As 2021 gets underway, Europe's new plastics tax is creating a demand boost for recycled plastics in the region, while in Asia, recyclers are expected to struggle with bearish virgin markets and soaring freight costs at least in the first half of the year.
After a tumultuous 2020 for the global recycled plastics markets that saw production margins pressured and bearish virgin prices causing buyers to shun recycled plastics, the first half of 2021 may see a step change, at least in Europe and the US, in reaction to newly signed legislation that may provide an impetus to increased demand.
In the Asian markets, a combination of uneconomic export opportunities and expected low virgin prices well into H1 2021 will likely mean recycled plastics markets will continue to struggle, though upcoming high-specification recycling plants, delayed from 2020, may provide a lifeline and a new impetus to high-specification recycled plastics in the region.
Rush for materials in Europe
European recycled plastics markets are set to be dominated by the EU's Plastics Tax, which took effect on Jan. 1, having only been announced in July 2020.
The lack of time afforded the market for planning, in addition to a lack of standard reporting principles across EU member states and unfavorable economics that will carry over from 2020, will cause a period of uncertainty early this year, market sources have said.
In Q4 2020 buyers rushed to the recycled HDPE market as they looked to ensure they can access the supply they need. Recyclers towards the end of 2020 reported high production rates, nearing 100% in some cases, in comparison to around 50-60% over the summer, in order to meet this extra demand.
Uncertainties may stifle R-PET uptake in Asia
Asian recycled plastics markets, however, are likely to remain under pressure in the first half of 2021 amid coronavirus uncertainty, a lack of container availability and competitive virgin plastics.
The overall PET market is unlikely to see a rapid recovery due to a lack of tourism and large events in the first half of 2021, sources said. Hence, consumption of bottled drinks will remain low, leading to limited feedstocks for PET recycling. Such domestic supply shortages could delay the stricter measures that some countries in Southeast Asia plan to implement on waste plastics imports, according to sources.
Meanwhile, limited container availability and rising freight costs have restrained recycled PET exports. This tightness could last until February, if not longer. If freight rates come down, Asian recycled plastics exports to Europe and the Americas may recover, adding much needed impetus to higher-grade R-PET in Southeast Asia.
Click『read more’to learn more.
請點擊「閱讀原文」了解更多。