RECYCLED plastics are likely to see limited uptick in demand into 2023, with buyers not seeing much incentives in using recycled resins, particularly if they were more expensive than prime material, reports London's S&P Global.
'It is much easier and cleaner to use prime material and there is no need to use recycled unless it is for branding purposes,' said a China-based trader.
Demand for recycled plastics in the first half of 2022 had been lukewarm. It was mainly dominated by Asian exporters selling to brand owners that recycled to meet their brand's sustainability commitments, as well as to buyers in Europe and the US where there are mandates to use recycled material, said the report.
But it was a challenge to maintain demand as recycled materials are sold at a premium over virgin materials delivered to customers, especially after considering freight costs.
In addition, the recycled polyethylene market appears to be entering a lull period after the peak summer demand season and on the back of high energy prices and increasing labour costs. Sources also said margins have come into sharp focus amid double-digit inflation in some countries as well as fears of an impending recession.
Production processes of pelletising require a lot of energy, and high energy costs were resulting in end-users earning thin production margins, market players said.
Recyclers also voiced concerns over continued cost pressures from soaring manpower and transport expenses. Thailand has seen diesel and electricity prices rise sharply this year, while labour costs in Malaysia have also increased following a 25 per cent rise in minimum wages from May.
Plastic bag bans in several Asian countries as well as moves to incinerate rather than sort waste have led to low polymer waste collections, according to recyclers. Licences required to import scrap plastics are also challenging to obtain, sources said.
In Asia, markets have recognised the growing global demand for recycled PET (polyethylene terephthalate) and polyolefins. Sources said that new reprocessing plant projects to help capitalise on this growing demand have accelerated.
But these new plants will need to be fed with post-consumer waste. With plastic waste imports continuing to decrease following widespread bans, domestic waste collection has yet to substitute it in either volume or quality, sources said.
SeaNews Turkey
'It is much easier and cleaner to use prime material and there is no need to use recycled unless it is for branding purposes,' said a China-based trader.
Demand for recycled plastics in the first half of 2022 had been lukewarm. It was mainly dominated by Asian exporters selling to brand owners that recycled to meet their brand's sustainability commitments, as well as to buyers in Europe and the US where there are mandates to use recycled material, said the report.
But it was a challenge to maintain demand as recycled materials are sold at a premium over virgin materials delivered to customers, especially after considering freight costs.
In addition, the recycled polyethylene market appears to be entering a lull period after the peak summer demand season and on the back of high energy prices and increasing labour costs. Sources also said margins have come into sharp focus amid double-digit inflation in some countries as well as fears of an impending recession.
Production processes of pelletising require a lot of energy, and high energy costs were resulting in end-users earning thin production margins, market players said.
Recyclers also voiced concerns over continued cost pressures from soaring manpower and transport expenses. Thailand has seen diesel and electricity prices rise sharply this year, while labour costs in Malaysia have also increased following a 25 per cent rise in minimum wages from May.
Plastic bag bans in several Asian countries as well as moves to incinerate rather than sort waste have led to low polymer waste collections, according to recyclers. Licences required to import scrap plastics are also challenging to obtain, sources said.
In Asia, markets have recognised the growing global demand for recycled PET (polyethylene terephthalate) and polyolefins. Sources said that new reprocessing plant projects to help capitalise on this growing demand have accelerated.
But these new plants will need to be fed with post-consumer waste. With plastic waste imports continuing to decrease following widespread bans, domestic waste collection has yet to substitute it in either volume or quality, sources said.
SeaNews Turkey
