US, Europe continue to see recycled plastic demand despite costs, coronavirus

London — Brand owners and retailers across Europe and the US are sticking to their plastic packaging sustainability commitments even during the economic uncertainty caused by the coronavirus pandemic.

Despite the higher economic cost of recycled plastic than virgin plastic, demand for recycled plastic in Europe and for post-consumer polyethylene terephthalate bottle bales -- the feedstock for recycled PET -- in the US has remained robust.

In fact, the premiums for recycled PET and recycled high density polyethylene over their virgin equivalents have increased during the coronavirus pandemic. Recycled PET clear flakes were assessed at Eur900/mt ($977.93/mt) FD NWE last Wednesday, Eur100 higher than virgin PET, compared to a Eur70/mt premium in early January, S&P Global Platts data showed.

Recycled-HDPE light-colored pellets were at Eur945/mt FD NWE Wednesday, Eur105 higher than the virgin plastic. Virgin HDPE was at a Eur50/mt premium early January. "Recycled HDPE blowmolding and extrusion grade demand is very good from the packaging sector. Prime material prices have dropped a lot but, for now, the recycled premium is manageable for buyers," a German recycler said Friday.

The strong demand for recycled plastics is, in part, due to the upcoming EU legislation in 2025 on minimum recycled content in packaging, as well as various brand owner commitments, some of which go beyond the legislation.

The most recent report from the Ellen MacArthur Foundation's New Plastics Economy, in October 2019, suggested that brands that have made commitments to adhere to the 2025 legislation are far behind on their promises. This means recycled plastic buyers have had to continue their purchases despite little fall in prices for key recycled plastics PET and HDPE during the pandemic.

A key source of continued support for recycled plastics has been major UK supermarkets. One of them, LIDL, announced at the end of March the inclusion of 30% minimum PET in their fresh fish packaging that comes specifically from at-risk areas for ocean plastics, such as Southeast Asia and Latin America.

The material, supplied by Bantam Materials Inc. in the UK as Prevented Ocean Plastics, is part of a wider project by the company to address two key issues.

First is the lack of enough quality supply within Europe of recycled PET to meet demand, and second is to help prevent plastic from entering the marine environment in regions that have inefficient collection infrastructure to cope with a high level of plastic use per capita.

The project works with, and has helped set up, recycling plants across Southeast Asia, Central America, South America, and the Mediterranean, in order to process recycled PET flakes collected from within 30 miles of key waterways and coastlines.

"The way to deal with European R-PET supply tightness and also prevent ocean plastic is to source high quality R-PET from coastal communities where the ocean plastic problem is acute and the potential for social benefit is high," Bantam Materials UK's director Raffi Schieir said.

The material, most of which is exported into the high demand regions of Europe and North America, is being produced to common standards.