RECYCLED PLASTIC GRANULES MARKET ANALYSIS

Market Challenges And Opportunities

Drivers

One of the major growth drivers of the global recycled plastic granules market is the rising prices of crude oil in the international market and vast availability of recycled plastic waste. As crude oil is a vital component of plastic, the variation in oil prices also has direct impact on the price of plastic. Increasing COVID-19 vaccination rates, lower pandemic-related restrictions, and burgeoning economy added impetus to the price of crude oil. For instance, according to the U.S. Energy Administration, spot price of Brent crude oil initiated the 2021 year with price of USD 50 /barrel and went to USD 86 /barrel in late October of 2021. Brent crude oil annual average for 2021 was around USD 71/barrel which was the highest in past three years (2018-2020).

In addition, the prices of crude oil were impacted as the Organization of Petroleum Exporting Countries (OPEC) lowered down their production and restricted supply during the pandemic. Further as the demand for petroleum reached back to its pre-pandemic level, the OPEC countries didn’t increased their production. Thus, increasing the price of crude oil over the last two years (2020-2021).

Furthermore, crude oil prices had witnessed a rise during the Russia-Ukraine war. Countries such as the U.S. and the U.K. banned Russian oil and gas imports; however, few countries went into panic buying of crude oil. Brent oil topped US$ 111 /barrel in 2022, which was up by around 14%. Thus, a slow production of crude oil compared to demand combined with Russia-Ukraine conflict has motivated plastic granules manufacturers to shift towards recycle plastic waste as a raw material.

A huge amount of plastic waste from milk sachets, liquor covers, tobacco covers, packaging covers, broken buckets, etc. are available in large quantities. Although the recycling rate of plastic is around 10-12%, environmental concerns and government initiatives to reduce the plastic pollution is expected to fuel the rate of recycling. This is expected to propel the demand for recycled plastic granules.

Market Restraints

The demand for recycled plastic granule is likely to lower down owing to the challenges faced during plastic recycling. Plastic recycling is considered harmful to environment as it releases VOCs (Volatile Organic Compounds). According to the American Lung Association, breathing VOCs could affect the eyes, nose, and throat. It creates problem in breathing and can damage the central nervous system as well as other organs.

Another major challenge for producing resins from plastic wastes is that different plastic types are not compatible with each other. Different types of plastic are combined in manufacturing processes, which further makes recycling more difficult. For instance, when a little quantity of Polyvinyl Chloride (PVC) is contaminated in a Polyethylene Terephthalate recycling stream, it can degrade the quality of recycled PET resin by releasing hydrochloric acid gas at a higher temperature.