO, chemical recycling is the new hot topic – especially for petrochemical companies. Following Sabic’s announcement of a venture in the Netherlands, a desire to develop chemical recycling projects has also been confirmed by BASF, Dow Chemicals, Petronas and LyondellBasell. Most virgin resin producers are conducting work in this field but they still have to demonstrate viability in terms of economics and industrial scale-up.
We witnessed the development of several new trends in 2019. For example, large European waste collectors have been taking over many recycling companies in order to process their own collected plastic waste. In addition, these companies have been looking to collaborate with the plastics industry to bring new circular products into the market. Meanwhile, European recycling companies have been investing heavily in washing and extrusion lines.
The increasing interest in recycling taken by major multi-nationals was illustrated at our meeting in Singapore last May where Unilever’s Aurore Belhoste spoke about her company’s initiatives in its pursuit of deriving 25% of its plastic packaging from post-consumer resins by the year 2025. Some of its products are already in packaging with a 100% recycled content and the plan that others will follow.
Partly in response to the tidal wave of anti-plastic sentiment, many consumer product companies have started up their own programmes for incorporating more recycled material into their products by means of a circular concept. Also on a positive note, they have been forced to think about the recyclability of their packaging as early as the design stage.
The plastics recycling market is currently in a transition phase where the existing linear business approach is being replaced by new circular
models. We will have to accept that old models are no longer sustainable and that the shipping of large amounts of plastic waste may cease to happen in the future. But this transition from the comfort zone of the familiar towards the less familiar must not paralyse us as an industry; there are opportunities galore for us to become part of a new circular economy. One of the key ingredients for the development of the circular economy is collaboration – no single government or business is large enough to operate alone in this transition phase.
At first glance, some of the developments seen in 2019 may not seem to bode well for us, but we must surely dwell on the positives and on the opportunities that change brings. Price fluctuations and cooling economies have always been with
us: there is nothing new about them. What is new, however, is that the recycling industry is taking on its role in the circular economy and is co-operating with the producers of finished products in order to create new value chains, thus offering us huge potential as an industry.
So our new mantra should be: Think Global, act Local.