Chemicals, Polymers
December 16, 2024
Inclusion commitments raise global demand expectations for recycled polymers
HIGHLIGHTS
US, European virgin polymer prices remain cost competitive
Increased demand expected across the Americas
Domestic and cross-regional regulatory hurdles for Asian players
The first half of 2025 will be a critical period for the global recycled plastics markets. Sellers are tentatively optimistic for a possible increase in consumption but legislative uncertainties across Europe, Asia and the Americas could upend those expectations.
But with INC-5 negotiations on a global UN treaty for the elimination of plastics pollution breaking down in Busan, South Korea in late November 2024, pessimism continues to underline market sentiment as players call for support in establishing circular economies.
Despite this, some positivity has been expressed on improved conditions from 2024, with inclusion targets on the horizon.
European demand depends on legislation
European participants have pinned their hopes on legislative changes to bolster recycled polymer demand following sluggish market conditions in 2024.
In the R-PET market, demand is expected to increase through the implementation of the European Union's Single-Use Plastic Directive (SUPD), slated to start in January. The directive mandates a minimum of 25% recycled content in plastic beverage bottles. Many held offer levels stable towards the end of 2024, building up stocks for the first half of 2025 in anticipation of the legislation.
EU member states have yet to announce penalties for non-compliance with the SUPD, leading market participants to suggest that it could take several months until its full effects are realized.
As a result, sources said there is limited incentive to switch to recycled products amid competitive virgin material offers.
For the European recycled polyolefin and styrenics sectors, the outlook is less positive due to an ongoing lack of competitiveness compared virgin material, while weak demand from the automotive and construction sectors is expected to persist amid continued high interest rates.
While some sources anticipate a slight uptick in activity during Q2, both sectors see less pressing mandated commitments when compared to R-PET, clipping a reliable consumption foundation.
Investment, legislative developments drive positivity in Americas
Recycled polymer players in the Americas enter 2025 with cautious optimism as government directives are expected to increase both supply and demand.
On the US West Coast, demand for recycled PET clear flakes has remained relatively stagnant throughout the year, with Platts FOB Los Angeles prices fluctuating between $1,036/mt and $1,179/mt from Jan. 3 to Dec. 6. In contrast, the US Midwest has experienced stronger demand levels, with FOB Chicago prices rising from $1,179/mt on Jan. 3 to $1,411/mt on Dec. 6, Commodity Insights data showed.
In Mexico, brand owners and the newly elected administration are expected to spearhead initiatives aimed at increasing post-consumer resin content and improving plastic recycling infrastructure. This push is likely to increase demand, which may exacerbate tight supply conditions. Nevertheless, some participants are optimistic that any surge in demand will also stimulate enhanced collection efforts.
Demand for recycled materials in Brazil is also expected to improve, driven by consumer goods companies that are striving to meet sustainability goals for 2025 and legislation promoting the circular economy. This has also led to a strong performance in the food industry and substantial government investment, which should increase material availability.
Virgin dynamics, trade constraints offer challenges in Asia
Across Asia, weakness in virgin plastics pricing has been undermining sustainability goals. On the other hand, R-PET prices have been supported by the cost of raw material bales that have risen since Q1 2024. Alongside legislation promoting recycled plastics, this has reduced the competitiveness of R-PET against virgin product.
Premium recycled PET clear flake prices FOB Southeast Asia increased from $795/mt on Jan. 2 to $925/mt on Dec. 9, according to Platts data.
India will enforce minimum content legislation in 2025, mandating 30% R-PET content in packaging. However, players continue to favor consumption of cost-competitive virgin material, with profitability remaining their primary concern.
The Asian recycled polymer market, which has historically seen strong exports, will face challenges in diversifying its export base as European regulations tighten in the informal waste sector. This was expected to complicate food-grade certifications and routes for material out of Asia.
Chemical Trends H1 2025
This feature is part of our bi-annual report analyzing the biggest themes and trends that will dominate chemicals markets in the year ahead. Explore more features below, or to read articles looking at the year ahead for a wider range of chemical markets, visit Platts Connect
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