According to Plastic Recycling Updates, the COVID-19 pandemic has intensified competition in the existing plastic recycling market, making the price of recycled plastics volatile. And creating uncertainty about how end users will meet their sustainability commitments.

Over the past few years, the recycling market for almost all materials has been challenged due to changes in overseas demand. Tariffs imposed on recycled materials and other goods, as well as ongoing disputes in the freight market, have created additional pressure.

Now, the coronavirus pandemic has added to health and safety concerns, job shortages and a general slowdown in manufacturing.

"It's every possible challenge you can imagine," said Joe ·, chief economist at the Institute of Waste Recycling Industries (ISRI). Joe Pickard said last week during a webinar hosted by several recycling stakeholder groups. He said the current situation is probably the most difficult time many recycling companies have ever faced.

For plastics, the impact of the coronavirus has coincided with a historic drop in oil prices, meaning that new plastic materials could be much cheaper than recycled resins for the foreseeable future.

a market research firm IHS Markit polyolefin America business senior director Joel & middot; "We're going to see a test of some of the brands' sustainability and development goals," said Joel Morales.

PET heat unabated

plastic recycling companies are facing a similar pressure to other industries: They are adjusting workplace safety procedures to prevent the spread of COVID-19, retooling operations in response to changes in supply and demand, and seeking financial assistance programs from the federal government.

But they face an additional hurdle in the free fall of crude oil prices, so much so that some oil futures contracts traded in negative territory last month, "making U.S. oil not only worthless but a liability," according to OilPrice.com.

The plunge in oil prices is the result of a drop in global oil demand due to the coronavirus and a surge in output following a rift among major producers. Despite an agreement among major producers last month to cut output, the oversupply lasted until the end of April. The market has only seen some rebound in recent days.

Because petrochemicals are an important raw material for plastics production, the pricing of new plastics tends to follow the price of oil and natural gas. And the pricing of recycled plastics follows the trend of new plastics.

"The premium we are willing to pay for recycled PET will be significant and higher than we had previously expected," PTA& of IHS Markit; Thyssen, head of PET at EO Derivatives · , Tison Keel said.

Keel explained that the low price of new plastic feedstock means the challenge of ensuring that end users choose to use recycled plastic, especially PET.

"It's going to be difficult," he says. You have too many raw materials, too many products. You have low crude oil prices, which will depress prices even more."

The recycled plastics market will be under pressure from commodity prices for at least the next two years, according to IHS Markit. During that time, "even in the most optimistic scenario, the crude oil prices we forecast will not return to the levels of the last few years," Kill said.

In addition, the price of recycled plastics cannot be as volatile as the price of new materials. Whether the price of new plastic is high or low, Kiehl explains, the cost of producing high-quality recycled plastic remains largely the same.

Sustainability measures may be suspended

The situation for PET is similar to that faced by the PE and PP markets, where raw material prices have fallen to levels not touched in over a decade, but the cost of producing recycled resins has remained unchanged.

"Before this, we thought it was a challenging environment for recyclers, now it's even more challenging," said IHS Markit's Morales.

Before the coronavirus impact, there was a big increase in the production capacity of polyethylene and polypropylene new materials. But now for PP and PE, Mr Morales said, "the coronavirus pandemic has made demand in the global market much lower than expected". That means margins for resin producers will be challenging, he said.

However, in some markets, demand for resin is growing as a result of the coronavirus.

Morales noted that plastic bag bans have been delayed or suspended in many communities across the country, which he explained is another unexpected change in the plastics market. Morales said the market for plastic bags, which had been expected to decline by 5 to 8 percent as a result of the ban, is "booming" again now that the moratorium has been suspended. "There will be an increase in funding for single-use plastics in the near term, but we are not sure how long this will last," Morales said.

IHS predicts that sustainability measures will come back into play in the future, but it is unclear whether this will start again later this year, or whether priorities will shift until long after the impact of COVID-19 has passed.

Curb infrastructure construction progress

The plastics recycling sector is already facing supply difficulties, with experts saying that not enough PET is being collected to meet projected demand. Keel noted that efforts are under way to improve recycling and that there has been more focus on this area in the past 12 months. But the momentum has stopped and, in some cases, collections are going backwards by suspending curbside projects and container deposit redemptions.

"COVID-19 is really causing problems for engineering, "Keel said. As a result, more PET is ending up in landfills, and Keel said he expects it will be difficult in the short term to get PET collections back to where they were, let alone raise them to new heights.

Kiehl said recycling stakeholders need to further drive public attention to the importance of plastic recycling as a way to reduce plastic waste and Marine debris.

Apart from collection, there is also a shortfall in recycling capacity compared to original production. Nina, CEO of More Recycling • Nina Butler highlighted new figures showing that post-consumer polyolefin recycling plants recycle just 5% of the material produced by the 10 largest original polyolefin producers each year.

Butler says this shows a clear need for greater recycling capacity. But that's a tough sales target to achieve in the current environment, Butler said: recycling is low, there are fewer markets, there is an oversupply of raw materials and the value proposition is "really evaporating."

Butler said the entire recycling system, from collection to final market demand, feels squeezed. But she says the current conflict is an opportunity for stakeholders working on these issues to redouble their efforts.