EU packaging regulation takes effect Aug. 12 as recycled polymer demand remains weak

The EU's Packaging and Packaging Waste Regulation (PPWR) will come into effect from Aug. 12, bringing mandatory recycled-content, recyclability and packaging requirements for companies placing packaging on the bloc's market.

Despite this, the regulatory deadline has yet to translate into stronger near-term demand for recycled polymers, with many buyers continuing to favor discounted virgin material amid weak downstream consumption and margin pressure.

The European Commission published a second, expanded version of its Frequently Asked Questions on the regulation on Aug. 3, offering further guidance on how the rules should be interpreted as the application date approaches.

The latest guidance clarifies how compliance responsibilities should be allocated across packaging supply chains and says companies that fail to comply should generally be given an opportunity to correct breaches before facing product withdrawals or market restrictions.

Most participants were still waiting for more clarity on how the regulation will be enforced, several participants said. Skepticism was also evident further down the value chain, with a grocery-sector participant expecting no shift in behavior without strong enforcement.

"We have always seen with legislation that the market waits for further details. Despite the recently published FAQ, people are waiting to see," a recycler said.

Price spreads continue to underline the challenging conditions for recycled material.

Platts, part of S&P Global Energy, last calculated the recycled HDPE natural pellets spread to virgin HDPE free delivered Northwest Europe at €400/metric ton on Aug. 5, €46/mt narrower from the prior week and at a premium to virgin material.

"The market economics will be a blocking factor unless PPWR is enforceable -- brand owners will find legal loopholes as long as prime materials are more favorable," a trader said.