LONDON (ICIS)--Recycled polyethylene (PE) supply could be affecting demand in the European virgin market, according to a producer on Friday, at least if we consider only mechanically recycled PE.
“The overall scenario is that more recycled material is available,” it said.
PE demand has been slow in the second half of July, and several reasons could be contributing to this.
The attitude of several buyers has gradually become more speculative in the last couple of years, said the producer.
They are building up stock of some grades when prices are very low and several spot actions are done by PE producers, typically in the last quarter of each year.
On top of this, the expectation of new imports from North American capacities is ever present, supporting hand-to-mouth buying, as few players expect higher prices to come.
Another element that many players have not seriously considered is the amount of recycled material available in the market.
“The latest data from 2016 shows 3.8m tonnes of mechanical recyclates PE, of which 2m stay in Europe. Most of this is actually for non-film applications,” the producer said, adding that film applications cover the biggest share of PE demand.
Film is not widely recycled at present.
“The trouble is statistics on recyclates are something pretty new and not yet homogenous. What is recyclate? Is it a bale that is ready for recycling? Is it a granule ready for re-use? Is it scrap? What about the severe rules with which virgin PE safety data sheets are prepared? Have we been over-cautious up to now?” the producer went on to say.
“I think a lot of topics have still to be clarified, we need homogeneity on definitions even at EU level.”
Some producers are actively looking at the prospect of chemical recovery of feedstocks in the search for a circular economy, but this is not yet commercially viable.
What sources do agree on is that recycling has the power to affect PE growth in future, but the recycling industry is having difficulty keeping up with consumer demands.