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The current condition of the plastics recycling industry in the United States could be described as, quite literally, trash. A study done by the Plastics Pollution Coalition, a non-profit dedicated to educating the public about plastic pollution, estimated that the recycling rate in the United States will fall from about 9.1% in 2015 to an estimated 4.4% in 2018. That means only 4.4% of all materials entering recycling bins are actually being recycled, and that is having an impact on the price of recycled plastic flakes. A major factor driving this decline in the United States’ recycling rate is China’s decision to stop taking the United States’ scrap materials, including plastics, which went into effect in 2018. Other factors contributing to this dramatic decline in recycling include increasing plastic production, rising costs of recycling and the low cost of virgin plastics.

Recycling Facts:

  • Half of all plastic consumed around the world since 1950 was produced between 2002 and 2015
  • An estimated 14 billion pounds of plastic trash is dumped into the ocean every year
  • One ton of recycled plastic saves about 5,774 Kilowatts of electricity, 30 cubic yards of space in a landfill and 685 gallons of oil

Virgin vs. Recycled Plastics Prices

The economics of plastics has only complicated the conversation surrounding sustainability, including the topic of recycled and virgin plastics. In 2019, the price of virgin plastics fell below the price of recycled plastics for the first time since a brief period in 2008 when there was parity between prices for both types of plastics. The price of virgin plastics fell on the back of a steady supply of virgin plastics in the United States, bearish input prices and weak demand for virgin plastics stemming from slower global growth and trade disputes with China. On the other hand, the price of recycled plastics has grown steadily on the back of stable demand stemming from the European Union’s policy initiatives to increase the amount of recycled plastic in plastic packaging. Furthermore, a tight supply of high-quality recycled plastics in North America stemming from the limited number of manufacturers that can successfully reduce the material variability of recycled resins and plastics has also contributed to higher and stable prices for recycled plastic. The process of decontaminating polyethylene terephthalate [PET] food containers is extremely expensive.

Besides the increasingly unfavorable economics, the recycled plastics market faces another significant hurdle: current recycling rates. The issue lies in how manufacturers will be able to meet demand for recycled plastics when recycling facilities are closing across the country and collection rates are near historical lows.

Most common recycled plastics:
  • Polyethylene terephthalate (PET)
  • Polyvinyl chloride (PVC)
  • Polystyrene (PS)
  • Polypropylene (PP)
  • Low-density polyethylene (LDPE)
  • High-density polyethylene (HDPE)

Will the recycling market adjust in time?

There is some good news: the plastics recycling market is already beginning to respond to the aforementioned challenges, albeit at a slow pace. US businesses and government will still need more time to address the larger issues across the market, including the increasing rate at which virgin plastics are being produced, the average consumer’s dependence on plastic, the difficulty in sorting and identifying recyclable materials and the lack of vital recycling infrastructure in the United States. That’s where innovation and technology have come into play to help address some of these issues. One company, Tomra Systems, is aiming to reduce the cost of recycling by replacing expensive labor with new optical recognition technology that can identify and sort cardboard even when it is flattened or torn into pieces. Furthermore, some companies have implemented new technology that uses blasts of air to more efficiently sort recyclables. Other solutions, such as a project by Teracycle titled “Loop,” are approaching these issues from a slightly different angle. The project is developing a reusable tote bag and container to reduce plastic used in packaging and shipping, which accounts for about 40% of all plastic used across the globe. Finally, there are discussions at the local and federal level about increasing taxes on landfills to incentivize more recycling and having the federal government step into the recycling business directly.

Procurement professionals should weigh the positives and negatives of virgin and recycled plastics, combined with the long-term and immediate effects of plastic consumption.

Pros & Cons of Virgin Plastics

Pros of virgin plastics:

  • Virgin plastics are less expensive than recycled plastics
  • Virgin plastic’s molecular structure does not change when heat and pressure are applied

Cons of virgin plastics:

  • Fossil fuels are used in the production process
  • An increasing supply of plastics in landfills will take more than 500 years to biodegrade
Pros & Cons of Recycled Plastics

Pros of recycled plastics:

  • Less fossil fuels are consumed, resulting in fewer greenhouse gas emissions
  • The rate at which plastics are added to landfills is slowed
  • The use of recycled plastics enables companies to capitalize on the goodwill of being viewed as an eco-friendly company

Cons of recycled plastics:

  • Recycled plastics are more expensive than virgin plastics
  • Every time plastic is recycled, it becomes weaker and more brittle

Despite the rising costs of recycled plastics, companies and procurement professionals should continue exploring their use as consumer attitudes shift toward promoting greater corporate social responsibility and sustainability efforts. Furthermore, the price of oil won’t remain low forever. As ever-volatile oil prices eventually rise, so will the price of virgin plastics, subsequently making recycled plastics economically competitive with virgin plastics again.

 

For more information on ways procurement departments can implement sustainability practices, check out our recent blog post titled:

Sustainable Success: How Procurement Can Help Businesses Go Green.

 

By Riley Mallon 

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