EVENT REVIEW PETplanet Insider Vol. 25 No. 04/24 www.petpla.net 51 2nd Icis Recycled Polymers Conference Asia by Michael Maruschke The 2nd Icis Recycled Polymers Conference Asia was held in Bangkok on February 21-22 and focused on the challenges, regulatory developments and collaborative opportunities in the field of plastics recycling in Asia, including rPET. The conference was attended by 74 CEOs, senior professionals and market influencers from across the supply chain from 14 countries. General oversupply - weak demand for rPET Icis analyst Joshua Tan Chee Yong and senior editor Arianne Perez opened the conference with an overview of installed capacity, price trends and outlook for 2023 and 2024 in Asia. In APAC, mechanical recycling is a large market with over 18 MTPY of installed capacity, while the more complex chemical recycling is just starting to emerge with only 700 KTPY of installed capacity (figures include rPET, rPE and rPP). In 2023, the PET market experienced oversupply and weak demand for rPET. For most of 2023, there was a wide price spread between bottlegrade vPET from China and vPET in SEA (South East Asia), and an even wider spread between vPET from China and rPET in SEA and NEA. Increased PET production in China (an estimated 2-3 million tonnes of additional volume) contributed to this oversupply, flooding the market with cheaper PET and further reducing the attractiveness of rPET. In addition, rPET producers in SEA have also added new capacity, putting further pressure on prices. Weak demand from countries such as Thailand and Taiwan, where rPET is allowed in food packaging but not driven by sustainability targets or consumer pressure, has not helped. While brands and established rPET producers can cope with reduced margins and are expected to survive the current situation, smaller and mediumsized rPET producers have already reduced production rates and cut prices to attract buyers. Bottle grade material is and will remain the most traded grade from Asia. Most produced rPET is destined for products for the European and US markets. Polyolefins, especially rPE/HDPE, face a similar situation of price pressure due to the large volumes of virgin material entering the market. The outlook for 2024 remains weak: The general oversupply, the lack of sustainability targets or firm regulations in Asia on the mandatory use of rPET in packaging will continue to put pressure on the price of rPET. Currently, Australia, New Zealand, Japan, South Korea, Thailand, India, Taiwan, Hong Kong and other major economies have approved the use of rPET in food packaging. In China, there are several food grade rPET players involved in mechanical recycling, such as Ceville, Yisheng Petrochemical, Guolong, Incom Recycle, Veolia and Alba. In addition, chemical recycling (via depolymerisation) is well established with companies such as Zhejiang Jiaren (DMT), SK Chemical & Shuye (BHET), Fujian Cyclone (BHET) and Yinjinda (BHET to PETG). However, China remains one of the few countries that has not yet approved rPET for use in food packaging. Arnold Wang, Deputy Secretary General - China Packaging Federation, confirmed that many discussions and initiatives are underway and that people in the industry are eager to see progress. He expects something to happen this year. Collection and sorting - the challenges with the informal sector While countries such as Korea and Japan generally have some form of developed solid waste management system, countries in SEA and certain parts of the Indian subcontinent rely heavily on the informal sector and its waste pickers, bottle collectors, aggregators and possible middlemen. The particular challenges of sourcing raw materials from the informal sector were a key theme of the panel discussions and were also raised by several speakers. Christian Pranata, CEO of the Langgeng Jaya Group in Indonesia, knows the Indonesian plastics recycling market well. His company, Langgeng Jaya, started recycling post-consumer PET in 2006. “Never stop buying” (even on major holidays), Christian Pranata said during a panel discussion, mentioning that he would rather accept warehouses fuller than needed than interrupt the recycling chain. It is clear that people in the informal sector, especially bottle collectors, depend on a regular and continuous, albeit small, stream Price spread between Asia R-PET, PET stays wide 800 850 900 950 1,000 1,050 1,100 1,150 1,200 1,250 1,300 1,350 1,400 1,450 1,500 1,550 1,600 PET Bottle Grade FOB SE Asia PET Bottle Grade FOB China RPET Pellets, Bottle Grade FOB NE Asia RPET Pellets, Bottle Grade FOB SE Asia USD/Tonne • Price spread with China PET stays widest (incremental volumes 2-3 million tonnes/year) • Some R-PET producers lower prices to stoke buying interest • FMCGs lowers R-PET use, hikes PET in packaging mix • Weak support gained from Thailand, Taiwan approval of R-PET use in local packaging • New capacities worsen supply glut Bottle-Grade R-PET, PET Pellets in $/tonne Source: Icis
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