INSIGHT: Europe’s R-LDPE market facing unpredictable future

LONDON (ICIS)–Regulatory changes and a growing focus on higher quality packaging-suitable grades – possibly at the expense of other grades – could bring about substantial change to the recycled low density polyethylene (R-LDPE) market in the next 12 to 24 months, making short-term forecasting increasingly challenging.

• Waste Shipment Framework will impact bale availability
• Packaging and Packaging Waste Regulation (PPWR) brings mandatory targets to the sector
• Packaging-driven demand requires more innovation, investment

REGULATION
Regulation is having an impact across all recycled polymer markets, but for R-LDPE, one of the immediate areas of interest is the changes to the Waste Shipment Framework which looks to introduce an all-out ban on shipments of plastic waste to non-OECD (Organisation for Economic Co-operation and Development) countries from November 2026 until at least May 2029.

Information on a European Commission website states:

‘Exporting plastic waste, including clean, non-hazardous waste (which is destined for recycling) (B3011) will be subject to the “prior notification and consent procedure”. This requirement will apply from 21 May 2026.’

The website then goes on to outline specific rules for non-OECD countries:

‘Starting on 21 November 2026, there will be a complete ban on such exports until 21 May 2029.

After this period, non-OECD countries interested in importing plastic waste are invited to notify the European Commission and demonstrate their capacity to manage such waste in an environmentally sound manner, in order to be included in the list of non-OECD countries to which plastic waste may be exported from the EU.

The request to import EU plastic waste can only cover non-hazardous plastic waste (B3011).’

Non-OECD countries wishing to continue to import non-hazardous waste after November 2026 had to submit requests to the Commission by 21 February 2025, with over 20 countries doing so including the likes of Indonesia, which regularly imports R-LDPE bales from Europe.

Several of those countries included B3011 in their requests but sources canvassed in the R-LDPE market over March said they are preparing that exports of R-LDPE to non-OECD countries will be banned from November next year, leading to more waste to be processed in Europe.

With growing concerns about recent bankruptcies and closures of both mechanical and chemical recyclers in Europe, some R-LDPE market participants have questioned if the region will have sufficient recycling capacity to handle any additional plastic waste which would usually have been exported after the ban comes into effect.

Another question recyclers have is what will this do to the price of feedstock bales in the region.

March saw increases in prices for both rigid thick film post-consumer natural bales and flexible 98/2 post-commercial natural bales due to more limited availability and growing demand from downstream pellets going into the packaging sector.

If exports of waste are banned from next year, this could see more bales available in the European market, which would increase availability.

The PPWR has also lead to concerns voiced previously from some R-LDPE recyclers over certain reuse targets and what that means for pallet wrap and collation film.

The Commission has addressed concerns about this and other targets, with an assessment launched at the end of 2024 but it will be some time until any clarity on these targets is given, leaving the market guessing for now.

SHIFTING PELLET MARKET
Those bale price increases in March were driven by the growing demand for higher quality natural transparent pellets to serve the packaging sector.

There is a growing demand for low melt flow index (MFI) pellets, typically between 0.3-0.8 and produced from thick film/shrink hood bales, and high-MFI pellets typically between 1.5-2.0 and produced from stretch film bales.

High MFI pellets also contain more linear low density (LLDPE) material, which can increase the value of the pellets due to the improved technical qualities.

Many sources are looking forward to the Plastics Recycling Show Europe (PRSE) at the start of April to get a better view of the developments in the pellet sector.

One market source commented that the industry is seeing a period of ‘professionalization’ in terms of technology, investment and partnerships being formed to address what is hoped to be growing demand from the packaging sector, driven by the mandatory recycled content targets coming into effect in 2030 as laid out in the PPWR.

But what that means for mixed coloured pellet demand and production is not clear.

Market activity appears more limited compared to that of the packaging-grade related markets, also not helped by overall lower demand from the construction sector, which is one of the main end-use markets.

Even recyclers that used to put some production capacity into the mixed coloured sectors have stopped doing so as they focus on natural grades.

UNCERTAIN DEMAND OUTLOOK
Those producers producing the natural transparent pellet grades have seen good demand during 2025 to date, in some cases above expectations, but there is also a question of how much further this demand will increase, especially if pellet prices rise due to higher feedstock costs.

Less post-commercial and post-consumer waste as a result of the wider macroeconomic uncertainty in Europe means the good quality bales are increasingly hard to come by while demand from pellet could keep rising. But if bale prices rise too high, recyclers will find it hard to pass costs down the chain.

The main reason is linked to the impact of the PPWR – or the lack of it currently. Even though the regulation has been signed into law, most R-LDPE participants do not expect to see real impact on demand until much closer to the 2030 deadline, possible 12-24 months before.

So while demand for natural pellets is good right now, some recyclers fear that it would not take much for brands and fast moving consumer goods companies (FMCGs) to move away from R-LDPE back to virgin if recycled prices get too high.

The ongoing discussion on tariffs on imports of virgin PE from the US to the EU is also a point of discussion in the R-LDPE market, mainly because of the level of uncertainty impacting the wider PE market.

Of all the US PE imports into the EU, LDPE is the lowest as the EU has higher domestic production, but around 35% of EU PE demand was satisfied by imports from January to November 2024 according to new analysis of the ICIS Supply & Demand database.

The direct impact on the R-LDPE market caused by any tariffs will be minimal at best, but it is the uncertainty that this could cause the overall PE market that R-LDPE recyclers and buyers will have to confront when they are trying to make their plans for the rest of the year and beyond.

Coupled with the uncertainty around regulation and the move up the value chain that several players are starting to make, the R-LDPE market will need to remain agile enough to deal with whatever unforeseen circumstances it finds itself in over the coming months and years.

Insight by Matt Tudball