[Plastic] European circular economy under the epidemic: reduction in recycling volume, weak terminal demand, and cautious investment

As the new crown pneumonia epidemic has become more and more intense in Europe, the epidemic prevention and control measures adopted by European countries have stepped up step by step.

Some industry sources revealed that the current concerns are:

Less recovery volume;

Loss of potential downstream demand in the non-packaging industry;

Logistics interruption;

Buyers abandon sustainability measures;

Reduce the necessary long-term investment.

Affected by seasons and epidemic quarantine

Even last weekend, industry sources revealed that concerns about the recycling industry are limited to the impact of price competition from nascent plastics and limited customer relations with countries such as Italy.

The reason is that the new coronavirus has had a significant impact on petrochemical products, hindered the global supply chain, changed consumer demand patterns and caused market shocks.

In addition, although some buyers have issued other warnings, the recycling market is largely normal.

Regarding the market for recycled PET (R-PET), the most commonly used recycled material in Europe, industry sources also revealed that they have found that consumer behavior has changed, especially in terms of buying and recycling habits.

A German recycler said on Tuesday: “People don’t take it back after buying bottled water, but store it.

“On the one hand, this is affected by the regular seasons of February and March because people seldom drink bottled beverages in winter.

Germany is a country with one of the most mature DRS in Europe.

As mentioned earlier, the decline in the consumption of bottled beverages has led to a tight supply of recycled plastic bottles.

At the same time, the epidemic may also affect the trend of bottled beverage consumption during the peak season.

In other important recycled polymer fields, such as recycled polyethylene (R-PE) and recycled polypropylene (R-PP), similar recovery rates are expected to decline.

Recycled polyethylene (R-PE) also has a downward trend in consumer demand.

"We plan to reduce the amount of materials entering the factory in the next few weeks," said a large French waste collection and reprocessing company.

Signs of reduced collection rates usually take several weeks to show up on the market, because it takes time for post-consumer or post-industrial materials to be sent to the recycling chain.

Decline in demand from downstream terminals in non-packaging industries such as automobiles

The impact on R-PO demand may be reflected in the terminal application market.

The automaker Aston Martin announced on Tuesday that it will close its two factories in Gaydon and South Wales, England, starting on March 25, and reopen until April 20 at the earliest.

The direct production of the construction industry due to production interruptions caused by the new coronavirus is relatively small, but it is likely to be seriously affected by the economic downturn.
At the same time, due to the implementation of isolation measures, the demand for outdoor furniture may also be affected.

On the contrary, packaging demand is expected to rise sharply.
Due to health and hygiene considerations, buyers are expected to favor plastic-packaged foods.
In addition, because polyolefins are widely used in cleaning and sanitation products, demand will also increase during the epidemic.

(Keyword: Polyethylene)