INSIGHT: Global recycling markets can rally despite pandemic-related challenges – Part II, Americas and Asia

Author: Paula Leardini

2020/07/17

LONDON (ICIS)--The pandemic has disrupted the US recycling market with restrictions on recycling and municipal waste services. Officials and local governments turned their attention almost entirely to coronavirus issues, whereas new ambitious recycling programmes and regulations were constantly announced from local governments and even brand owners prior to the pandemic.

A recent bill introduced to Congress, however, indicates that recycling is back in the legislative eye.

The Plastic Waste Reduction and Recycling Act underlines roles the US federal government and agencies can take to unify the approach in supporting plastics recycling as one nation, while recycling programmes have been actively set and regulated at the state level.

Several local governments have resumed work toward recycling. Colorado just passed a bill  to support recycling end markets, and Michigan is in motion to overhaul the states’ solid waste law to favour and improve recycling.

All the efforts are toward recovery of the recycling market, yet more work will be required to generate market demand in the longer term.

The US  recycling market is still short in supply where infrastructure should be better funded and located. Demand for higher quality generally is growing, therefore, the technology of the recycling infrastructure will need improvement.

Pricing of recycled resins will continue to drive the market supply/demand to gain a market shift on a large scale.

In Colombia and Argentina recycling has not been suspended during the pandemic and recovery should be smoother than other countries in the region.

In Mexico and Brazil, gradual reopening of curbside collections, drop-off locations and MRFs (materials recovery facilities) started in early July and should bring plastic waste supply back to pre-pandemic volumes over the next few months.

The recycling market is expected to recover relatively quickly in Latin America due to the needs of recycling workers to earn their income.

In the mid/long-term, demand for high quality recycled resins is expected to grow in the Latin America region, especially in Mexico, Brazil, Colombia, Argentina and Chile, driven by global brands and their pledges. Supply volume is still expected to be limited in addition to continued low quality output produced, due to the informal role of waste pickers and the low value supply chain.

However, improved prices of recycled polymers, and materials with recycled content, are likely to encourage supply chain developments, but this is a longer-term prospect.

ASIA
In Asia, formerly stipulated bans on single-use plastic have been postponed due to the coronavirus pandemic and are most likely to be implemented by 2021.

This has not restricted investment in the region, with recycling becoming the preferred end-of-life route for plastics.

New plants are expected in Indonesia, Thailand and the Philippines.

The investment in new capacity and other market developments in Asia are primarily brand led, often using joint ventures. Examples are the Suez low density polyethylene (LDPE) and linear low-density polyethylene (LLDPE) recycling plant in Thailand, due for the fourth quarter of 2020.  A Coca-Cola and Indorama plant in the Philippines is slated to start up in 2021. It is designed to reprocess 30,000 tonnes of polyethylene terephthalate.

Retail and supermarket chains have announced pledges to reduce single-use plastics in packaging and plastic bags.

Other developments include chemical recycling, where Japan appears to be a first mover, with a new joint venture, R Plus Japan, which involves twelve major brand owners. Investment in innovation has come in the form of Circulate Capital which is investing $106m in small to medium sized enterprises (SMEs) and Coles Nurture $3m Fund investing in 12 start-ups.

There continues to be a greater focus on informal workers as both the public and private sectors rely on waste pickers for waste management.

It is estimated that in southeast Asia the informal sector captures approximately 15% of generated waste, highlighting the lack of infrastructure for waste management in the region.  The informal sector in southeast Asia was particularly affected by the coronavirus due to the health risks in picking potentially hazardous waste.

This issue also impacts the trade of waste, with more stringent policies in place, such as the introduction of a 2% contamination limit on recycled paper and plastic in Indonesia.

More regulation can be anticipated in the coming months as the region protects its population and markets.

Insight by Paula Leardini, Hyejin Kim and Jia Hui Tan