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BIR head says oil price not to blame for poor recycled plastics market

A senior member of the Bureau of International Recycling (BIR) has said there is no direct correlation between the price of oil and that of recycled plastic in Europe.

Surendra Borad Patawari, chairman of the BIR plastics committee, said that when he considered price movements during the past six months “there is no direct link between the prices of these two commodities”.

Patawari, writing in the latest BIR plastics newsletter, said that at the turn of the year, the oil price decreased substantially from $68 (£44) to $47 per barrel. At the same time, he said, prices of LDPE in Europe also fell from around €520 (£368) to €410 per tonne.

“When the oil price increased to $55 per barrel in late February, [recycled plastic] also started to creep up. But when oil prices slid to around $45 per barrel during mid-March, the plastic price did not decline. On the contrary, it increased to almost €560 per tonne, which is higher than the price prevailing before the oil price drop”.

He added: “The market for plastic scrap is immature and volumes are relatively low compared to prime materials. Prices are also influenced by the policy and regulatory environment as well as by the quality of scrap. The influence of oil will be less in Europe as there is a large tax component between oil and raw material prices.”

Patawari said that the depreciating value of the Euro during the last six months has also impacted European plastic prices.

In the UK, industry representatives have maintained that companies such as Closed Loop Recycling (CLR) have been struggling because of the slump in virgin oil prices when the processing costs for recycled plastic remained high. But there was also recognition that the cost of buying baled used plastic - the raw material - had risen.

After a publicly-aired fight to keep afloat, CLR was taken over in a ‘pre-pack’ administration.

In the BIR newsletter, Grégory Cardot from Veolia’s French recycling division was positive about the future of recycled plastics on the continent.

“The decline in collections of plastic waste since the beginning of the year, coupled with strong seasonal demand from users, has put pressure on the European market, thus implying price increases over the coming months for the valuable grades in particular,” he said.

Readers' comments (1)

  • The selling price of recycled pellet is de facto capped at the Virgin price because buyers don't want to pay more than the Virgin price .
    The cost of producing recycled pellet is comprised largely of equipment , power , labour and waste plastics - the price of the last of these is driven by supply and demand , particularly demand from countries where the materials can be sorted manually/cheaply

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