Page 47 - Plastics News July 2024

FEATURE NEWS

ing to increase the amount of plastic we’re able to material. That dynamic has changed with the huge
collect for recycling,” Bailey said. influx of virgin resin, Eagles said.
Numerous reclaimers across the country have the Adding to the negative pressures for the U.S. rec-
existing capacity and infrastructure to process a lamation industry, competition is emerging from
lot more than they can currently source. There’s overseas. More post-consumer resin is being im-
enough capacity to double the U.S. plastic bottle ported from abroad, from countries where the cost
recycling rate, for example, if reclaimers could get to produce it is lower – due to laxer regulations, for
their hands on more bottles to process, Bailey said. example – and it’s being sold for prices that U.S. re-
claimers can’t meet, Eagles explained.
EPR will help on the supply front because of the “am-
bitious but achievable” recycling targets in the laws “This is undercutting markets,” she said, adding that
that have been passed in five U.S. states. These tar- the erosion of domestic PCR production is “not the
gets will prompt investment in improving collection direction we want to go.”
as packaging producers work to come into compli- Demand trends to come
ance. Expanding collection to meet those targets
will correspond with more tons coming into the sys- Although EPR offers positive signs for increasing col-
tem, Bailey explained. lection volume, Bailey provided a less rosy outlook
for the demand pressures. She presented figures
The EPR-driven supply growth will take time to bear from Chemical Market Analytics by OPIS, highlight-
fruit, however. ing a global capacity surplus of 12.1 million metric

“We’re still a few years out before we see more tons tons – or 26.7 billion pounds – of virgin PE in 2022
coming into the program, but we feel good that the and 2023. That was driven by new capacity vastly
foundation is there for success,” Bailey said. overshadowing what was still lagging demand fol-
lowing the height of the pandemic.
The crucial question is, if the recycling sector solves
the supply challenge, will end users actually buy the The figures indicate another projected surplus of 7
recycled resin? Despite numerous brand pledges million metric tons – 15.4 billion pounds – in 2027
and multiple emerging PCR mandates in U.S. states, and 2028, because even though demand is flat in
the answer turns out to be surprisingly unclear. those years, the OPIS projections show significant

Demand challenges due to virgin resin and imports new capacity coming online. That capacity is concen-
trated in China, the Middle East and North America.
The key underlying factor hurting recycled resin “What we’re seeing is a big mismatch between
demand is global overbuilding of virgin resin pro- the amount of plants that are being built and the
duction capacity. This overcapacity has led to “lots amount of demand for virgin plastic,” Bailey said.
of low-cost virgin and virgin equivalents,” such as “The short story is that there is a glut of virgin plas-
chemical prime or off-spec resin, said Eagles. tic on the market.”

The glut of inexpensive virgin resin entering the That translates to plants needing to simply move a
market comes into direct competition with recycled lot of material out the door, regardless of the price,
resin, at least when looking solely at price. so it turns into dumping cheap resin into the market

“Recycled materials offer an environmentally-pre- that competes with PCR.
ferred alternative, but they won’t always be the As long as recycled resin demand is tied to its price
cheapest option,” Eagles said. competition with virgin, Bailey said, the recycling

Recycled resin has long had to compete with virgin sector will be impacted by the whole range of fac-
resin on price, and historically recycled has been on tors influencing global oil markets.
par with or slightly cheaper than virgin resin, provid- “We are really subject to what’s happening across
ing end users with a price advantage to the recycled the entire supply chain, decisions that China is mak-

July 2024 PLASTICS NEWS 49