The COVID-19 pandemic is continuing across the globe. Although countries throughout Europe previously appeared to have gained control of the virus through strict lockdown measures, many of them are now concerned about a second wave, with the number of people infected with the Coronavirus growing once again. This is creating great uncertainty in Europe and around the world - not only for the recycling industry but also for the global economy.
Although our industry is still feeling the drastic effects of the Coronavirus crisis, the last few months have brought a slight improvement in the market for Europe and other parts of the world. Short-time working is no longer common practice everywhere and demand for recycled materials has increased a little - but we cannot speak of a full recovery. The hoped-for positive effects of restocking after the summer holidays did not materialize and the risks attached to a second wave of COVID-19 infections could have negative consequences for recycled material demand in the next couple of months.
The market is in a very uncertain phase and expectations are that prices for recycled material will not increase in the next couple of months. Prices for LDPE, HDPE, PP and HIPS have climbed a little in recent months but relevant drivers for further increases are lacking for the upcoming period. Furthermore, companies still have significant stocks for the moment; that is the reason why recyclers are producing mainly to order and at a reduced capacity.
The expectation is that sales of European recycled material to Asia will come under pressure.
China is currently updating its GB/T standard relating to the import of recycled plastics. Following the ban on plastic scrap, it will be more difficult for them to import recycled material such as granules. From September 1, Chinese customs tightened the enforcement of existing regulations on importing recycled pellets by imposing penalties of between RMB 500,000 (US$ 75,000) and RMB 5 million (US$ 750,000) for violating rules governing uniformity of colour, size and packaging.
Most recyclers are choosing to suspend imports until the situation has been completely clarified. Some goods that arrived after September 1 were inspected but managed to pass laboratory testing.
The global recycling industry is concerned about these latest developments and is expecting new trade barriers for shipping recycled material to the Far East.
In response to the COVID-19 crisis, governments initiated financial support programmes to protect the jobs and incomes of as many people as possible. A large number of recycling companies used these programmes to survive.
European Commission President Ursula von der Leyen recently announced that Euro 750 billion would be invested in the EU over the coming years, 37% of which is to be spent directly on the objectives of the Green Deal. The EU wants to invest in new environmental techniques, to launch a European recovery plan and to be the leader in the circular economy field. It is hard to say what benefits our industry will derive from this, but one of the most important issues is that legislation will come forward to mandate the use of recycled material in end products. Until this legislation is in place, our industry will have a tough time. The volume of newly-produced plastic will continue to increase but sales of recycled plastics will not grow at the same pace.
It is difficult to say how the market will develop over the coming months, but we as an industry have faith that we will play a very important role in the future development of the circular economy.