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Bale Market

Waste bale shortages expose sorting, collection shortfalls and add pressure on recycling chains

European waste bale supply is tight across all major recycled polymer chains as growing demand from the packaging sector continues to expose shortfalls in collection and sorting capacities.

There are now major supply shortages across the recycled polyethylene terephthalate (R-PET), recycled high density polyethylene (R-HDPE), recycled polypropylene (R-PP) and recycled polyvinyl chloride (R-PVC) chains.

Multiple players across these markets expect current shortages to last throughout 2021, and potentially across 2022.

Waste bales - either from post-consumer or post-industrial origin - are the feedstock for the recycling industry, and low availability is adding pressure throughout the recycling supply chain.

For R-PP, for example, flake and pellet players have had to limit operating rates by as much as 40% in recent months due to a lack of bale availability.

There are multiple factors in the current shortages, and which differ slightly from market to market, including the onboarding of projects delayed by the coronavirus pandemic, logistic and workforce disruption due to COVID-19, changes to waste input mixes, and substitution of virgin material owing to shortages in the first half of 2021.

This would be enough to replace 11% and 15% of virgin plastic packaging, respectively under those same conditions.

However, wastage rates (the amount of material lost during production due to contamination or mechanical losses) are typically from 25-50%, packaging does not have a 100% share of the market, and many applications can only use natural material. Natural material comprises around 10% of bale input.

This suggests that current collection capacity could replace less than 1% of current virgin polyolefins plastic packaging consumption.

''There is a risk that the escalation in recycled polymer prices and inability to increase supply due to structural constraints will begin to challenge some users in their ambitions to attain high recycled content levels and for some to use recycled content at even a minimum level.'' - Helen McGeough

Brands have increasingly begun to announce ambitious recycling content targets, which are typically for 25-50% recycled content, but can be as high as 100% recycled content.

As a result of ongoing single bale shortages, downstream players are increasingly looking to create joint ventures with waste management firms and to backwards integrate over expectations that bale shortages could become endemic, largely the result of rising demand from the packaging sector.

Given the current lack of bale capacity some polyolefins players are expecting investment in selection systems for mixed-plastic bales, and an increase in usage of mixed-plastic feedstocks.

These are the same feedstocks that many chemical recyclers in Europe typically seek to use, potentially placing the two industries in direct opposition. At present, many calculations on the economic feasibility of chemical recycling plants are predicated on the assumption that waste management companies will pay to have waste plastic bales taken away, or that partially sorted bales will remain at low cost.

This is currently common because the alternative would be to pay gate fees for incineration or landfill, and as long as the money paid to chemical recyclers is below gate fee costs, waste managers are prepared to do it.

As this material increasingly becomes desirable or usable for the mechanical recycling chain, though, competition is likely to intensify and making material sold at negative values increasingly less likely.

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