Recycled Plastics Market

Global Industry Analysis (2017 – 2020) – Growth Trends, and Market Forecast (2021 – 2025)


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Recycled Plastics: Tackling Waste Issues to Achieve Circular Economy for Plastics

Every year more than 350 million tons of plastic is produced globally with more than 50% of it meant for single-use purpose. Increasing ubiquity of plastics has not been without drawbacks. Much of this single use plastic ends up in landfill, incinerators, or oceans. An estimated 10-12 million tons of plastic is thrown into oceans every year, destroying as many as 1 million sea creatures. Ineffective management of plastics and take-make-waste model has put immense burden on ecosystems resulting in releasing harmful chemicals into the environment, thus polluting soil, underground water, and air.

It recent years, growing demand for recycled plastics from range of end users due to its cost-competitiveness compared to its virgin counterparts has finally helped to unlock the market potential of recycled plastics globally. This commoditization of plastic waste streams seems to be an effective way to deal with plastic waste pollution and ultimately becoming a part of system required to create a circular economy for plastics. With the help of plastic recycling, a scrap or waste plastic can be recovered and reprocessed as a material for functional and useful products. Recycled plastics can be used in wide range of applications including the ones from which they are recovered (closed-loop recycling).

Polyethylene Terephthalate and Polyethylene to Lead the Demand Due to Competitive Pricing

In 2019, an estimated 18 million tons of recycled plastics were consumed across major end-user industries such as packaging, construction, and automotive. Recycled polyethylene terephthalate (rPET) saves around 80% energy and 70% of CO2 emissions as compared to its virgin counterpart. Consumer support is pushing brand companies and governments to restrict usage of plastics in packaging applications, thus forcing brand owners to incorporate high level of recycled PET content in packaging. rPET is largely sourced from the post-consumer waste. Growing demand from PET bottles and thermoformed containers, trays, and sheets is expected to drive the demand for recycled PET over the coming years. FMCG companies such as Coca-Cola, PepsiCo, and Nestlé have pledged usage of rPET in product packaging to achieve the goal of 100% recyclable packaging over the coming years.

Shortages of virgin polyethylene and polypropylene are expected to drive the substitution alternatives such as recycled polyethylene. Sharp growth in demand from packaging industry to prioritize environmental sustainability commitments and ensure long-term cost savings is expected to drive the market for recycled high-density polyethylene (HDPE) and low-density polyethylene (LDPE). Strong demand from construction, consumer products, and outdoor furniture sector is expected to drive demand for recycled polypropylene over the forecast period. PP and PE for recycled plastics is largely sourced from post-industrial waste streams with a certain percentage from post-consumer waste as well. With better collection systems and sorting services, the production of engineered plastics recyclate such as ABS, nylon, and polystyrene is anticipated to grow with growing demand from end user.

Packaging to Remain the Largest Consumer for Recycled Plastics

Packaging industry is responsible for generating extraordinary amount of plastic waste every year. An estimated 170 million tons of plastic waste is generated by the packaging industry alone. A lot of this waste cannot be recycled easily due to multi-material packaging. Packaging companies and governments worldwide are focusing more on the sustainable packaging alternatives using recycled plastics to minimize packaging wastage. Packaging accounted for more than 60% of the total consumption of recycled plastics in 2019. Food contact packaging and non-food/non-pharma packaging applications such as containers for cleaning chemicals, automotive fluids, personal care products, etc. is anticipated to drive the demand for recycled plastics over the coming years.

Many automotive companies such as Ford, Volvo, and Renault Group are also ensuring that recycled plastics get incorporated in production of their cars. Growing demand for sustainable plastic materials from the automotive industry is likely to boost the demand for recycled plastics as well. To tap this potential, plastic recyclers have developed technologies to effectively separate and recycle plastic from end-of-life vehicles (ELV).

The construction sector too has been changing its perception towards plastic consumption in recent years, paving the way to a more conscious decision. Recycled plastics can be incorporated in construction materials such as polymeric timbers. They can also be used for carpeting, flooring tiles, roofing tiles, indoor insulation, bricks, and fences. These materials can be used in residential as well as commercial construction owing their durability, lighter weight, and high strength in case mix-compound recycled plastics. Furthermore, these materials are cost-competitive compared to virgin plastics. Above all, they saves energy and additional resources required for newer materials.

Legislation and the Need for A Sustainable Use of Resources to Drive the Demand in Europe

In 2021, EU introduced a new plastics tax of ~US$1/kg on nonrecycled plastic packaging waste. This scheme is expected to generate between US$ 7.2 bn and US$ 9.7 bn annually till 2027. This new tax policy is expected to boost the demand for recycled plastics in the region. EU has imposed various policies in the past to tackle the issue of plastic waste. These policies are expected to improve the margins for recycled plastics companies in the region, significantly improving the recycling rates.

Asia Pacific, which currently is the largest consumer of virgin plastic, is also anticipated to improve the recycling rates and collection systems over the coming years. Governments in countries such as Japan, India, and China are emphasizing more on the consumption of recycled plastics with an aim to boost the domestic plastic recycling industry.

North America is also anticipated to invest in collection and recycling capabilities to secure the supply of recycled plastics. Industry association, brand owners, regulations, and consumers are driving factors behind the growth of recycled plastics in the region. In the past, the U.S. used to ship majority of its plastic waste to China for recycling. However, China’s ban on plastic waste import through its ‘National Sword’ policy in 2018 has created major recycling opportunity for the entire region in the past couple of years.

Companies Adding New Capacities to Meet the Growing Demand   

The recycled plastics market is dominated by companies with strong regional and domestic presence. In the past few years, there has been growing demand for high-performance recycled plastics across various industries such as automotive, electrical and electronics, and construction. Furthermore, various companies have set goals for circular economies activity and are adding new production capacities to meet their targets.

In 2019, Synova announced plans to double its recycled polypropylene capacity. From 2021, the company will produce 40,000 tons of recycled polypropylene annually. This expansion will help the company to meet growing demand for recycled plastics form automotive OEMs and carmakers.

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