Due to a rise in Shale gas, a surge in petrochemical production in China and the United States has triggered a global oversupply of industrial chemicals crucial in plastic manufacturing. This abundance has driven the price of virgin material so low that the recycled alternative has become economically less viable.
China, accounting for 60% of petrochemical capacity increases in 2023, has played a pivotal role in this shift, with the US experiencing a similar surge in production due to the shale gas boom. This has resulted in an oversupply of materials like polyethylene not witnessed since the 1980s. The lower prices for virgin material, attributed to petrochemical overcapacity, have made it challenging for recycled plastics to compete.
The significant rise in ethylene capacity, reaching almost 42 million tonnes last year, has outpaced the global demand by approximately 14 million tonnes.
Since April 2022 the price of virgin HDPE has dropped from 2,000 AED per tonne to 1,070 AED at the end of December.
Recycled HDPE prices have fallen from highs of 2,075 AED per tonne to 1,450 AED.
This is a stark contrast to the scenario before 2019 when recycled plastic used to be cheaper than virgin products. Right now recycled plastic is 35% more expensive than virgin, making it harder for companies to adopt a more circular economy.
The value of the plastic we handle is a vital revenue stream for ourselves and our higher rebates rates for our clients is a USP.
Through our partnership with Rebound Plastic we are not only able to fully track our client’s plastic once it leaves our facility but we can find the best possible price for our material.