Global plastics glut and weak regulations hurt European recyclers

Europe’s plastics recyclers are under financial pressure, and some are closing plants. Industry experts cite a surge in cheap virgin plastic being imported into the region and a lack of regulation requiring the use of recycled material.

A global excess of ethylene supplies and of other raw materials for plastics has lowered the cost of virgin plastic, making it cheaper than recycled plastic in Europe. “The recycling market will be unprotected for a while as it comes under pressure from the cheaper virgin prices,” says Husam Taha, principal analyst for plastics sustainability at Wood Mackenzie.

Global ethylene production capacity is about 225 million metric tons (t) per year, while demand is closer to 180 million t, according to data compiled by S&P Global. Spot prices for virgin high-density polyethylene (HDPE), a widely recycled plastic used in products such as shopping bags and food packaging, have dropped from above $1,500 per metric ton in 2021 to less than $1,000 today, according to S&P.

Imports of cheap recycled plastic into Europe are exacerbating the issue, Ton Emans, president of the industry group Plastics Recyclers Europe, says in a press release.

Prices for virgin plastics could stay low for some time to come, according to analysts at ChemOrbis. “China and USA are planning big new plants for polyethylene, for example, in the next 3–4 years,” says Ezio Filippi, chief representative for ChemOrbis in Italy. “The effect on prices, with demand still being subdued globally, is obvious.” Unless new regulations are introduced to enforce the use of recycled plastics, cheaper virgin polymers will continue to displace them, Filippi says.

Any shift in EU regulation will likely be too late for Umincorp, which operates a plastics recycling plant in Amsterdam. The company is close to bankruptcy and has been appointed a financial administrator by a Dutch court. Umincorp uses a magnetic separation technology developed by the Delft University of Technology that can recover 90% of HDPE, polypropylene, polystyrene, and polyethylene terephthalate (PET) from plastic waste.

In another case, the waste processing firm Veolia shut its PET recycling plant in Rostock, Germany, at the end of 2023. Veolia blames the shutdown on a lack of willingness by customers in the food and beverage industry to support recycled PET. The plant had been using the UnPET process, codeveloped by Coca-Cola, to recycle about 36,000 t per year of used PET.

While Europe’s recycled plastics market is no doubt struggling, analysts say the plant closures could also be the result of consolidation as the sector matures. “Although some closures will occur, looking at the other side of the coin shows investments still pouring into the market with new projects going on line regularly,” Wood Mackenzie’s Taha says.