Plastics Recycling Is Mostly About Volume

The McKinsey analysis is likely spot-on, as it is very difficult to get enough recycled polymer to produce a mechanically recycled stream that can be used in the highest value same use market. Solving for this is complicated by many factors, with too many stakeholders in many of the chains to make it work:

Source: Mckinsey - Helping build the circular economy for plastics, March 2022

1. Product designs need to change to create more “pure streams” of reusable polymer – especially for polypropylene, high-density polyethylene, and PET.
2. Municipalities need to be more focused on the opportunity that exists from promoting both the collection and sorting of polymers streams
3. Ultimately the mechanical recyclers will have to bid material away from the chemical recyclers who may be willing to see minimal returns to ensure that their virgin polymer units run hard.
4. Polymer prices are volatile, and brief periods of high margins for recyclers are often offset by some very poor returns.

These are just a handful of the factors that dictate whether or not you can make money in recycling but the volume issue is likely the most relevant – the virgin polymer producers are making polymer at an order of magnitude higher scale than you are as a recycler – sometimes much more than that. The trick to effective recycling is going to be more standardized products to increase the pool of available material. For more see today's daily report.