Falling oil prices are putting pressure on the recycled plastic market, making virgin plastic competitive with recycled polymer.
Back in May we reported on the difficulty in the aluminium market, highlighted by the quarter one and two recycling figures. However we should also sit up and pay attention to the problems being faced in the plastic recycling market at the moment. It’s a market that’s becoming an increasingly challenged one, highlighted by the Annual WRAP Report.
Published earlier this month, the report explains how falling oil prices are putting pressure on the recycled plastic market by making virgin plastic competitive with recycled polymer. This threatens the viability of recycled material.
In short, if companies begin to buy cheap virgin material instead of recycled polymer, investment in recycling will decrease, eventually pushing up the price of recycled plastic - ultimately undermining the viability of the entire recycled plastics market.
Victims of the market
As an example of this volatility, the Mixed Plastic Loan Fund operated by WRAP has encountered difficulties, with two of the reprocessors the fund provided support to going into administration last year. One of these reprocessors, ECO Plastics, has seen a £1.65 million loan written off by WRAP after it went into administration in December.
The other reprocessor, Euro Closed Loop Recycling, is facing closure after failing to convince the dairy industry to purchase rHDPE at a higher rate. Although we saw healthy plastic recycling figures in quarter two of this year, this has not eased the burden that many plastic recyclers now face.
With recyclers facing closures, the danger is we could have fewer facilities to recycle the plastic we need to reach the UK’s annual target, thereby creating scarcity in an already volatile market and pushing up the price of plastic PRNs.
Commitment to sustainability
Despite the economic difficulties facing the recycled plastics market, many household brands are leading the way and committing to using less virgin plastic, for example Procter & Gamble and Coca-Cola. This is beneficial because the more recycled plastic purchased, the greater the investment in the market, and the more the price will fall in the long term. As well as lower prices, it is great for those companies’ marketing and sustainability initiatives.
Last month, P & G confirmed it was in talks with a UK plastics recycler about the supply of recycled HDPE for use in the production of detergent bottles. It has pledged to increase the amount of recycled plastics by around 3,800 tonnes per year. Long term, the company wants to use 100% renewable or recycled material in their packaging, as well as reduce packaging usage by 20% by 2020.
Innocent Drinks are currently dedicated to sourcing 50% of plastic for its smoothie bottles from rPET, an increase of 25% since 2003. And in June, Coca-Cola unveiled the world’s 100% PET plant-based bottle made from waste sugar cane.
This is of course not an exhaustive list. There are a great many companies trying to do their bit for the environment in the form of sustainable packaging. But why is this? To improve their image? To build up great relationships with plastic recyclers for the future? To instil trust? Or simply to do the right thing?
Whatever the reason, it's a positive step because support is needed more than ever to help ensure the plastic recycling market is viable, both now but also in the future.
In a nutshell, using recycled plastics is a long-term strategy that could not only help the bottom line but could also benefit the company’s brand, as well as contributing to a stable market for recycled plastics in the future.
Snap into action
If your organisation has an idea for a sustainable plastic initiative that you'd like to get off the ground, simply send us an email or give us a call on 0845 094 2228. ecosurety has long-standing relationships with accredited reprocessors, enabling us to assist you with any sustainability plans. You can also follow this link to find out more about packaging compliance.
As policy manager, Robbie is responsible for liaising with government, regulators and industry organisations to represent our members’ views and interests. In previous roles, he helped to instigate market-based change and he brings that dynamism to his current role of influencing regulatory change. With years of experience working across a number of departments at Ecosurety, it’s fair to say he has an excellent understanding of producer compliance and recycling, which enables him to provide high-level policy expertise, industry insight and market analysis to our members.
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