Baled PET and HDPE scrap is in short supply on the continent as sustainability targets accumulate, says ICIS.
European plastic scrap bale supplies are tight across all major recycled polymer chains as growing demand from the packaging sector continues to expose shortfalls in collection and sorting capacities.
There are now major supply shortages across the recycled polyethylene terephthalate (PET and rPET), recycled high density polyethylene (HDPE), recycled polypropylene (PP) and recycled polyvinyl chloride (PVC) chains.
Multiple players across these markets expect current shortages to last throughout 2021, and potentially across 2022.
Scrap bales - either from postconsumer or post-industrial origin - are the feedstock for the recycling industry, and low availability is adding pressure throughout the recycling supply chain.
For recycled-content PP, for example, flake and pellet players have had to limit operating rates by as much as 40 percent in recent months due to a lack of bale availability.
There are multiple factors in the current shortages, which differ slightly from market to market, including the onboarding of projects delayed by the coronavirus pandemic, logistic and workforce disruption due to COVID-19, changes to scrap input mixes and substitution of virgin material owing to shortages in the first half of 2021.
The common trend across all markets, though, is the lack of sufficient collection and sorting capacity.
Expansions in collection and sorting capacity have not kept pace with demand created by growing sustainability pressure on fast-moving consumer goods (FMCG) firms, ambitious brand targets, and the ongoing consumer and regulatory pressure against single-use plastic.
Across most of Europe, recycled materials collection is the responsibility of local authorities, and investment in collection systems has been limited since the global financial crash in 2008.
As an example of how sharp the gap can be, in Europe, at present, there is around 600,000 to 700,000 metric tons per year of postconsumer rigid PP input.
This would be sufficient to replace around just 5.5 percent of Europe virgin plastic packaging consumption, based on Independent Commodity Intelligence Services (ICIS) Supply & Demand database figures, assuming that every metric ton was used by the packaging sector with no wastage.
For recycled-content HDPE, there is around 700,000 to 800,000 metric tons per year of postconsumer rigid input, and a similar figure for recycled-content LDPE.
This would be enough to replace 11 percent of PP and 15 percent of LDPE virgin plastic packaging, respectively, under those same conditions.
However, wastage rates (the amount of material lost during production due to contamination or mechanical losses) are typically from 25 to 50 percent. Packaging does not have a 100 percent share of the market, and many applications can only use natural material. Natural material comprises around 10 percent of bale input.
This suggests that current collection capacity could replace less than 1 percent of current virgin polyolefins plastic packaging consumption.
Brands have increasingly begun to announce ambitious recycling content targets, which are typically for 25 to 50 percent recycled content, but can be as high as 100 percent recycled content.
As a result of ongoing bale shortages, downstream players are increasingly looking to create joint ventures with waste management firms and to backwards integrate over expectations that bale shortages could become endemic—largely the result of rising demand from the packaging sector.
Given the current lack of bale capacity some polyolefins players are expecting investment in selection systems for mixed plastic bales, and an increase in usage of mixed plastic feedstocks.
These are the same feedstocks that many chemical recyclers in Europe typically seek to use, potentially placing the two industries in direct opposition.
At present, many calculations on the economic feasibility of chemical recycling plants are predicated on the assumption that waste management companies will pay to have plastic scrap bales taken away, or that partially sorted bales will remain at low cost.
This is currently common because the alternative would be to pay gate fees for incineration or landfill, and as long as the money paid to chemical recyclers is below gate fee costs, waste managers are prepared to do it.
As this material increasingly becomes desirable or usable for the mechanical recycling chain, though, competition is likely to intensify and making material sold at negative values increasingly less likely.
Traditionally, September would be the time across the major recycled polymer markets when bale availability is at its highest.
For rPET, this is because its major input source is used plastic drinks bottles, more of which are consumed when temperatures are higher. It typically takes several weeks for the used bottles to make their way back into the chain, and so September is when extra volumes from the summer become apparent.
For recycled polyolefins, converters and recyclers typically shut down during July and August for routine maintenance, and lower consumption typically lengthens the bale market.
In 2021, however, strong demand from the packaging sector has meant that the summer months have done little to rebalance the market. That bale supply is so tight in September is causing concern across recycled polymer chains, but particularly for rPET.
Traditionally, rPET converters and recyclers build stock in the summer months when temperatures are high and more material is typically entering the discards stream to offset lower volumes entering the chain in colder months.
Underlying demand for the rPET flake sector has strengthened in 2021 due to additional capacity coming onstream and an increasing number of players captively producing from flake through to pre-form. There also is increased interest in flake material from the bottle-to-bottle sector.
Increased demand for rPET is being stimulated by intensifying sustainability commitments from the packaging sector, and ongoing consumer and regulatory pressure against single use plastics.
Consumption of rPET flake has increased by as much as 60 percent compared with 2019 levels (2020 demand was negatively impacted by the pandemic), according to market estimates.
This has placed upward pressure on bale prices throughout 2021. Bale prices are the largest variable cost for the recycling industry, and this has increased production costs significantly during 2021. Rising electricity costs also have had an impact because of the higher cost of washing material.
“There is a risk that the escalation in recycled polymer prices and inability to increase supply due to structural constraints will begin to challenge some users in their ambitions to attain high recycled content levels and for some to use recycled content at even a minimum level,” says Helen McGeough, senior analyst, plastics recycling, at ICIS.
“The drive of the end markets has not been mirrored by developments and investment upstream in collection and sorting,” she continues. “Without focus on these fundamentals, the industry can expect high costs and supply limitations through 2022.”
Demand, meanwhile, shows no sign of slowing. With plastic packaging taxes due to come into effect in Italy, Spain and the United Kingdom in 2022, and brands approaching their 2025 content commitments, and other sectors such as automotive and fabric fiber becoming increasingly interested in sustainability, underlying consumption is expected to continue to grow.
ICIS has been highlighting collection and sorting capacity shortages for several years; never have they been more apparent than in 2021.
The author is Senior Recycling Editor at London-based Independent Commodity Intelligence Services (ICIS).
Initial batch of nine companies seeking sustainability presence on “passport” includes two with sizable recycling involvement.
The London Metal Exchange (LME) has announced the first sustainability disclosures registered on the United Kingdom-based trading platform’s newly launched digital credentials register, LMEpassport.
Nine metals producers have listed disclosures under what the LME calls its “sustainability taxonomy,” which has been designed to cover environmental, social and governance (ESG) aspects of how branded metals on the LME are produced.
“We’re delighted to see key members of the metals community taking the opportunity to provide greater visibility of their sustainability credentials,” says Georgina Hallett, LME chief sustainability officer. “Transparency can help facilitate meaningful progress in important target areas, and we’re pleased to support our brands in their vital work to drive the sustainability agenda across all base metals.”
While recycled-content metals would seem poised to benefit from such credentials, the initial batch of companies and their credentialed metals are predominantly tied to mining and primary smelting activities.
Mining firms including Freeport-McMoran, Anglo American and Antofogasta and primary smelter operators including Rusal (aluminum), CBA (aluminum), Thaisarco (tin) and Huayou Cobalt comprise seven of the nine companies in the initial group.
On the recycling front, Canada-based Teck Resources Ltd. has earned sustainability credentials for its Teck Cominco smelter. According to the Teck website, the firm’s smelter in Trail, British Columbia, Canada, accepted more than 40,000 metric tons of recyclable materials as feedstock in 2019 to produce lead and zinc. That feedstock was predominantly lead-acid batteries but also cathode ray tube (CRT) monitor glass and zinc alkaline batteries.
Also receiving credentials was Sweden-based Boliden AB for four of its metals production plants. That firm has a large-scale electronics recycling plant that helps supply material to its Rönnskär copper smelter in Sweden.
Marcia Smith, a senior vice president with Teck Resources, says, “At Teck, we are committed to producing the essential metals and minerals that the world needs in an environmentally and socially responsible manner. The LMEpassport will further enhance transparency in the metals and minerals supply chain and strengthen consumer confidence.”
“Our ambition is to be the most climate-friendly and respected metal provider in the world, and we are happy to contribute to sustainability improvements in our sector as base metals play a crucial role in the transition away from fossil fuels in society,” remarks Mikael Staffas, a group CEO with Boliden.
Public opinion and recycling-friendly policies can receive a boost when the right words are used during the dialogue stage.
For several decades, the Washington-based Institute of Scrap Recycling Industries (ISRI) has conducted a semantics campaign to stress that scrap is not waste and that recyclable materials are secondary commodities.
This publication has been a steady supporter of this message, with its editorial staff trying earnestly not to use the word “waste” interchangeably with scrap, secondary commodities or other words that convey many discarded materials have value. (My colleague DeAnne Toto stated the case perfectly just this July.)
Despite considerable successes to this campaign’s credit, ISRI reportedly is considering changing or updating its phrasing concerning recyclable materials and how to best distinguish them from landfill- or incinerator-bound waste.
A suggestion from this corner is the term “circular commodities.” Like the word “sustainability,” the phrase “circular economy” seems to have staying power and to be recognized as a good thing by people and governments around the world.
Unfortunately, the terms “scrap” and “secondary commodities” each have shortcomings. In many peoples’ minds, something that is scrapped is being written off. In those same minds, something secondary could be considered second rate.
A circular commodity label fends off these connotations. Gaining unanimous backing for any policy is an unlikely prospect. In the current climate, however, sustainable and circular policies tend to gain considerable support.
The rephrasing is by no means a panacea. Governments and policy advocates who want to restrict trade in and financial support for circular commodities (for perceived environmental or protectionist reasons) will continue to do so.
Circular commodities in 2021 are establishing new and higher price benchmarks, including in the oft-criticized plastics recycling sector. That has not stopped recycling critics from staying on the attack. China has prohibited many circular materials despite the fact their residue levels are significantly below those of metal ores or concentrates. Malaysia may essentially follow China’s lead.
Advocacy for keeping raw materials closer to home also is a trend gaining momentum around the world. It must be noted that rephrasing alone will not stop all policies or corporate decisions made in the wider economic and policy arenas.
A form of linguistic high ground, however, could be a welcome result of a term such as circular commodities. Making a public case against materials circularity—reuse and recycling and the resource conservation it entails—becomes trickier than lobbying against waste, scrap or secondary materials.
To those of us in the industry, all those terms may mean the same thing, and we’re comfortable with the old terminology. In the policy arena, though, words are twisted and manipulated, and recyclers and traders seem to be in need of some keener phrasing.
Laura Chiticariu, chief architect of Watson Core Language and IBM engineer, will present during the Understanding AI session at next week’s MRF Operations Forum webinar.
The 2021 MRF Operations Forum Webinar Series kicks off Monday, Oct. 18 with a session designed to break down the myths of artificial intelligence (AI) to MRF operators. Laura Chiticariu, chief architect of Watson Core Language and engineer at IBM, will present during the kickoff session “Understanding AI.”
At Armonk, New York-based IBM, Chiticariu leads the strategy for development of AI technologies for processing natural language. She believes in "transparent machine learning,” which entails leveraging machine learning techniques, while ensuring that the system remains transparent, easy to comprehend, debug and enhance.
Previously, Chiticariu was a researcher in the Scalable Natural Language Processing (NLP) group in IBM Research, where she built and led the transfer of NLP technologies to multiple IBM products and completed multiple customer engagements with Fortune 100 and multinational organizations.
She has been teaching NLP in universities within and outside of the U.S. and developed two online courses in the process. She also holds a Ph.D. in computer science from University of California, Santa Cruz, and a B.S. in computer engineering with a major in automation and industrial informatics from Politehnica University of Bucharest in Romania. In her spare time, she enjoys introducing kids to computer programming.
During the session, Chiticariu will break down what AI is and how machines learn from it.
Understanding AI airs Oct. 18 at noon EDT. The 2021 MRF Operations Forum Webinar Series takes place Oct. 18-19. Registration for the webinar series is free, and attendees will gain access to both days of the series along with all four days of programming for the 2021 Paper & Plastics Recycling Conference Webinar Series that takes place Oct. 20-21 and Oct. 26-27.
For the full agenda, click here.
The company expects operations to begin at its Texas plant by the end of 2022.
ExxonMobil Corp., Irving, Texas, has announced plans to build its first large-scale postuse plastic advanced recycling facility in Baytown, Texas. The company says it expects to begin operations at the facility by the end of 2022.
ExxonMobil reports that it wants to use this facility to help address the challenge of plastic waste in the environment. According to a news release from ExxonMobil, a smaller, temporary facility already operates and is producing commercial volumes of certified circular polymers that will be marketed by the end of this year.
“We’ve proven our proprietary advanced recycling technology in Baytown, and we’re scaling up operations to supply certified circular polymers by year-end,” says Karen McKee, president of ExxonMobil Chemical Co. “Availability of reliable advanced recycling capacity will play an important role in helping address plastic waste in the environment, and we are evaluating wide-scale deployment in other locations around the world.”
The company has performed an initial trial of its proprietary process for converting plastic scrap into raw materials. According to ExxonMobil, the trial recycled more than 1,000 metric tons of plastic scrap and has demonstrated the capability of processing 50 metric tons per day.
Upon completion of the large-scale facility, the operation will have the capacity to recycle 30,000 metric tons of plastic scrap per year. ExxonMobil says it anticipates that operational capacity could be expanded if policy and regulations that recognize the lifecycle benefits of advanced recycling are implemented for residential and industrial plastic scrap collection and sorting systems.
The company also plans to build about 500,000 metric tons of advanced recycling capacity globally over the next five years. In Europe, the company is collaborating with Plastic Energy on an advanced recycling plant in Notre Dame de Gravechon, France, which is expected to process 25,000 metric tons of plastic scrap per year when it starts in 2023, with the potential for further expansion to 33,000 metric tons of annual capacity. The company also is assessing sites in the Netherlands, the U.S. Gulf Coast, Canada and Singapore.
ExxonMobil also has formed a joint venture with Agilyx Corp., Cyclyx International LLC, focused on developing solutions for aggregating and preprocessing large volumes of plastic scrap that can be converted into feedstocks for products. The company reports that Cyclyx will help to supply its advanced recycling projects.