[Plastic] The price of new plastic materials has fallen, and the recycling market has been squeezed again

According to foreign media Plastic Recycling Updates, the new crown epidemic has intensified competition in the existing plastic recycling market, causing the price of recycled plastic to fluctuate, and creating uncertainty about how end users fulfill their sustainability commitments.

In the past few years, due to changes in overseas demand, the recycling market for almost all materials has been challenged.

Now, the pandemic of the new coronavirus has increased people's health and safety concerns, job shortages, and a general slowdown in manufacturing.

"This is every possible challenge you can imagine," said Joe Pickard, chief economist at ISRI, in a network hosted by several recycling stakeholder organizations last week.

For plastics, the impact of the coronavirus has been accompanied by the historical drop in oil prices, which means that in the foreseeable future, new plastic materials may be much cheaper than recycled resin.

Joel Morales, senior director of the polyolefins Americas business of market research company IHS Markit, said: "We will see a test of the sustainability and development goals of some brands.

PET continues to grow hot

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

However, according to OilPrice.

The plunge in oil prices was the result of a decline in global oil demand due to the coronavirus and a sharp increase in production following disagreements among major oil-producing countries.

Since petrochemical products are important raw materials for plastic production, the pricing of new plastic materials often follows the prices of oil and natural gas.

"The premium we are willing to pay for recycled PET will be huge and higher than we previously expected," said Tison Keel, director of PET operations at IHS Markit's PTA&EO Derivatives Company.

Keir explained that low-priced new plastic materials mean the challenge of ensuring that end users choose to use recycled plastics (especially PET).

He said: "It will be difficult.

According to IHS Markit, the recycled plastics market will be under pressure from commodity prices for at least the next two years.

In addition, the price of recycled plastics cannot fluctuate as easily as the price of new materials.

Sustainability measures may be suspended

The situation of PET is similar to the situation faced by the PE and PP markets.

Morales of IHS Markit said: "Before this, we thought that the environment facing recyclers was challenging, but now it is even more challenging.
"

Before the impact of the coronavirus, the production capacity of new polyethylene and polypropylene materials had been greatly improved.
But Morales said that for PP and PE, "the new crown epidemic has made global market demand much lower than expected.
" He said that this means that the profit margins of resin producers will face challenges.

However, in some markets, the coronavirus has prompted a growing demand for resin.

Morales pointed out that the plastic bag ban has been delayed or suspended in many communities across the country.
He explained that this is another unexpected change in the plastics market.
Morales said that due to the plastic ban, the plastic bag market was originally expected to fall by 5% to 8%, but now the delay of the plastic ban has been postponed, and the plastic bag market is "booming" again.

Morales said: "The recent capital investment for single-use plastics will increase, but we are not sure how long this situation will last.
"

IHS predicts that sustainability measures will come into play again in the future, but it is not clear whether this will restart later this year or whether the priorities will change until the impact of COVID-19 is long in the past.

Restrain the progress of infrastructure construction

The plastic recycling sector is already facing supply difficulties.
Experts say that the currently collected PET is not enough to meet the expected demand.
Keel pointed out that efforts are currently being made to improve recycling, and people have paid more attention to this area in the past 12 months.
But this momentum has stopped, and in some cases, collections are regressing through the suspension of roadside projects and container deposit redemptions.

"COVID-19 really caused trouble for the project," Keel said.
As a result, more and more PET enters landfills, and Keel said that he expects it will be difficult to restore PET collection to its original level in the short term, let alone raise it to a new level.

Keir said that recycling stakeholders need to further promote the public's attention to the importance of plastic recycling as a way to reduce plastic waste and marine debris.

In addition to collection, compared with the original production, the recovery capacity is also insufficient.
More Recycling CEO Nina Butler (Nina Butler) emphasized the new data, the data shows that the amount of material recycled by the post-consumer polyolefin recycling plant is only the amount of material produced by the 10 largest virgin polyolefin producers.
5%.

Butler said this indicates a clear need for greater recycling capacity.
But Butler said that in the current environment, this is a sales target that is difficult to achieve: low recycling volume, small market, oversupply of raw materials, and the value proposition "really evaporating.
"

Butler said that the entire recycling system, from collection to final market demand, feels squeezed.
But she said that the current conflict is an opportunity for stakeholders who are committed to resolving these issues to redouble their efforts.

(Keyword: Plastic Recycling)