Technological watch
K 2022: Europe chemical recycling investment continues but waste supply access remains a challenge
Investment in chemical recycling from the industry has continued at pace in recent months, despite growing negative macroeconomic conditions. Industry players met at the K Plastics Fair, the largest trade fair and networking event for the European polymers and plastics industry.Words: Mark Victory Senior Recycling Editor at ICIS × In part, this is because pyrolysis-based players – the leading form of chemical recycling in Europe – can generate electricity as part of the process, although for PET chemical recycling processes electricity costs this is not generally possible.
Nevertheless, even for pyrolysis, electricity costs remain a potential challenge – depending on set-up – and particularly in the initial months of operation when throughput is limited. Some players have speculated that this could also lead to delays in plant start-ups, as players await more favourable energy costs.
Although investment in the sector from industry has not reduced, the sector is facing additional unexpected cost burdens as a result, they may result in additional funding requirements
In recent weeks, some players have noted a slowdown in private investment, and that preparing business plans to present to potential investors was becoming increasingly difficult due to the uncertainty of future energy costs.
At present, pyrolysis is the dominant form of chemical recycling in Europe, although much ofthe existing capacity remains pre-commercial. Waste managers remain concerned over a growing disconnect between available waste material with high enough quality for pyrolysis-based chemical recyclers, and announced future capacity.
Some players expect advances in mechanical recycling sorting technology and number of sorting stages to lead to reductions in reject volumes and non-mechanically recycled waste available for chemical recycling.
Pyrolysis typically requires the minimisation of chlorine content (typically to 0.1% or less) due to its corrosive effect, the removal of polyethylene terephthalate (PET) because it oxygenates the process and does not depolymerise using pyrolysis, and the avoidance of nylon and flame retardants.
There has also been speculation that lack of sufficient feedstock availability in the mid-term could increasingly place chemical recyclers in competition with mechanical recyclers.
This is something that chemical recyclers have generally been keen to avoid historically, both from an economical perspective and environmental impact perspective. Chemical recycling typically has a higher production cost than mechanical recycling, although this could change with economies of scale and the gap between the two has narrowed for some pyrolysis-based processes because pyrolysis can - depending on set-up- generate its own electricity to partially off-set rising energy costs, while mechanical recyclers cannot.
Although there remains an absence of independent, directly comparable life cycle analyses (LCAs), chemical recycling is broadly seen as having a higher environmental impact than mechanical recycling. Coupled with this, the narrow geographical spread of new plant locations could intensify competition between chemical recyclers chasing the same pool of local waste volumes. The first half of 2022 had already seen many chemical recyclers pushed out of the mixed polyolefins waste sector, because of increased captive use by waste managers, and material being contracted by mechanical recyclers due to shortages of monomaterials.
The influx of mechanical recycling demand pushed mixed polyolefin prices to record highs during the first half of 2022, and saw chemical recyclers increasingly look to source other grades of material such as refuse derived fuel (RDF). Chemical recyclers require RDF bales with high plastic content – typically more than 90% – while demand from the burn for energy sector has led to increased biomass in RDF bales. As a result, the market for RDF has fractured in to multiple grades.
RDF with higher biomass, that typically serve traditional burn-for-energy applications such as cement and lime, and unsorted bales, which typically serve burn-for-energy units which have sorting-centres attached, continue to trade at negative values, with buyers paid to remove waste based on saving for the waste manager against alternative disposal costs.
RDF with high plastic content, suitable for recycling, meanwhile, has been trading at positive values throughout 2022. Prior to Q4 2021, this material had always traded at negative values. Since July, monomaterial availability has been lengthening due to macroeconomic bearishness, particularly in non-packaging grades, and there has been downward pressure in the market, with the low-end of high-density polyethylene and polypropylene bale prices falling substantially since the start of the third quarter.
As monomaterial prices have fallen, mixed polyolefin bales have also seen downward pressure – although not to the same degree. In early October, 90% mixed polyolefin prices reached parity with the low end of both monomaterial polypropylene (PP) mixed-coloured post-consumer and post-industrial bale values, and above 95/5 low density polyethylene (LDPE) mixed-coloured post-consumer.
flexible bale low-end price.The high end of the mixed polyolefin range, meanwhile, also reached parity with the low end of the monomaterial high density polyethylene (HDPE) bale prices range, and above the high end of the rigid LDPE post-consumer mixed-coloured bale price.
Although the low-end of mixed polyolefin prices has fallen since early October, the top-endremains at parity with a number of monomaterial bale values, and monomaterial bales continue to face downward pressure.
Nevertheless, there are a wide range of monomaterial bale prices currently in the market,
which is predominantly the result of varying energy and storage and cashflow positions
across firms across Europe.The average price for monomaterial bales remains above mixed
polyolefins.
Despite weak demand, the market remains structurally tight following increased captive use
by waste managers following the onboarding of sorting capacity in the first half of 2022,
which has left more limited volumes of mixed polyolefins on the market.
Coupled with this, with monomaterials in tight supply throughout the second half of 2021 and
first half of 2022, many players in non-packaging sectors turned to mixed polyolefins to try to
bridge shortfalls of monomaterials, with multiple players signing volume framework
agreements, which has also counterbalanced the falls in ad hoc activity.
This has pushed access to waste up the agenda for many in the market, and there have
been moves by chemicals majors such as Lyondell-Basell’s joint venture (JV) with 23 Oaks
Investment to build a new waste sorting plant to feed its planned Wesseling pyrolysis-based
chemical recycling plant.
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Nevertheless, even for pyrolysis, electricity costs remain a potential challenge – depending on set-up – and particularly in the initial months of operation when throughput is limited. Some players have speculated that this could also lead to delays in plant start-ups, as players await more favourable energy costs.
Although investment in the sector from industry has not reduced, the sector is facing additional unexpected cost burdens as a result, they may result in additional funding requirements
In recent weeks, some players have noted a slowdown in private investment, and that preparing business plans to present to potential investors was becoming increasingly difficult due to the uncertainty of future energy costs.
At present, pyrolysis is the dominant form of chemical recycling in Europe, although much ofthe existing capacity remains pre-commercial. Waste managers remain concerned over a growing disconnect between available waste material with high enough quality for pyrolysis-based chemical recyclers, and announced future capacity.
Some players expect advances in mechanical recycling sorting technology and number of sorting stages to lead to reductions in reject volumes and non-mechanically recycled waste available for chemical recycling.
Pyrolysis typically requires the minimisation of chlorine content (typically to 0.1% or less) due to its corrosive effect, the removal of polyethylene terephthalate (PET) because it oxygenates the process and does not depolymerise using pyrolysis, and the avoidance of nylon and flame retardants.
There has also been speculation that lack of sufficient feedstock availability in the mid-term could increasingly place chemical recyclers in competition with mechanical recyclers.
This is something that chemical recyclers have generally been keen to avoid historically, both from an economical perspective and environmental impact perspective. Chemical recycling typically has a higher production cost than mechanical recycling, although this could change with economies of scale and the gap between the two has narrowed for some pyrolysis-based processes because pyrolysis can - depending on set-up- generate its own electricity to partially off-set rising energy costs, while mechanical recyclers cannot.
Although there remains an absence of independent, directly comparable life cycle analyses (LCAs), chemical recycling is broadly seen as having a higher environmental impact than mechanical recycling. Coupled with this, the narrow geographical spread of new plant locations could intensify competition between chemical recyclers chasing the same pool of local waste volumes. The first half of 2022 had already seen many chemical recyclers pushed out of the mixed polyolefins waste sector, because of increased captive use by waste managers, and material being contracted by mechanical recyclers due to shortages of monomaterials.
The influx of mechanical recycling demand pushed mixed polyolefin prices to record highs during the first half of 2022, and saw chemical recyclers increasingly look to source other grades of material such as refuse derived fuel (RDF). Chemical recyclers require RDF bales with high plastic content – typically more than 90% – while demand from the burn for energy sector has led to increased biomass in RDF bales. As a result, the market for RDF has fractured in to multiple grades.
RDF with higher biomass, that typically serve traditional burn-for-energy applications such as cement and lime, and unsorted bales, which typically serve burn-for-energy units which have sorting-centres attached, continue to trade at negative values, with buyers paid to remove waste based on saving for the waste manager against alternative disposal costs.
RDF with high plastic content, suitable for recycling, meanwhile, has been trading at positive values throughout 2022. Prior to Q4 2021, this material had always traded at negative values. Since July, monomaterial availability has been lengthening due to macroeconomic bearishness, particularly in non-packaging grades, and there has been downward pressure in the market, with the low-end of high-density polyethylene and polypropylene bale prices falling substantially since the start of the third quarter.
As monomaterial prices have fallen, mixed polyolefin bales have also seen downward pressure – although not to the same degree. In early October, 90% mixed polyolefin prices reached parity with the low end of both monomaterial polypropylene (PP) mixed-coloured post-consumer and post-industrial bale values, and above 95/5 low density polyethylene (LDPE) mixed-coloured post-consumer.
flexible bale low-end price.The high end of the mixed polyolefin range, meanwhile, also reached parity with the low end of the monomaterial high density polyethylene (HDPE) bale prices range, and above the high end of the rigid LDPE post-consumer mixed-coloured bale price.
Although the low-end of mixed polyolefin prices has fallen since early October, the top-endremains at parity with a number of monomaterial bale values, and monomaterial bales continue to face downward pressure.
Nevertheless, there are a wide range of monomaterial bale prices currently in the market,
which is predominantly the result of varying energy and storage and cashflow positions
across firms across Europe.The average price for monomaterial bales remains above mixed
polyolefins.
Despite weak demand, the market remains structurally tight following increased captive use
by waste managers following the onboarding of sorting capacity in the first half of 2022,
which has left more limited volumes of mixed polyolefins on the market.
Coupled with this, with monomaterials in tight supply throughout the second half of 2021 and
first half of 2022, many players in non-packaging sectors turned to mixed polyolefins to try to
bridge shortfalls of monomaterials, with multiple players signing volume framework
agreements, which has also counterbalanced the falls in ad hoc activity.
This has pushed access to waste up the agenda for many in the market, and there have
been moves by chemicals majors such as Lyondell-Basell’s joint venture (JV) with 23 Oaks
Investment to build a new waste sorting plant to feed its planned Wesseling pyrolysis-based
chemical recycling plant.
Back to Search Results
This project has received funding from the Bio Based Industries Joint Undertaking under the European Union’s Horizon 2020 research and innovation programme under grant agreement No 837761.
