Unutilized potential for recycling: Brazil leaves money on the beach

Brazil's recycling industry faces a significant challenge as demand for recycled polymers outpaces supply, widening the price gap between recycled and virgin resins.

A study released on Sept. 18 revealed that over 90% of waste on Brazilian beaches is plastic, yet recyclers are struggling to secure enough feedstock to meet market needs. This disparity highlights a critical issue: Brazil's inefficient scrap collection system is leaving valuable resources literally on the beach.

The study, conducted by Sea Shepherd Brasil and the Oceanographic Institute of the University of São Paulo, USP, shared the findings of their first Clean Waves Expedition. This extensive research lasted 16 months, covering over 7,000 km of coastline and 306 beaches, making it the largest research ever conducted on the profile of marine waste in Brazil.

"We aim for the project's results to not only shock but also provoke action, bringing to light the need for public policies and a change in plastic consumption culture in Brazil," Nathalie Gil, president of Sea Shepherd Brasil, said.

The X-Ray of Waste on the Brazilian Coast revealed that 100% of the surveyed beaches are polluted with plastic waste, with single-use items accounting for 61% of the debris. This alarming pollution not only threatens marine ecosystems but also represents a missed opportunity for the recycling industry.

Despite the abundant plastic waste in the oceans, Brazil's polyethylene terephthalate recycling industry is paradoxically grappling to source feedstock. This disconnect underscores a critical failure in Brazil's waste management system, a trend also seen globally.

Worldwide, more plastic waste escapes into the environment, 22%, than is collected for recycling, 15%, according to a study by the Organisation for Economic Co-operation and Development, OECD.

The contradictory struggles of Brazil's PET recycling sector

Due to insufficient supply, the Brazilian industry is currently operating only around 70% of its total installed capacity of 500,000 metric tons per year for recycled PET, according to sources.

As demand for post-consumer PET outpaces that for virgin materials, increased competition for buying post-consumer PET bottles bales has driven prices up since the beginning of 2024, reaching their highest levels ever.

Platts, part of S&P Global Commodity Insights, last assessed post-consumer PET clear bottle bales at Real 5.20/kg DDP São Paulo on Sept. 19, up 70 cents/kg since Aug. 12, when the assessment was launched.

Despite rising feedstock costs, prices for downstream flakes are capped by the virgin resin price.

Platts last assessed recycled PET clear flakes at Real 8.60/kg DDP São Paulo on Sept. 19, up Real 1.10/kg since Aug. 12, when the assessment was launched, surpassing the threshold price of virgin resin and turning away buyers, according to sources.

Considering the grinding process yield, usually around 70%, and all operating costs, recyclers in Brazil have been dealing with margins approaching negatives throughout 2024.

Strong Brazilian GDP data indicated a positive outlook for scrap generation and feedstock availability for recyclers if collection keeps pace. "This is positive for scrap availability, but we usually see a delay before higher consumption improves scrap supply," a bales seller said.

Additionally, Brazil's Chamber of Foreign Trade approved on Sept. 18 an increase in import taxes for PET, which could raise domestic prices for virgin PET resin, enabling recyclers to also increase flake prices, even though supply constraints persist.

If Brazil can bridge the gap between the significant production of plastic scrap and its collection for proper reuse, it could transform an environmental crisis into a significant economic opportunity and provide a solution for a key industry sector.