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Analysis: Laws, company policies boost Europe recycled polymer demand

https://www.chemnet.com   Mar 27,2017 Platts
A combination of factors including legislation and measures adopted by some of the largest consumers of polymers has raised the demand growth rate for recycled plastics polymers in Europe to above that of virgin grades.

Industry sources say a there has been a drive toward a recycled polymer industry in Europe over the past five years as the US has developed a shale-gas-based petrochemicals industry.

However, there are several factors hampering the growth of the recycled polymer industry.

In an end-February interview with S&P Global Platts, Mark Garrett, the CEO of Austrian petrochemicals producer Borealis, said recycling would be one of the strongest measures for the European petrochemicals industry to rise to the challenge posed by the burgeoning shale based petrochemicals production in the US.

Garrett said that some of the recent steps like an ordinance introduced by the German government in mid-2016 to improve waste plastics collection and recycling, besides commitments made by some of the major consumers such as Unilever and Proctor & Gamble has been a shot in the arm to the recycling industry.

"The demand for recycled polymers is growing at a rate much faster than the virgin grade," he said. Garrett added that Borealis is trying to expand its recycling business both by acquiring smaller companies and making greenfield investments.

Borealis said in a separate e-mail that it asked some consultants to estimate the growth in recycled plastic polymers and they reached a figure of 6-15% between 2016 and 2017.

The demand growth for virgin grade polymers in EU is estimated at a much lower 1.1%. The total demand for polymers such as polyethylene and polypropylene in Europe is currently estimated at 27.4 million mt a year.

An exact estimate of demand for recycled polymers is not available, but mandates among polymers buying companies to use recycled product in their assembly lines ranges between zero and 100%.

The EU has set up recycling several targets for the entire block. While the economic block has a common target of recycling 75% of its packaging waste by 2030, it plans to recycle 65% of its municipal waste by 2030.

Countries such as Germany and the Netherlands have adopted measures to promote recycling. Germany, which already generates 18 million mt/year of plastics waste, introduced an ordinance in mid-2016 that raised waste collection and recycling targets.

Unilever, one of the largest consumers of polymers in Europe, announced during the World Economic Forum annual meeting in Davos, Switzerland, in January that the company would shift to using 100% of recycled material for its plastic packaging by 2025.

Few other fast moving consumer goods companies, including Coca Cola have raised procurement of recycled plastics.

"Demand for recycled polymers has risen because companies like Coca Cola are demanding higher volumes," a Lithuania-based converter who supplies products to several fast moving consumer goods companies said.

Some of the major producers in Europe are reacting to these developments. Borealis said in a statement released end-February that it has fully acquired German plastics recyclers MTM Plastics and its affiliate MTM Compact.

The companies, based in Niedergebra, Germany, are among the largest recyclers in Europe and recycle polyethylene and polypropylene.

Total has introduced a range of high density polyethylene compounds. The company's initial production capacity of 20,000 mt/year for high density PE circular compounds will come online in 2020.


CHALLENGES TO RECYCLING

Even though Germany and the Netherlands have set up deposit schemes for collection of plastics, several other European countries lack such measures.

"There is no pan-UK plastics deposit scheme in the UK. That makes jobs for the recyclers very difficult," a UK based recycler said. "Germany has developed a very successful deposit scheme which should be followed by other European countries," he added.

Another trader said that a lack of government regulation in several European countries has been preventing the recycled polymers industry from growing.

"It's difficult to sort some plastics like PP and process it for recycling," an industry consultant said. "Also, it remains to be seen if containers made out of recycled material will be cause of any problems to consumers," he added.

The consultant said recycled products have so far worked well in applications such as covers for underground pipes and in the construction industry.
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