New Iran conflict threatens plastics recycling market

Renewed fighting between the US and Iran in the Middle East could have “massive repercussions” for the recovered plastic sector, according to a senior figure in the global market.

Writing in BIR’s latest Mirror market report, plastics division president Henk Alssema reflects that the recent substantial fall in crude oil prices has been reversed and virgin polymer prices have also started to climb again. That usually means manufacturers turn to secondary plastics, which in turn boosts the recycling industry.

“This evolving situation [over the Strait of Hormuz] could have massive repercussions for our market going forward,” he writes. The developments come at a time of softening demand. The holiday season prompts plastics processors to reduce production levels while buyers are maintaining significant inventories as a precaution against potential supply disruptions arising from Middle East conflict.

Trading activity has slowed, while competitively priced imported materials continue to exert pressure on the European market. On the plus side, strong demand experienced over the past few months was helping recyclers work through the traditionally slower summer period.

Scale and Competitiveness

For fellow division board member Max Craipeau, the Middle East conflict clarifies the diagnosis: the plastic recycling crisis is driven not by imported recycled material but by “the structural oversupply of virgin resin – the product of abundant fossil feedstock and years of aggressive petrochemical expansion, above all in China.”

Craipeau writes of an imbalance of scale with the annual capacity of Europe’s virgin PET industry of 2.6 million tonnes compared to China’s PET output of some 17.5 million tonnes. Overcapacity of that magnitude sets the global price floor for virgin PET, HDPE and PP. Recyclates, produced through a fundamentally different and more costly industrial process, are dragged down with it.

Europe is no longer the benchmark. The EU’s 25% requirement for beverage bottles was a necessary first step, but India is moving towards 40% recycled content for PET food packaging while Nigeria has announced a framework reaching 50% by 2030. Craipeau argues for higher targets for recycled content in new plastic products.

“The lesson of the Hormuz episode fits into a single sentence: at rational virgin prices, recycling operates sustainably; against structural overcapacity, it cannot compete on price alone,” he concludes.