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Canada-based NOVA Chemicals signs recycled plastics deal with Merlin Plastics

London — Canada-based NOVA Chemicals Corp. marked its entry into the post-consumer recycled plastic sphere with an announcement of a long-term agreement with Merlin Plastics Supply, according to a statement Sept. 1.

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The agreement aims to increase the supply of high-quality, post-consumer recyclate (PCR) to be used in consumer packaging.

NOVA Chemicals will provide financing to accelerate Canadian company Merlin's expansion into PCR for food contact applications. In return, NOVA Chemicals will secure a reliable supply of PCR to offer to its customers.

Eventually, NOVA Chemicals plans to offer 100% PCR polyethylene and PCR blended with its virgin grades, the press release said.

Merlin Plastics operates two facilities in British Colombia, one in Gifford and one in Delta.

NOVA Chemical's financing will be used to upgrade equipment at the Delta, BC facility, according to the press release.

The companies plan to produce high-end recycled high density polyethylene pellets suitable for food packaging applications.

"We expect demand for PCR to increase tenfold in the next five years based on brand owner sustainability commitments," said Greg DeKunder, vice president, marketing, NOVA Chemicals.

Although strong long-term growth is expected in the recycled plastics market, the recycled polyethylene terephthalate market -- the most advanced recycled plastic market in the US -- has been subdued as a result of the coronavirus pandemic.

The price for premium grade post-consumer PET bottle bales -- the primary feedstock for high value consumer beverage bottles -- in Los Angeles has fallen 8.25 cents/lb since April 1, when S&P Global Platts first assessed the market. Premium grade post-consumer PET bottle bales were assessed at 9.75 cents/lb FOB Los Angeles on Aug. 31.

Prices have fallen as buyers chose to move purchasing to the virgin PET market, where prices have tracked the upstream oil complex lower.