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Europe’s plastic recycling drive pits consumer demand against economic realities

Recognition of plastic waste as a global problem has spurred legislation and industry initiatives in the last two years, and driven growth in demand for recycled plastics.

When it comes to developing recycling as a sustainable business, Europe leads the way, and in particular the market for polyethylene terephthalate (PET), best known as the material of choice for plastic drinks bottles. But the evolution of PET and recycled PET (R-PET) markets in 2019 highlighted underlying concerns around profitability and cost, as price trends shifted with changing demand patterns.

Demand for recycled plastics over the longer term is expected to grow in part due to European Union policy initiatives to increase the recyclability and recycled content of packaging. In the short term, the market’s true commitment to sustainability will be tested in the face of unfavorable economics.


Recycled PET price premium

There has been much talk about a growing disconnect between pricing in the recycled PET flake market and the virgin PET market. Flake prices have traditionally held a wide and fairly steady discount to the virgin market, making the product economically viable and a boon for marketing. However, 2019 saw virgin resin prices sink, at first to parity with flake prices, and then below.

Virgin PET spot prices had not previously fallen as low as spot flake prices since S&P Global Platts first began assessing flake prices  in February 2008. In December of that year, virgin spot prices fell to a Eur10/mt premium over flakes, but that is as close as they had come to parity until this year, according to Platts data.

Since February 2008, spot virgin PET has on average been Eur214/mt more expensive than flake and most market participants see a triple-digit discount to the virgin price as necessary to make recycled flake prices competitive, given the additional costs required in processing recycled flakes.

This year, though, a combination of high virgin stocks, bearish feedstock prices and relatively weak demand over the summer have seen virgin resin prices fall. Recycled flakes, on the other hand, have proved more resilient in 2019. A tighter supply of good quality recycled material and the need for buyers to secure recycled supply chains has kept recycled PET prices more stable.

On the surface, this looks positive for food-grade R-PET demand growth, but it may also have a less positive impact if these dynamics were to continue in the long term.

Converters have been eyeing the possibility of switching much of their flake buying capacity into cheaper virgin resin, for certain end uses such as sheet and film. For sheet producers, this has begun to take place. For bottle producers, however, this is easier said than done.

“It comes down to whether the consumer is really willing to pay substantially more for a 100% recycled bottle or not,” a recycler said. “There comes a price point at which it is not economically sustainable.”

Although this is a concern, the market is skeptical about the ease with which companies can quickly switch their buying activities away from R-PET to virgin resin. In part, this is down to the difficulty in running different blends of virgin resin and R-PET for individual packaging through existing machinery – which requires some level of packaging redesign.

More importantly, it may prove difficult to reverse big brands’ decisions of increased recycled content, set to last over many decades, just because of poor economics over a relatively short time frame.

Clear future for plastic

Despite these unfavorable economics, the industry remains positive about complying with recycled contents legislation, driving sustainability initiatives and building on current recycling rates.

From the recycling side, Europe appears well placed to meet upcoming legislation. Christian Crepet, Executive Director of Petcore, an industry body representing the whole PET value chain, says there is currently a 300,000 mt overcapacity of mechanical recycling in Europe. To hit a recycled content level of around 40-50% in bottles, the infrastructure is there, he believes.


Chemical recycling, whereby post-consumer plastic is depolymerized to its original state, is also progressing well in Europe. Crepet says there are seven chemical recycling startups associated with Petcore and big recycling companies are also seeing good progress in this field. He sees the two recycling forms working well together in the future.

There are challenges that need to be addressed, however. Crepet’s top priorities include moving away from colored PET and sticking to clear packaging; moving to single polymer packaging to avoid mixing different polymers; and improving collection rates across Europe.

This final point is being well addressed in Europe. The UK government, for instance, proposed in March 2018 the introduction of a deposit return scheme as a means of increasing collection rates within the UK.


According to the UK government’s Commons Select Committee environmental audit, a deposit return scheme in the UK could significantly increase recycling rates from around 57% to between 80%-90%, as in countries with successful deposit return schemes.

In continental Europe, many countries already have successful deposit return schemes and there are plans, particularly in Germany, to increase their scope further by accepting a wider range of plastic packaging.

Crepet’s first point is that the future of PET is clear. Colored packaging, he says, will simply not be accepted in years to come because people are aware now of the difficulties in recycling it. Brands and consumers are recognizing the fact that the industry must return to clear packaging in order to boost recyclability. Coca-Cola, for instance, is switching its Sprite branded bottles from light green to clear in order to boost recyclability and make it easier to incorporate 50% R-PET in their manufacture.

The PET bottle industry is well placed to deliver on targets. The tray industry, however, has further to go. A key issue in this market is the use of mixed polymers in packaging, with around 50% of plastic tray packaging using a mix of different polymers that makes them difficult to recycle, according to Crepet.

There is progress being made, however, to move towards single polymer trays and Crepet believes that in a few years around 75% of plastic trays will be a monomer material and that chemical recycling could provide a solution to the remaining 25%.