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[The price of new plastic materials drops, and the recycling market is squeezed again]
Release date:[2020/5/11] Is reading[50]次

According to foreign media Plastic Recycling Updates, the New Crown epidemic has intensified competition in the existing plastic recycling market, making the price of recycled plastics volatile and causing uncertainty about how end users can fulfill their sustainable commitments.


In the past few years, due to changes in overseas demand, almost all material recycling markets have been challenged. The tariffs imposed on recycled materials and other commodities, as well as the ongoing disputes in the freight market, have brought additional pressure.


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


"This is every possible challenge you can imagine," Joe Pickard, chief economist at the American Institute of Waste Recycling Industry (ISRI), last week in a network hosted by several recycling stakeholder organizations Said at the seminar. He said that the current situation may be a particularly difficult period for many recycling companies.


For plastics, the impact of coronaviruses is accompanied by a historic decline in oil prices, which means that in the foreseeable future, new plastic materials may be much cheaper than recycled resins.


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


PET heat is not reduced


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


However, according to OilPrice.com, they also face an additional obstacle, namely the free fall of crude oil prices, so that the price of some oil futures contracts last month was negative, "making US oil not only worthless, but Kind of debt ".


The plunge in oil prices was the result of a decline in global oil demand due to coronaviruses, and a surge in production following divergences among major oil-producing countries. Although major oil-producing countries reached an agreement on production cuts last month, the situation of oversupply continued until the end of April. Only in recent days has there been some rebound in the market.


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 pricing of recycled plastics follows the trend of new plastic materials.


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


Kiel explained that the low price of new plastic materials means the challenge of ensuring users choose to use recycled plastics (especially PET).


He said: "It will be difficult. You have too many raw materials and too many products. Your crude oil price is very low, which will further lower oil prices."


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 under optimistic conditions, our predicted crude oil prices will not return to the levels of the past few years," Kiel said.


In addition, the price of recycled plastics cannot fluctuate as easily as the price of new materials. Kiel explained that regardless of whether the price of new plastic materials is high or low, the cost of producing high-quality recycled plastics remains basically unchanged.


Sustainability measures may be suspended


The situation of PET is similar to the situation facing the PE and PP markets. The price of raw materials has fallen to a level that has not been touched in more than a decade, but the cost of producing recycled resins remains unchanged.


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


Before the impact of coronavirus, the production capacity of polyethylene and polypropylene new materials has been greatly improved. However, Morales said that for PP and PE, "the new crown epidemic has made the global market demand much lower than expected." He said this means that the profitability of resin manufacturers will be challenged.


However, in some markets, coronaviruses are driving the growing demand for resins.


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


Morales said: "The one-time use of plastics will increase capital investment in the near future, but we are not sure how long this situation will last."


The IHS predicts that sustainable development measures will return to play in the future, but it is unclear whether this will start again later this year, or whether priorities will change until the impact of COVID-19 is long past.


Suppress progress in infrastructure construction


The plastics recycling department has already faced supply difficulties. Experts say that the PET currently collected is not enough to meet the expected demand. Keel pointed out that efforts are currently being made to improve recycling. In the past 12 months, people have paid more attention to this area. But this momentum has stopped, and in some cases, collections are going backwards by suspending roadside projects and redemption of container deposits.


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


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


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


Butler said this shows a clear need for greater recycling capacity. But Butler said that in the current environment, this is a difficult sales target: low recycling, fewer markets, oversupply of raw materials, and value propositions "really evaporating."


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


Source: China Plastic Online


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