The linked headline is interesting and accurate, but the “civilian” education around plastics has just begun – and will need to be continuing education. Plus, the agenda for plastics producers likely changed with COP26. On the first point, while consumers have been made more aware of plastic waste issues and recycling in 2021, it is still very mixed by geography, with some countries and some US states making major pushes in 2021 while others have lagged. There remains a significant level of skepticism and disinterest in recycling in the US as we discussed in a recent ESG and Climate report – linked here (See chart below). The continuing education comment is based on the likely significant evolution of plastics over the next ten years. If we introduce more biodegradable polymers into the mix, these will have to be dealt with differently by consumers. Also, as packagers move towards more “recyclable” packaging, more materials will move from a waste stream to a chemically recyclable stream and ultimately to a mechanically recyclable stream – as this evolves, consumers will need constant updates is they are expected to play a part.
We have talked a lot over the last year about our preference for PVC as likely the better longer-term story within polymers – more stable growth – more limited global investment and less impact from the plastic waste moves, as very little PVC ends up in packaging. The exception is the medical device space, where demand for PVC in single-use applications is growing as illustrated below. While the medical device industry is setting up to use recycled PVC it is going to be hard to close the loop here as medical waste is generally quite contaminated and PVC does not do well in a conventional pyrolysis process because the chlorine molecule is a contaminant. The solution will likely be getting PVC from end-of-life consumer durables and recycling that PVC back into medical applications. Disposal of the medical waste is best done through a pyrolysis or gasification process that includes very high-temperature plasma technology. These facilities exist and operate well outside of the US, and we would expect to see broader acceptance within the US over time. See more in today's daily.
The concerns about supply chain inflation hurting chemical demand are likely very end-use specific. While the packagers and consumer goods sellers are seeing significant inflation in all raw materials, not just polymers, the packaging is a minor component of the cost and value of what they are selling and while it may hurt their earnings, it is unlikely to stifle demand – none of us is likely to stop buying milk, orange juice or cookies if the prices rise a couple of cents because the manufacturers are trying to cover some of their higher costs.