Amid the global optimism surrounding COVID vaccination programmes, our sector is witnessing a combination of constant price hikes across all segments, huge demand for recycled material and very high shipping rates.
After a very difficult 2020, the recycling market has picked up very strongly in 2021, with a huge demand for recycled materials over recent months. The upward price movements seen in December continued into January and February, and further increases seem likely in the next couple of months. Aided by market tightness on the back of strong demand and the higher oil price, plastics recyclers are very positive about prospects for the coming months. Prices for HDPE, LDPE, PP and HIPS have risen significantly and forecasts indicate this improvement will continue, eventually to pre-pandemic levels.
Plastics recyclers believe the improved demand is resulting from the new trend towards end-product producers being more aware of a future in which a circular economy will be the standard. They are using more and more recycled material (instead of prime) to make their products more sustainable and thus to contribute to this more circular economy. Another reason behind the high demand is that purchasers did not buy a lot of material during the last few months of 2020 because they wanted to reduce their stocks for end-of-year reporting purposes.
Although the market is quite positive, there are major problems for recyclers who export their materials, namely the enormous increase in shipping rates and the long lead times for handling the containers; in some cases, it is taking six to eight weeks to ship materials owing to a lack of containers. How this situation will develop in the coming months remains uncertain.
As noted above, the industry is very upbeat, partly because of the worldwide vaccination programmes. Vaccine breakthroughs have led to upgraded economic growth forecasts; in a new report, one credit agency says it expects the vaccination of vulnerable populations to be completed in the summer of 2021. This should set the stage for a strong growth rally in the second half of this year.