Mechanical recyclers are increasingly exploring the use of mixed-polyolefin waste as a feedstock amid record high recycled polyethylene (R-PE) and recycled polypropylene (R-PP) pellet prices, and structural shortages of mono-sorted R-PE and R-PP waste.
New sorting capacity from waste managers and recyclers, targeting the use of mixed-plastic polyolefin waste, is due to come onstream in 2022.
This is not the first time mechanical recyclers have explored mixed-plastic waste as a feedstock, with previous attempts unsuccessful because low yields and the complexity of sorting material made the process economically unviable.
Nevertheless, ongoing tight supply of mono-material bales and growing demand for recycled material have shifted the economic feasibility of using mixed plastic waste significantly.
With sharp increases in single material bale prices across 2021, ongoing structural shortages, developments in sorting technologies, and firm R-HDPE and R-PP pellet values (currently at record highs in Europe), using mixed polyolefin waste as an input has become economically viable. This is particularly true given the shortages are expected to last into the mid-term.
Mono-sorted bale prices across all major polymers have risen sharply in the past 12 months, with prices at minimum doubling, and, in the case of high density polyethylene (HDPE) mixed-coloured bales more than quadrupling in price.
With a number of new packaging projects scheduled for 2022 - due to the ongoing sustainability pressure on fast moving consumer goods (FMCG) brands - mono-sorted HDPE and PP bale availability is expected to remain low throughout 2022.
This has increased demand for mixed-polyolefin bales and added upward pressure on prices that have traditionally been involatile.
Rigid 84% mixed-polyolefin spot prices are currently at up to double yearly contract values due to tight supply of material. Supply has tightened following growing buying interest from the mechanical recycling sector amid downstream material shortages.
84% rigid mixed polyolefin bales are the most common mixed polyolefin bale in the German waste system, and are typically referred to as '323' due to their classification in Der Greenpunkte collection system. Contract prices - which in many cases have been set on an annual or bi-annual basis in 2020/2021 - are currently at €250-300/tonne ex-works.
Meanwhile, spot prices for additional volumes are trading at over €500/tonne ex-works Germany due to a lack of availability. Some players said that it was near impossible to source additional volumes in the market currently - a situation which would have been unimaginable just a few short years ago.
The growing interest from mechanical recyclers in mixed polyolefin waste bales has caused pyrolysis-based chemical recyclers to explore the use of PVC-free RDF bales for use in pyrolysis processes, to avoid competing with mechanical recyclers.
They are also exploring the use of flexible mixed-polyolefin bales with varying minimum polyolefins content so as not to compete with the mechanical recycling industry.
Post-consumer flexible mixed polyolefin bales are harder to sort, separate and recycle than rigid grades
One challenge facing pyrolysis-based chemical recycling start-ups is the sheer number of different input waste types that can potentially be used in the process, which typically requires extensive testing of different types of input waste to see which will deliver within specification at lowest cost.
70% mixed-polyolefin, 90% mixed-polyolefin, or RDF reject bales are commonly used, depending on what sorting facilities chemical recyclers have on site.
Some pyrolysis-based chemical recyclers are unwilling to source bales at a positive price due to the cost of the process, coupled with the fact that the majority of chemically recycled material is currently sold under fixed-price tolling agreements.
With growing demand from pyrolysis-based chemical recyclers and the burn-for-energy sector - particularly from the cement sector - there is a growing bottleneck for refuse derived fuel (RDF) bales. This has meant that while historically waste managers paid to have RDF bales removed, prices now attract a positive value.
With a number of new projects due to come onstream in 2022, consumption is expected to further increase in 2022.
As a result of planned new projects, 2022 volume offtake agreement negotiations remain ongoing. Typically, discussions would finalise in September/October, so this year’s protracted talks are causing some players concern over security of supply.
At the same time, political pressure against incineration and burn-for-energy is mounting, which is diverting some waste streams away from burn-for-energy.
There are expectations that this political pressure could result in higher gate fees, resulting from legislative measures, in the next few years.
Gate fees are a major factor in prices for all reject bales, but particularly for unsorted waste bales from material recover facilities (MRFs), which are typically priced based on a saving against gate fee.
ICIS will launch a new mixed plastic waste pricing service on 23 November amid the increased volatility and changing shape of the mixed plastic waste sector. The new service will cover European prices for mixed-polyolefins waste bales, reject RDF bales and reject materials recovery facility (MRF) reject bales.