Mike Boswell looks at the market for sustainable resins, and the current state of play for prices.
Reduce, reuse, recycle (and recover) have become the clear mantra for sustainability. In the polymer sector much has already been done in the area of reduce where thinner, lighter structures have been supported by the economics of yield and productivity, plastics also lends itself well to reuse in the form of reusable transit packaging, however the situation becomes more challenging when it comes to recycling; where apart from a few notable exceptions including PET, HDPE Dairy applications and uPVC from the construction sector, the majority of mechanical plastics recycling is often downcycling. Downcycling tends to create a lower price expectation as the material qualities are typically degraded when compared to the virgin polymers from which they are derived. With exception of rPET, recycled polymers are typically sold at a discount to virgin polymers and in any event the prices are related and herein lies a further issue as prime virgin polymers have high fixed cost, low variable cost economics whereas the opposite typically applies with recycled polymers and inevitably the economics of recycling polymers is less attractive whenever virgin polymer prices enter the lower regions of the price cycle. This dilemma is clearly publicised such as in the PIE daily newsletter published on October 18th with the following headline:
Standard recyclate October 2022: Further discounts on all grades / Weak demand prevents transfer of high energy costs / Recyclers shut down plants / Downward pressure continues
Virgin polymer prices also impact on the demand for recycled materials as many converters happily interchange; typically consuming more recycled material when virgin polymer prices are high and less when virgin polymer prices are more affordable. This phenomenon points towards the concept of economic sustainability, where business will choose profit over the environment, particularly when hard pressed by inflationary factors such as labour and energy cost inflation
The following graph depicts the behaviour of virgin LDPE and various recycled grades in Euro/tonne over the last price increase cycle. The price movement for the ‘translucent’ rLDPE almost doubled over the period, which is an indication of the economic desire to substitute prime virgin with a lower cost alternative, and whilst the other qualities did not experience the same inflation, prices increased significantly, until just after the point where virgin prices start to fall.
As the current situation would appear to favour the economy, what can be done to restore the balance in favour of the environment? At a superficial level many would argue that the best solution is to apply legislation in the for of taxes and/or subsidies to ensure the viability of mechanical recycling over the medium and long-term.
But this does not address the issue of downcycling and here we await the developmentof new technologies such as the nascent Advanced (Chemical) recycling which will enable the circularity of plastic products which cannot berecycled by other means.Whilst the journey to sustainability in polymers is challenging, the journey has started and there is no doubt that innovation will drive futuresuccess in all forms of sustainability.