Business philosophy – The problem of low recycling rate from a helicopters view

Dr. Steve Wong

December 22, 2022

According to data from the recently published OPIS (oil price information service) report, a persistent short-supply situation would exist globally in the plastic recycling industry.

It casts a downward trend on the quantities of plastic scraps exported from the US to Southeast Asia. With the OPIS report, the plastic scraps exported from the US for the first ten months of this year amounted to 19,503 containers or 450,076 tons – down 17.7% year-on-year. The major importing countries in the sequence of quantities are Mexico, Canada, Germany, Turkey, and India, followed by Malaysia, Indonesia, Vietnam, Taiwan (China), Hong Kong (China), and Thailand.

Meanwhile, Exxon Mobil announced the commencement of production of their recycling factory in Baytown, Texas, with 36,000 tons yearly capacity. To comply with the circular economy requirements, the Group plans to raise the production capacity at this site and other places to 450,000 tons annually. Other petrochemical companies follow suit to achieve ESG (Environmental, Social, and Governance) objectives, which has increasingly entailed the short supply situation for plastic scraps.

During my participation in the Basel Convention – Compliance and Implementation Committee in the middle of November this year, I shared information on the plastic recycling industry, mainly why the global recycling rate is at only 9%. The main reasons are the lack of an adequate workforce in developed countries to perform plastic waste separation and sorting. On the contrary, developing countries lack systems, financial resources, and infrastructure for plastic waste collection, separation, and washing for pelletizing. The US and Hong Kong (China) are typical examples. Around 70-80% of plastic waste from household, although collected in waste separation bins, end up in landfills or incinerated due to the lack of resources for effective sorting and reprocessing as feedstock. I reiterated that many recycling factories in Southeast Asia had to close down due to a lack of well-sorted plastic waste for pelletizing. This situation will also be present in developed countries as there are misconceptions for investors that the recycling industry needs more factories for processing sorted shredded material or scraps without realizing that the bottleneck is upstream of the waste recovery chain. Without a balanced investment in the upstream facilities, it will create overcapacity in the downstream processing, resulting in fierce competition and factories closing down outside Southeast Asia.

The large petrochemical companies and consortiums name it in their investments as “advance recycling”, or chemical recycling, to turn waste plastics back into oil for producing different types of plastic materials, gasoline, or other chemical products for continued recycling and reuse. Is this a technological breakthrough? What has been controversial is whether we can achieve the objective of economic and production efficiency apart from being environmentally friendly. We cannot reach effective use without proper sorting and separating before recycling the waste materials, even in chemical recycling. With the vast investments by the petrochemicals groups talking about billions of dollars to turn waste into oil at any cost, would it avoid internal competition with virgin materials? One thing for sure is the demand for plastic scraps will not become less. The current disruptions in supply and demand and the upstream bottlenecks of the supply chain will entail a big challenge for the recycling industry.

The expected downtrend in supply will be a significant challenge to the recycling industry, which we must be prepared to face.

Shopping Cart