Smaller plastics recyclers may not survive the current coronavirus outbreak, according to the plastic committee president at the Bureau of International Recycling (BIR).
In his latest World Mirror on plastics, Henk Alssema from Vita Plastics in the Netherlands warned that demand is weak for recycled plastics as a result of lockdowns implemented in many countries.
He added: “In all sectors not considered essential, processors and buyers of plastic products have suspended or massively reduced production.
“The resulting slump in demand has led to swelling inventories for a large number of recyclers. Against this backdrop, many of them are also cutting back on output, putting employees on short-time working and even planning a complete shutdown.
“An additional problem for many companies is the lack of liquidity owing to high stocks and the large investment made over the years.
“Market observers expect that some of the smaller recycling companies in particular will not survive this period of drought.”
He also warned that the low oil price has pushed prime virgin material values to historically low levels and that the gap between virgin and recycled materials has melted away.
When couple with weak demand, this has resulted in very low prices for all types of recycled plastics including LDPE, HDPE, PP and HIPS.
But he finishes his article on an optimistic note when he said: “On the other hand, many opportunities will follow in the wake of the pandemic when the time comes to rebuild.
“This moment of recovery will be an opportunity to rethink our society and to develop a new model of prosperity. The massive investments must trigger a new global economic model that is based on the principles of the circular economy, with new value chains and a very important role for ‘our’ recycling industry.”