SABIC sees global recycled plastics market surging to $43 bil by 2026, says regional head

The growing global emphasis on environmental sustainability is fueling a boom in the recycled plastics market, but questions remain over feedstock costs and accreditation consistency, SABIC vice president and regional head of South Asia and Australia Janardhanan Ramanujalu told S&P Global Commodity Insights in an interview.

"The global recycled plastics market is projected to grow from $27.9 billion in 2021 to $43.5 billion by 2026," he said. "This demand for recycled plastics is supported by advancements in recycling and a stronger awareness of the environmental benefits provided by recycled plastics."

Platts Analytics projects the combined volume of recycled polyethylene, polypropylene and polyethylene terephthalate produced globally will rise to around 30 million mt in 2026 from 20 million mt in 2021 and combined equate to 10% of the virgin demand volume by 2026, up from around 7% in 2021.

The uptrend is being driven by both governments and the corporate sector showing increasing commitment to environmental sustainability driving plastics recycling investment.

However despite the rapid uptick in production capacity, demand continues to outstrip supply. Feedstock shortages are common, particularly for high-quality bales, lowering conversion yields and capping producer output.

With demand ever-increasing, new sources of feedstock will be necessary to sustain the industry's growth, Ramanujalu said.

Ocean-bound plastics

One source of alternative feedstock currently being explored was ocean-bound plastics, or OBP, which SABIC defines as used plastic material that has been recovered from ocean-feeding waterways and inland areas within a 50 km radius of the ocean.

An estimated 8 million mt/year of plastic ends up as OBP and comprises 80% of marine litter, making OBP a relatively untapped source of post-consumer feedstock, Ramanujalu said.

Although the collection and processing of OBP is in its infancy, SABIC is positioning itself as a first-mover, collaborating with Malaysia's Heng Hiap Industries to produce the world's first certified OBP-based circular polymers. HHI recovers the OBP in Malaysia for conversion into pyrolysis oil through chemical recycling for SABIC to use as an alternative feedstock in its production process.

SABIC is also investing in mechanical recycling, which shreds and remolds plastic waste into new recycled resins.

"As well as helping to protect our oceans and waterways, recycling ocean-bound plastics helps generate value for local communities by increasing demand for recycled plastic across the industry," Ramanujalu said.

Challenges

A continuing challenge for the recycled plastics sector is consistency in accreditation, with accreditation bodies differing in their certification processes and definitions. This can prove a sticking point in encouraging the adoption of plastics recycling, as it can cause customer confusion and affect perceptions of the robustness of the standards, Ramanujalu said. Even the definition of OBP varies between accreditation bodies.

SABIC uses the Zero Plastic Oceans accreditation and Control Union to qualify the feedstock material produced by HHI as ocean-bound.

A second certification from ISCC PLUS traces alternative feedstock across complex supply chains by implementing a mass balance accounting system that defines whether a product can be classified as renewable or circular. The mass balancing approach also allows original equipment manufacturers or OEMs to document and quantify the sustainability of their applications made from these certified materials, Ramanujalu said.

The economic viability of chemical recycling and its associated costs for accreditation can also pose hurdles for recyclers, especially smaller companies, he said.

Adopting chemical recycling infrastructure and technologies can be costly, with no immediate economic reward while market share against virgin plastics remains limited.

Given the wide variance in feedstock and labor cost across regions, the pricing of recycled materials can also vary sharply, and the development of pricing standards will be an important step forward for the industry in rationalizing investment costs and setting budgets, Ramanujalu said.

Nevertheless, as sustainability become increasingly entrenched, further growth is expected in the recycled plastics market despite the obstacles, he added.

"While there has been progress made, we still have a long journey ahead in realizing a circular economy in Asia," he said.

"By forging new collaborations, we hope to help reshape our industry and our value chain and in doing so, lead the way in helping to guide the necessary regulation and governance to address societal challenges in a lasting, meaningful way," he added.