EU adopts packaging waste regulations; mixed views on market impact

The European Council adopted a regulation to mandate the amount of recycled content in plastic production, a move which will be critical for participants across recycled polymer markets in the second half of the decade, according to a Dec. 16 press release.

The Packaging and Packaging Waste Regulation will legally bind reuse targets for producers, with different polymers requiring different thresholds.

Affected products include packaging for prepacked fruit and vegetables of less than 1.5 kg, which are often PET-based, and single-use cosmetic and toiletry products, such as shampoo bottles, which are often made of high-density polyethylene or polypropylene.

Packaging for individual portions of condiments, beverages served at public venues and lightweight plastics bags will also have their recycled content mandated.

The regulation will seek to minimize the weight and volume of packaging and minimize "substances of concern," which refers to per- and polyfluorinated alkyl substances beyond the mandated amount.

The PPWR reuse targets will vary depending on the end-use applications. The EU Council cited 40% for transport and sales packaging and 10% for group packaging as examples.

For single-use bottles made of contact-sensitive non-PET plastic, such as polyethylene and polypropylene, producers will be required to manufacture products with a minimum recycled content of 10% by 2030 and 65% by 2040.

"The formal adoption by the Council today marks the final step in the ordinary legislative procedure. The regulation will now be published in the EU's Official Journal and will enter into force," the EU said in the Dec. 16 release. "The regulation will be applied 18 months after the date of entry into force."

The passing of the PPWR through the EU Council marks a significant step forward in the EU's plans to promote circularity, following the recent initiation of the Single-Use Plastic Directive that is due to begin in 2025.

The SUPD is set to be implemented in 2025, which will require 25% recycled content in PET beverage bottles and establish a 77% target for the separate collection of plastic bottles. Despite the support offered by regulation in promoting recycled material, R-PET participants remain concerned about the appetite for increased consumption of recycled content.

Virgin material has become more competitive in the lead-up to 2025. Paired with the absence of penalties announced, consumers are indicated to prefer cutting costs by purchasing virgin material.

Legislation impact on demand

Expectations of PPWR pulling up demand for recycled polyethylene are more pessimistic compared to recycled PET due to a perpetual lack of consumer cost-competitiveness for the former against its virgin counterpart.

Recyclers and converters do not expect these mandates to increase R-PE demand by any significant amount in the short term, with the legislation viewed as a long-term demand driver.

The R-HDPE market has been slow toward the end of the year, with HDPE producers waiting to see consumer cost-competitiveness in favor of virgin materials and waiting for PPWR to be adopted to dictate how much recycled material they would need to acquire.

Platts, part of S&P Global Commodity Insights, assessed R-HDPE natural pellets FD NWE at a Eur730/mt premium to their virgin counterpart Dec. 11, up Eur2/mt on the week, reflecting expectations of significant pricing disparity between the markets, with an average fourth-quarter spread of Eur613/mt.