European recyclers feeling the strain as prices tumble

The European recycled plastics market is under severe pressure because of extremely low demand and lengthening supplies. Some recycling plants have been shut down and most others are operating at reduced rates in order to avoid excess stocks from developing. However, weak levels of demand mean that recyclers’ stock levels are steadily rising.

This situation applies to all recycled plastics sectors, but the situation is particularly precarious for PET recyclers where a fierce price war between recycled PET and virgin PET means that it is very difficult to operate the recycling plants economically.

Despite a severe price reduction of €250 per metric ton for clear flake material and a fall of €200 per tonne for clear food-grade pellets since the beginning of May, converters are increasingly switching to virgin PET where prices have tumbled in recent months. In mid-June, virgin PET prices were trading at €1150-1200 per tonne compared with €1670-1880 per tonne for clear food-grade pellets and €1140-1300 per tonne for clear flake.

European PET recyclers have also expressed concern about the record high levels of competitively-priced imported material, which has diverted demand away from locally-produced recyclate.

Other recycled plastics materials are also under downward price pressure due to very weak demand, competition from virgin material and lengthening supply.

Recycled high density polyethylene blow molding prices have declined by a total of €80 per tonne since the beginning of May while injection molding grades fell by €40 per tonne over the same period. Recycled low density PE natural film prices have fallen by €60 per tonne over the last two months, with recycled LDPE translucent film prices down by €80 per tonne. Recycled polypropylene prices have fallen by €90-100 per tonne since the beginning of May and recycled high impact PS prices are down €40 per tonne during the same period.

In July, recycled plastics prices are likely to remain under downward pressure as the beginning of the summer holiday season also weighs heavily on demand.

Recycled PET
Recycled PET prices have remained under heavy pressure over the last two months because of continuing weak demand, the lower cost of bottle scrap, competition from virgin PET and cheaper imported material. Clear flake prices have fallen by €250 per tonne since the beginning of May, clear food-grade pellet prices are down by €200/tonne and colored flake prices have fallen by €100 per tonne.

Demand remains extremely low as a result of competition from the falling cost of virgin PET and competitively-priced imports from the Far East. Furthermore, the soft drinks sector has failed to raise seasonal demand in line with expectations due to the summer weather being less than favorable than usual in Europe.
Material availability is more than sufficient despite recyclers continuing to curb production while imports have added to the growing supply surplus.

Recycled PET prices are likely to fall further in July due to continuing low demand and competition form the lower cost of virgin material.

Recycled HDPE
Recycled HDPE prices have fallen in each of the last two months due to weak demand and plentiful supply. Blow molding prices have declined by a total of €80 per tonne since the beginning of May while injection molding grade prices fell by €40 per tonne over the same period.

Demand remains extremely low and recyclers have responded by curbing output even more to avoid a further build-up of stocks.

In July, recycled HDPE prices are expected to fall again as the start of the holiday season puts additional downward pressure on demand. 

Recycled LDPE
Recycled LDPE prices continued on a downward trend during May and June. Natural film prices have fallen by €60 per tonne over the last two months, with translucent film prices down by €80 per tonne and black extrusion pellet prices down €10 per tonne.

Recycled LDPE film prices were adversely impacted by ongoing weak demand and continued replacement by lower cost, off-spec virgin material from post-industrial sources. Recyclers are increasing production curbs to avoid build-up of excess stock levels, yet availability of base material and recyclate still exceeds demand.

Recycled PP
Recycled PP prices have fallen in each of the last two months because of low demand, high stocks at recyclers, competition from the lower cost of off-spec virgin material and lower base material costs. Recycled PP homopolymer prices have fallen by €100 per tonne since the beginning of May while  recycled PP copolymer prices are down by €90 per tonne over the same period. Some recyclers even granted triple-digit price concessions to clear stocks.

In July, recycled PP prices are set to soften even further as the start of the holiday season exerts additional downward pressure on demand. 

Recycled PS
Recycled high impact PS prices have fallen by a combined total of €40 per tonne since the beginning of May because of persistent weak demand and plentiful supply. While recyclers have continued to cut production rates, there is still more than sufficient material available.