Dr. Steve Wong
January 27, 2023
After more than three years of the epidemic, many industries and enterprises have suffered severe impacts, and some had to close down and lay off employees. Oil and energy prices had risen sharply only to fall equally sharply. Countries like the US and others had rounds of interest rate hikes to curb the inflation derived from rising prices of consumer goods. Signs of recession are seen in Europe, as evidenced by the weakening consumer buying power. There are also Geopolitical issues such as the Russia-Ukraine War, which has resulted in disruptions in the supply of foodstuff and energies, the declining demand for plastic raw materials, and the oversupply caused by the over-capacity situation in the petrochemicals industry. It has resulted in the declining prices of most general and engineering plastic virgin materials to the pre-pandemic levels or even lower.
The decline in the price of new materials was seen as a positive factor for waste plastic recyclers because they can purchase plastic waste at lower prices. However, the market for recycled pellets has become very slow due to the significant cut in the price of virgin plastic materials due to excess supply, attracting factories to use more virgin materials instead. As a result, recyclers have to offer substantial cuts in their repro pellets to be able to sell, causing further difficulties for the recycling industry. Given the rising production costs, labour shortage and the increasing cost of law compliance, many recyclers decided to stop or close altogether due to liquidity problems. This situation became more evident with the approaching of the Chinese New Year.
Many recyclers increased their investments earlier, given brand-owners’ commitments to using 20% – 30% recycling materials for their products to promote a sustainable economy, use green products to preserve the environment, and promote their ESG (Environmental Social Governance) responsibility. However, some brand owners only used this to promote their products and mislead consumers. Using low-cost virgin materials to get better economic benefits is more realistic. Preserving the environment is only a slogan to attract consumers. Unless the use of recycled materials for products is a requirement by law, factories would not willingly spend extra to purchase recycled materials.
Though we are still determining how effective it is, we hope that it marks a beginning with the legislations in California and UK earlier that the production of packaging materials should contain a certain percentage of repro-pellets and that it should be reusable and recyclable. By law, it is now required for enterprises to label such declarations on products.
California’s Attorney General Rob Bonta wrote to the leading plastic packaging enterprises and demanded that the claim that their products are recyclable needs to be substantiated by evidence. Packaging enterprises should produce proof of recycling traceability. He emphasized that enterprises are liable for misrepresentation if their products are not recyclable.
It was raised recently by the UNEP (United Nations Environment Programme) that the voluntary use of recycled material is not sufficient. Achieving the desired objective of promoting and increasing the use of recycled plastic materials can only be pursued through legislation.