With the novel coronavirus pneumonia epidemic intensifying in Europe, the European countries have stepped up the epidemic prevention and control measures, and the worries of recycling industry on the long-term impact of the major recycling market in Europe are increasing rapidly.
Some industry sources have revealed that they are worried about:
Less recycled volume;
Loss of potential downstream demand in non packaging industry;
Logistics interruption;
Buyer abandons sustainability measures;
Reduce the necessary long-term investment.
Affected by season and epidemic isolation, the recovery volume decreased
Even at the end of last week, industry sources revealed that concerns about the recycling industry were limited to the impact of price competition from nascent plastics and limited customer relations with countries such as Italy.
The reason is that novel coronavirus has a major impact on petrochemical products, which hinders the global supply chain, changes the way consumers demand and leads to market turbulence. At the same time, due to the continuous price war between Saudi Arabia and Russia, the crude oil price plummeted, and the emerging plastics market across Europe also fell, which worried the industry about the impact of price competition from the emerging plastics.
In addition, despite other warnings from some buyers, the recycling market is largely normal. At present, however, this situation is changing.
According to the most commonly used recycled material in Europe - Recycled PET (r-PET) market, industry sources also revealed that they have found that consumer behavior has changed, especially in purchasing habits and recycling habits.
"When people buy bottled water, they don't take it back for recycling, they store it," a German recycler said Tuesday With Europeans panicking about buying food and other necessities, the demand for pet in March has increased dramatically.
Under the outbreak, the consumption habits of European citizens changed, and the recycling action was not so active, resulting in the reduction of recycling volume.
"On the one hand, it is influenced by the seasonal routine in February and March, because people drink less bottled drinks in winter. But on the other hand, purchasing takes a lot of time, so consumers store bottles at home, and some people use glass bottles instead. " The recycler added.
Germany is one of the most mature DRS in Europe, under which consumers return used PET bottles to businesses through vending machines set up in supermarkets and other places. What is the impact on the country's recycling industry today when social distance and self isolation are required in an epidemic? It is still to be evaluated.
As mentioned earlier, the consumption of bottled drinks has declined, which has led to tight supply of recycled plastic bottles, so many people will pay more attention to how to send used PET bottles to the recycling stream during the outbreak.
At the same time, the epidemic may also affect the trend of bottled beverage consumption peak season. If you still need to keep social distance in summer, people may not have many opportunities to go out, which will lead to a decrease in the material source of r-PET.
Affected by the quarantine measures, this year's bottled beverage sales season will be affected.
In other important areas of recycled polymers, such as recycled polyethylene (R-PE) and recycled polypropylene (r-pp), a similar decline in recovery is expected.
Recycled polyethylene (R-PE) also has a downward trend in consumer demand.
"We plan to reduce the amount of material entering the plant in the next few weeks," said a large French waste collection and reprocessing company.
Signs of a reduction in collection rates usually take weeks to emerge on the market, as it takes some time to deliver post consumer or post industrial materials to the recycling chain. This means that there will be a shortage at the beginning of peak season of r-PET and r-po. However, given the uncertainty of demand, the peak season of 2020 may not arrive as scheduled.
The demand of downstream terminals in automobile and other non packaging industries has declined.
The impact on r-po demand may be reflected in the end application market. The main end application markets of r-po include automobiles, buildings, garbage bags, outdoor furniture and packaging. Due to the outbreak of the epidemic, the demand for automobiles has declined sharply, and the demand may further decline after the automobile manufacturers all over Europe shut down their factories temporarily.
Auto maker Aston Martin announced on Tuesday that it would close two factories in gaydon and South Wales from March 25 and reopen as early as April 20.
The direct production of novel coronavirus caused by production interruption in construction industry is relatively small, but it is likely to be seriously affected by the economic downturn. At the same time, due to the implementation of isolation measures, the demand for outdoor furniture may also be affected.
On the contrary, packaging demand is expected to rise sharply. For health and hygiene reasons, it is expected that buyers will prefer plastic packaged food. In addition, demand will rise during the outbreak due to the wide use of polyolefin in cleaning and hygiene products.
Under the influence of the epidemic, the demand for plastic bottle packaging increased.
However, it is not clear to what extent this will benefit the recycling industry. Some companies believe that the epidemic will allow industries to reduce their focus on sustainable goals in the short term. They also think brands will use more virgin plastic because it may be easier to get.
In addition, because the prices of colorless r-PET flakes and food grade particles, recycled high-density polyethylene (r-hdpe) natural and food grade particles, and r-pp natural particles are higher than those of raw materials, the use of raw materials will only be further increased.
Because of the competitive price of raw plastics and the easier access, the use of raw materials will be further increased.
"In the current situation, if they can't find recycled low-density polyethylene (r-ldpe), they will choose virgin LDPE as the product supply," said one large packaging manufacturer
As the epidemic intensifies, the industry has also begun to worry about staff shortages, and if small recyclers cannot continue to operate, they will also face a shortage of working capital. Compared with the petrochemical industry, the cash reserves of recyclers are usually not so sufficient.
Border closures in Europe pose challenges to the logistics supply chain
Another issue of great concern is logistics. At present, several countries / regions in Europe have closed their borders and restricted the flow of goods and people, thus posing a challenge to the transportation of materials to and from recycling stations.
"We see problems with logistics, such as the delivery of bottles and finished products." "Some of the borders are closed, although it's mainly for personnel testing, rather than cargo transportation, such as the driver's need for temperature testing at the border, but it also affects the speed of transportation," said an r-PET manufacturer
In the whole recycling industry, the pan European trade flow generally includes post consumer and post industrial wastes, which are usually from overseas, and the regenerated flakes and particles are usually exported across the border.
"At present, the logistics problem in Europe is a headache. All products and materials do not know what problems they will encounter in the end, which will affect the use of products." Said a sheet producer in Central Europe.
Under the epidemic situation, countries take measures to "close the border" and affect the logistics operation.
Logistics problems have prompted some companies to build inventories to deal with any potential disruption.
"When we do bulk purchases from France, the Netherlands and Italy, when the border is completely closed, there is a big problem: where do we get the materials? And 50% of our final products are shipped from Germany to Europe. If we have to reduce production, customers will ask if we can provide the materials they need. "
"When we asked for factory transportation, they said it was OK. At present, everything seems stable on the surface, but the question is, when the government decides to close the border, what will happen next? " A large European recycling company raised questions.
The uncertain response of European governments to the coronavirus has further clouded demand: some are stockpiling, others are operating conservatively and avoiding new orders.
"We still have orders on hand, but there will be no new orders in the next few weeks. The next few weeks are very uncertain. " A large French waste collector and handler said.
Limited long-term investment due to uncertain epidemic impact
The long-term impact of the epidemic on investment decisions is also uncertain. Investment in mechanical and chemical recycling is crucial if the industry is to achieve Packaging Recycling Legislation and brand goals. At present, there is a serious shortage of food grade materials in all recycled polymers in terms of recycling and reprocessing.
For example, the reprocessing capacity of r-PET is only 300000 tons / year, while that of r-hdpe is about 100000 tons / year.
For other recycled polyolefin composite (r-po) grades, only a very small number of food grade materials can be supplied, given the traceability and classification requirements of the European Food Safety Agency (EFSA).
To achieve the 2025 target, it is essential to develop new technologies and collection methods, as well as to improve chemical recycling and reprocessing capacity.
However, the weak economic situation is restricting investment, especially in recycling and other fields. Most investors are from small start-ups, because compared with petrochemical products, the barriers to investment in recycling market are lower; in addition, the recycling system is still largely controlled by the authorities. In the current situation, these two forces are relatively fragile.
The uncertainty of the epidemic has kept companies conservative in their investment strategies.
For example, due to the global recession in 2008, austerity measures were widely adopted throughout Europe, resulting in low investment in collection systems by local authorities for more than a decade.
Due to the need of epidemic prevention and control, the society has to take large-scale isolation measures, which is likely to further lead to global recession.
Although most of Europe's recycling industries are still operating as usual, the impact of the epidemic is likely to seep in the coming days.
