Original by Dr. Steve Wong
October 30, 2024
Two weeks ago, I attended the FAKUMA plastics exhibition in Germany and noticed that the crowd was smaller than in previous years. Many exhibitors in the recycling industry reported that their business situation was very poor. Decreased demand, unprofitable prices, rising production costs, and stringent environmental regulations have left them helpless.
After speaking with several suppliers I have known for nearly 40 years, they mentioned that their business was unprecedently sluggish. The primary reason is the mass production of raw materials in Southeast Asia and China, which are exported due to excess capacity. In the past, the high shipping costs made raw materials produced in China unattractive, but in recent months, shipping costs have dropped from up to $20,000 per container during the pandemic to around $3,000. The market is flooded with various types of general and engineering plastics.
The European economy has been impacted by the Russia-Ukraine war and conflicts in the Middle East, particularly between Israel and neighboring countries. High energy costs, high labor costs, and high interest rates have hit various industries. Disposable income for the average household has decreased after deducting living necessities, and both companies and the public have lost confidence in the economic outlook. Even those who can spend are unwilling to do so, and those who are financially strapped find spending even harder. Additionally, the proportion of imported goods such as household appliances, daily necessities, and clothing has increased, and even the import proportion of cars is gradually rising. The decline of the European economy is partly related to low labor efficiency and low birth rates.
Ironically, Europe continues to introduce various regulations aimed at improving environmental, health, and safety management, but often with unintended consequences. A second-generation Belgian recycler I know, Caroline, operates a polyethylene and polypropylene recycling factory, converting waste into recycled materials. However, due to the lack of government mechanisms to reclassify “end-of-life plastics” as secondary or recycled materials, downstream manufacturers’ use of recycled materials is restricted. If downstream factories do not obtain certification for using waste-to-recycled materials, they cannot use them at will. Caroline criticized the contradictory regulations in the media, which led to concerns from banks about her factory’s prospects, and some even advised her not to touch certain stakeholders’ interests.
For brand companies, although they emphasize the use of recycled materials in their promotions, in reality, the low price and better quality of new raw materials often mean they cannot meet their recycled material usage targets, citing insufficient market supply. The complexity of the European recycling industry has led to the closure of numerous recycling companies. Many waste plastic materials cannot be freely disposed of or used as energy for incineration due to export or local recycling restrictions, ultimately leaving them nowhere to go.