With 2023 coming to an end, reflections about the year past and wishes for the year to come are in order. It has not been an easy year for the recycled polymer industry, particularly in Europe, where prices have been under severe pressure for the entire year. R-PET has been particularly affected. Weak demand caused by the economic stagnation throughout Europe, competition from the falling cost of virgin plastics, and cheaper imports of Asian material have been the main culprits. Industry bodies have warned plant closures may be unavoidable unless urgent measures are taken.
The beginning of the new year is unlikely to bring respite, according to S&P Global. In a Commodity Insight published at the end of November, the analyst firm predicted the recycled polymer market will experience ongoing sluggishness during the first quarter of 2024, exacerbated by the seasonal dip in buying appetite during winter.
Lack of cost-competitiveness with virgin resin will remain an ‘underpinning trend’ in the first semester of the 2024, S&P Global said, forecasting that consumption will mostly be directed at ‘more economical items’.
"Next year will change a lot with sustainability goals, 2025 is coming, many big brands have announced goals and are looking to increase their content", S&P Global cited a converter as saying, who added that "it all depends on the customers – they need to wake up and use more recycled material, otherwise the struggle will continue".
Amid upcoming recycled content targets and weak 2023 market conditions, key recycling industries in Europe are expected to face a year of consolidation in 2024, S&P Global forecasted. Those that live to tell the tale, however, are likely to take advantage of the expected seasonal pickup in demand from the second quarter 2024 onwards. Companies’ capacity to meet demand from voluntary or mandatory recycled content targets, for example the EU’s Single Use Plastic Directive, will be put to the test ahead of the 2025 deadline.
"As you look into 2024 and 2025, some of the legislation and pledges are looming giving a push on the demand side,” said Olivier Maronneaud, global lead of plastic circularity at S&P Global Commodity Insights. “At the same time, we expect to continue seeing challenging macroeconomic conditions and an oversupply olefins/polyolefins markets.”
Southeast Asia
Pressure on European recyclers may also ease on the second half of the year due to decreased cost-competitiveness of recycled resin from Southeast Asia, according to S&P Global. The firm expects labour costs in collection hubs such as Indonesia, Thailand, and Vietnam to rise amid calls to increase the local minimum wage.
India is expected to benefit the most from the easing of resin cost-competitiveness from its Southeast Asian neighbours. S&P Global predicts improved demand for domestic recycled polyethylene as industry players are likely to start using a share of recycled material ahead of the implementation of the government guidelines in 2025.