Plastics Recycling – Slow Progress – Not Much Quality Product and An Idea
As we noted a couple of days ago, the significant increase in recycled polymer prices in recent weeks has not been driven by altruistic behavioral change, but by a need to find cheaper polymer as virgin resin prices have shot up. What will likely be a very quick conclusion is that there is not that much high-quality recycled polymer to go around. The volumes available from the multiple recycling programs that we highlight on almost a daily basis are small and will have minimal impact on the overall market, while possibly having an incremental impact on average pricing for those that can use the materials. A radical rethink is needed around recycling and it involves more than just some low-risk JV’s from the major producers, such as the one highlighted in our daily today between Agilyx and Exxon. Everyone knows that the major constraints, especially in the US, are around collection and separation, with a general lack of coordination between plastics consumers, waste companies, and municipalities. We see some local initiatives that appear to be moving in the right direction, but nothing moving fast enough to make a meaningful impact. Waste is likely to take a back seat to emissions in terms of Government-led initiatives in the US for a while in our view.
We have a potential business model for a more holistic approach to recycling and we are in discussion with a couple of potential partners to create a business plan, initially for a first investment, but around a design that could easily be repeated. Please reach out to us if you would like to learn more.