APPEC: Mechanical recycling of plastics gains momentum; Europe leads growth

Mechanical recycling is seeing strong growth, particularly in polyolefins such as polypropylene, high density polyethylene and polyethylene terephthalate, said Andrew Neale, vice president for chemicals, derivatives, plastics and materials at S&P Global Energy.

Europe is leading the growth in recycled content for PET packaging and polyester fibers, driven by improved collection systems and supply-side enhancements, while Central and Eastern Europe are seeing modest growth in virgin polyester materials, he added.

However, delays by governments and corporations in meeting sustainability targets are slowing investment decisions.

"Company returns have dropped. We're seeing [environmental, social and governance] slipping down the agenda, toward the bottom line rather than commitments around that," said Neale, speaking at APPEC 2025 in Singapore on Sept. 9.

Additionally, inflation has dampened consumer demand for recycled goods.

"When you are staring at a cost or price comparison of upward of $100 per ton, it doesn't make a compelling argument to start buying fixed amounts of recycled material," he said.

Despite these setbacks, Neale said recycling initiatives are expected to regain momentum toward the late 2020s and early 2030s, shaping future market dynamics.

Taking a broader view of global cracker capacity, industry consolidation and efficiency efforts are expected to intensify over 2026-2027 in "high-cost regions," he added.

With about 4 million tons of cracker capacity closed globally and an additional 1 million tons potentially at risk, Neale said these closures are unlikely to significantly alter global supply dynamics unless 20 or more crackers are shut down.

Europe is seeing more closures, but this alone is unlikely to significantly reduce global capacity, as international majors will continue supplying olefins from other regions such as the US and the Middle East, he added.

Overall, chemical demand is expected to grow over the long term, but 2025 faces headwinds, with an estimated 25% drop in demand as tariffs continue to drive volatility and uncertainty, Neale said.