UK groups out to secure bottle recycling business

The United Kingdom non-profit Waste & Resources Action Programme (WRAP) is hosting a meeting this week with leading figures in the supermarket supply chain to look at balancing the market for recycled high density polyethylene and help stricken recycling firm Closed Loop.

Hit by the double blow of low oil prices and a supermarket price war, Britain's biggest recycler of plastic milk bottles is facing possible collapse.

The Dagenham, England-based firm has warned it could be forced to call in administrators because clients have cut back on buying recycled plastic.

PRW has been told by Closed Loop and WRAP that a meeting will take place this week with retailers and the supply chain to address the problem.

WRAP CEO Liz Goodwin said: “The contribution that a thriving and vibrant plastics recycling industry can make to both overall resource efficiency within the U.K. and the economy in general, is considerable. At the same time, recycled plastics are commodities that tend to track the prices of their virgin equivalents. Right now, the low oil price means that virgin plastic prices are low.

“This problem is currently being made worse for the HDPE market by the high prices for recovered plastic HDPE bottles in Europe — the feedstock for some of these plastic recycling plants.  This is a result of temporary supply disruptions in the U.S., causing Asia to look to Europe for its recovered plastic bottles.

“This means that some of our pioneering food grade plastic HDPE recycling plants in the U.K. are facing highly squeezed margins at the moment with high input material prices and low finished product prices. To be viable they need to sell recycled food grade plastic HDPE at a higher price than virgin plastic.

“WRAP is talking to the industry about this.” 

Through the WRAP-led Courtauld Commitment, leading retailers, manufacturers and suppliers have voluntarily signed up to reduce waste within the U.K. grocery sector.

Goodwin added: “Right now, buying virgin HDPE for milk bottles might seem the better buy, but it is not a long term approach.  Commodity prices go up and down. Recycled food grade HDPE will be a good buy again but if we don't stick with it now, there won't be any to buy in the U.K., and that would be a real loss for us all. Having our own supply of these key raw materials offers a level of resilience which will become increasingly important in this increasingly unstable world.

“To make this happen, we need the whole supply chain to come together, to look at where the risks lie and to look at how best to share those risks so all can benefit. Industry might need to pay a premium for high quality food grade recycled plastics so that it can honor the important commitments it has made.  However, in the context of falling plastic prices overall, this should be affordable.”

Closed Loop chief executive Chris Dow said: “We know that there is a solution on the table that will stabilize the market and long term sustainability of recycled HDPE.

“This will also ensure the future of our plant and provide a profitable business model for future investors. We are the most vulnerable part of the supply chain, yet are shouldering all of the risk.”

Meanwhile, The British Plastics Federation's Recycling Group (BPFRG) has reiterated its claim that the packaging recovering note (PRN) system needs urgent reform before more U.K. recyclers become victims of the current market failure affecting members such as Closed Loop. 

Reductions in oil and commodity polymer prices coupled with strong demand from global low cost economies for waste plastics have undermined confidence in the U.K. plastics recycling industry putting jobs and economic security at risk.

The British recycling group believes that the current situation could have been avoided had the government taken decisive action and implemented the proposals it published last year in its manifesto. The proposals focused on identifying drivers to achieve a sustainable future for the plastics recycling sector by introducing two fundamental changes in the PRN system.

The first is a split on the plastics packaging recycling targets, to distinguish recycling in the local market (U.K, and EU) from that which is exported outside Europe. This would be achieved through the existing PRN/PERN mechanism, leading to a progressive weighting towards increased local recycling year-on-year. Not only could this deliver the best environmental outcomes, but it would also encourage and incentivize innovation and investment – enabling the UK to future-proof markets for plastic waste.

The second relates to an ‘offset' proposal, which calls for a modification to the producer responsibility framework to encourage retailers and brand owners to increase the use of recycled polymers. 

Roger Baynham, chairman of the BPFRG, said: “We have effectively reached a fork in the road. Do nothing, accept that the U.K, recycling sector will struggle to compete with global low cost economies and become increasingly dependent on such markets for our waste or implement changes which can deliver successful and investable long term recycling businesses which create green UK jobs as part of a sustainable circular economy. Events at Closed Loop show that this is a decision which can no longer be ducked.”