OUTLOOK ’24: Europe mixed plastic waste demand weakness to continue

LONDON (ICIS)–Demand for mixed plastic waste in Europe from the mechanical recycling and burn-for-energy sectors is expected to remain weak into 2024 amid ongoing challenging macroeconomic conditions.

This has resulted in reduced industrial output which has blunted demand for burn-for-energy volumes, and from key mechanical recycling end-use sectors such as construction.

For burn-for-energy markets, only the defence sector has seen robust demand in 2023 owing to ongoing geopolitical tensions.

For mechanical recyclers, the low price of mono-material bales and falling prices for most finished recycled polyolefin flake and pellet grades in 2023 have removed the economic incentive to produce from mixed polyolefin bales that had been seen in 2022. This is expected to continue to be the case while bearish conditions persist across mechanical recycling markets. Estimations of how long this will be vary from player to player, although some sources expect that demand will remain limited at least through H1 2024.

Buying interest from chemical recyclers has remained firm throughout 2023, but the market remains too small to impact the overall supply/demand balance for mixed plastic waste.

Nevertheless, the sector’s market share of mixed plastic waste – and mixed polyolefins in particular – is expected to increase in the mid-term as additional capacity comes on stream.

While chemical recycling can process waste types that it would be difficult or impossible for mechanical recyclers to use, it is a myth that there is no link between the input waste quality and output quality of chemical recyclers, and that chemical recyclers can use any form of waste.

For example, pyrolysis-based processes typically aim to limit chlorine content in bales due to corrosion risks; polyethylene terephthalate (PET) content in bales because it doesn’t pyrolyse and it creates oxygenation; and nylon and flame retardants, which also oxygenate the process. Pyrolysis is the dominant form of chemical recycling in Europe.

They also typically aim to minimise moisture content, because loose water molecules in the reactor can cause changes to pressure values. The production of pyrolysis oil requires an inert atmosphere (i.e. heating in the absence of oxygen).

Any sorting that needs to be done to remove the presence of these materials in the input bale adds additional cost and slows throughput. As a result, pyrolysis-based chemical recyclers typically opt for mixed polyolefin bales (with a typical minimum 80% polyolefin content, and often a minimum 90% polyolefin content) as an input source.

Coupled with this, the quality of the input waste has a direct impact on the quantity and type of impurities present in the pyrolysis oil output and the boiling point of the pyrolysis oil. Boiling point, chlorine content, sulphur, fluorine, nitrogen and oxygen are among the key determiners of pyrolysis oil prices.

Pyrolysis oil can be – and often is – run through an upgrader or purifier to enhance its properties, but the quality of input waste has an impact both on yield and quality – and therefore profitability – throughout the pyrolysis chain that is often under-discussed.

Because of the link between input and output quality in pyrolysis oil, 2023 had begun to see the emergence of new grades of mixed polyolefins – trading at a premium to standard grades – specifically targeting the needs of pyrolysis-based chemical recyclers. Multiple waste managers have confirmed in Q4 2023 that they are developing projects to provide bespoke mixes.

This is in response to some of the challenges chemical recyclers have found with pre-treatment and sorting on site, particularly connected to the need to continuously adapt processes to account for continually shifting feedstock mixes. Pre-treating and sorting at waste manager level creates economies of scale and prevents the slowdown in throughput sometimes associated with chemical recyclers sorting on site.

Chemical recycling players continue to explore the use of pellets and agglomerates because they help:

• Limit the impurities such as sulphur, fluoride, oxygen, chlorine and nitrogen in finished pyrolysis oil
• Enable placing feedstock straight into the reactor and thereby save on capital expenditure
• Avoid slowing throughput and the expense of onsite sorting
• Avoid degradation and allow players to stockpile material ahead of plant scale-ups

This is a trend expected to increase in the mid-term, alongside the underlying growth of the chemical recycling sector, and which has the potential to radically reshape the market in the mid-term.

Focus article by Mark Victory

The introduction of three new pyrolysis oil spot price quotes in to its recently renamed Mixed Plastic Waste Europe and Pyrolysis Oil Europe pricing service has made ICIS the first market information service to price chemical recycling outputs. With our pre-existing mechanical recycling, waste bales, and virgin price coverage, ICIS gives you the complete picture across the value chain. For more information on the new prices please contact Mark Victory at mark.victory@icis.com.

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