Quarterly Report – May 2021

January 1 2021 marked the beginning of an era of Basel Convention controls on plastic waste movements. The plastics recycling industry in South East Asia has suffered the double blow of a drastic drop in the supply of recyclables and shipment booking problems, leading to a decline of more than 50% in the feedstocks needed for recycling operations in the region. A substantial number of recycling factories have been forced to close.

Supplies have been hardest hit by restrictions on exports from the EU to non-OECD countries. South East Asian countries make up a core recycling hub but are not OECD members and so are facing a complete loss of imports from most EU countries. The disruption in plastic scrap supply is likely to continue for a while until there is an effective solution.

Those recyclers fortunate enough to be able to survive on dwindling feedstock supplies from the USA are forced to bear dramatic increases in freight costs and delays to shipment schedules. This situation is discouraging plastics scrap trading and is leading to additional costs - a situation which is likely to persist until the COVID pandemic is behind us.

Meanwhile, there has been an acceleration of demand aimed at fulfilling brand-owners’ commitments to recycled content in their products. The perception is that this will create an enormous imbalance shortly in the supply and demand situation. A typical example is that the price of recycled pellets from HDPE milk bottles has gone up to US$ 3600 per tonne, much higher than virgin prices. It would not be surprising to see these recycled pellets reach US$ 10,000 per tonne one day. With post-consumer recycling a prime theme in today’s business world, the cost of recycled content is not the main issue for brand-owners.

The prices of most forms of plastic scrap have been holding firm in recent months. In particular, the styrenics, polyolefins, PVC and engineering plastics have been driven higher by the surge in the cost of feedstock, as well as demand for computer equipment and home appliances during the pandemic.