Increased circularity requires collaboration between mechanical, chemical recycling: AEPW

Chemical and mechanical recyclers must work together to achieve circularity for the plastics supply chain, according to Martyn Tickner, chief advisor/circular solutions at the European Alliance to End Plastic Waste, in a speech Oct. 15 at the 2024 Recycling Expo in London, as per Chemweek.

Tickner reflected in his speech on themes and pressures that have driven conditions in mechanically and chemically recycled markets throughout 2024, reflecting broader market player concerns, but also consensus within the industry about the path toward increased adoption and commoditization.

Tickner noted that “mechanical recycling remains the preferred option” for recyclers and industry players due to a “lower carbon footprint” and “lower cost” than its chemical counterpart.

Despite this preference, Tickner emphasized that chemical recycling was still necessary and stressed that “the gap is going to close” between the divergence in utility between both segments due to a need to meet the EU food industry’s plastic waste targets.

To handle plastic waste, including food packaging, chemical recycling methods such as pyrolysis, where waste plastic is converted into pyoil, or depolymerization, where polymers are liquified back into their monomer building blocks. According to sources, chemical recycling is more effective in this application, offering less variance in output quality than its mechanical counterpart.

For traditional technologies, Tickner explained that advanced mechanical recycling would be required to keep up with EU mandates and ensuring effectiveness in providing the minimum amount of material needed to meet inclusion targets. Under advanced mechanical recycling methods, material undergoes a more stringent sorting and processing procedure than in simple mechanical processes, allowing for higher and more consistent output quality.

Tickner said that products converted through this method had 35% more post-consumer recycled material, in line with European Packaging and Packaging Waste Regulation inclusion requirements for non-polyethylene terephthalate (PET) recycled materials. He added that, through this process, mechanical recycling could yield higher-quality products, which by the start of such EU requirements in 2030 will “command much higher pricing,” increasing incentives for some recyclers.

Tickner’s bottom line was that mechanical and chemical recycling technologies complement each other and both are necessary to create a closed loop on plastics in Europe.

Competitiveness concerns hamper wider conditions
In the wider market, traders have said that brands have been slowing down the amount of recycled material they use ahead of EU regulations due to a lack of affordability and generally weak macroeconomic conditions that have hampered consumption of polymers in 2024.

This has led to consumer cost competitiveness in favor of virgin materials, which Tickner also addressed during his speech, saying that “virgin polymer is very cheap,” which has counteracted the short-term impact of “regulations [which are] not there yet.”

Such dynamics have been a critical force in undercutting the commoditization of recycled and sustainable materials in the European market in 2024, with consumers favoring the use of cost-competitive virgin material against a weak macroeconomic backdrop.

Attendees at the event echoed these concerns, with a recycler saying that higher prices for recycled material continued to clip buyer appetite.

Natural recycled polypropylene (PP) pellet pricing has averaged a €636.67 per metric ton premium to virgin homopolymer spot values in the fourth quarter to date, up 12% on the quarter, Platts data showed, as both import and domestic supply have lengthened in the latter market.

Looking ahead, Tickner was optimistic in his expectations for the development of European circularity, noting that “end market demand is addressed by PPWR.” He noted a road map for broader commoditization from the recycled PET segment, saying that the sector “is an example of how a recycled market can look ... we are not there yet with most other polymers.”

Another conference attendee said that r-PET saw better purchasing demand than adjacent materials, such as recycled high-density polyethylene (HDPE), for packaging due to legislative packaging requirements, which is an end-user industry that PET is strongly utilized in.

A lack of industry-adopted specifications for most recycled materials was also highlighted as a critical hurdle for commoditization, with Tickner saying that “it is necessary to establish quality specifications ... starting with the end product rather than the feedstock.”

A broker expressed similar sentiment, attributing large variations in price for recycled materials to the lack of standardization between grades. They argued that this makes trading conditions more difficult for both buyers and sellers.

“Buyers are unsure of if they are being given a reasonable price, and the recyclers/bale producers are not sure where to price their products,” the broker said.

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North American chemical rail traffic continues to show signs of weakness, according to new data from the Association of American Railroads (AAR), said Chemweek.

During the week ended Oct. 19, chemical railcar volume in North America totaled 45,831 carloads, up 4.0% from the previous week and up 0.5% year over year. The four-week moving average (4wma) came to 45,289 carloads: down 0.7% sequentially, up 0.6% year over year and up 3.9% from the seasonal trendline, as represented by the average for 2014–23 (left chart). The increment over the trendline has steadily declined since the week ending Sept. 21, when it peaked at 8.2%.

In the US, 4wma chemical railcar volume came to 31,078 carloads: down 1.6% sequentially, up 0.6% year over year and up 0.8% from the region's seasonal trendline (right chart). The increment over the US trendline has steadily declined since the week ending Sept. 21, when it peaked at 7.3%.

In Canada, 4wma chemical railcar volume came to 13,494 carloads: up 1.6% sequentially, up 0.7% year over year and up 14.5% from the trendline. In Mexico, 4wma chemical railcar volume came to 718 carloads: down 1.0% sequentially, down 0.9% year over year and down 27.0% from the trendline.

For the year to date, chemical railcar volume in North America is up 3.5%, while total railcar volume is down 2.9%. US chemical railcar volume is up 3.9% on the same basis, while Canadian chemical railcar volume is up 2.5%, and Mexican chemical railcar volume is up 4.3%.

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The Russian Prosecutor General's Office is requiring that the structures of UK-Netherlands Shell compensate for over 1 billion euros in damages, the court's press service told Interfax.

The size of the requested damages is approximately equal to the 94.8 billion rubles that Gazprom paid in March 2024 for a share in Sakhalin Energy LLC, the successor to Sakhalin Energy which belonged to Shell with a 27.49999998621683% stake. The deal was concluded in accordance with a Russian government order of March 23, 2024, which approved the monopoly as the buyer of the stake in Sakhalin Energy.

As reported, the Moscow Arbitration Court has accepted the claim of the Russian Prosecutor General's Office against a number of structures of Shell. The court has scheduled a preliminary hearing for December 11. If the case is deemed ready following the hearing, then it may be considered on the same day immediately after the preliminary hearing.

The Prosecutor General's Office filed a lawsuit with the Moscow Arbitration Court against a number of Shell entities on October 2. The court's press service told Interfax that the lawsuit was filed to recover damages for the non-fulfillment of obligations. Shell has not commented on the lawsuit.

The defendants in the case are Shell Global Solutions International B.V., Shell Exploration and Production Services B.V., Shell NefteGaz Development LLC, Shell International Exploration and Production B.V., Shell Sakhalin Service B.V., Shell Energy Europe Ltd, Shell and Shell Sakhalin Holdings B.V.

The third parties are Gazprom Export LLC, the Russian Energy Ministry, Sakhalin Energy LLC, Sakhalin Energy Investment Company Ltd and the Sakhalin regional authorities.

It was later reported that Shell had made the decision to liquidate its remaining legal entities in Russia - Shell NefteGaz Development (V) and Shell NefteGaz Development LLC. The latter is the sole Russian defendant in the lawsuit filed by the Prosecutor General's Office. Following the two subsidiaries' closure, Shell's representation in Russia will be limited to a branch of the Dutch Shell Exploration and Prod.Serv.(RF) B.V., which is registered at the same address as the company's subsidiaries and has the same CEO, Tatiana Ivanova.

In 2022, in line with a decree signed by Russian President Vladimir Putin, Sakhalin Energy Investment Company Ltd (Bermuda) was replaced by Russia's Sakhalin Energy LLC. At the time, according to the conditions for setting up the LLC, Gazprom Sakhalin Holding was assigned a 50.00000001% share upon its establishment. The foreign co-owners of the project had to confirm their participation in the new legal entity - Japanese Mitsui & Co., Ltd. (12.5%) and Mitsubishi Corporation (10%) confirmed they would remain in the project, while Shell informed the Russian authorities it would not take part as a co-owner with the new Russian operator.

The foreign partners can receive funds for their share only after determining and offsetting compensation for the damages caused by them during the project's implementation, as well as damage caused to Gazprom by refusing to accept a new payment system for Russian pipeline gas supplies to Europe.

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Mainland China’s exports of toluene fell 58% month over month to 18,670 metric tons in September, the latest data from the China Customs Statistics Information Center showed, as per Chemweek.

The bulk of the volumes was absorbed by Taiwan at 8,147 metric tons, while Malaysia and South Korea purchased relatively similar amounts of 4,990 metric tons and 4,975 metric tons, respectively, according to the data.

The sharp decrease in exports was attributed to stockpiling ahead of the Golden Week holidays over Oct. 1-7, trade sources said to S&P Global Commodity Insights. Slower demand from Southeast Asia and South Asia also contributed to the decline, they added.

Meanwhile, mainland China’s imports of toluene rose to 11,453 metric tons in September from 10,904 metric tons in August, the data showed, with most volumes coming from South Korea.

Earlier it was reported that Titan Group is exploring the possibility of creating a joint venture for the production of silica sols and silica gels in China.

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Shipments of gasoline to the domestic market are currently 3% higher than a year ago and diesel fuel shipments are 7% higher, head of the Russian Energy Ministry's oil and gas complex department Anton Rubtsov said during a roundtable meeting at the Federation Council, as per Interfax.

"Shipments of gasoline to the domestic market compared to last year have increased 3% and [have increased] almost 7% for diesel fuel. Taking into account the decisions taken [on banning exports], a significant portion is sold through the exchange. Sales of motor fuel and all types of petroleum products on the exchange have increased by around 23% year-on-year in nine months of 2024. Diesel fuel has seen the biggest growth after decisions were taken to raise the sales thresholds," he said.

The level of gasoline remaining at oil depots is 2% higher in total compared to last year, while for diesel fuel the level is 5% higher, he said.

Retail prices are very close to the level of inflation, while margins for gas stations remain at a good level, so there is no need to worry about pressure on retail prices, he said.

"In terms of important areas of work it's important for us to ensure the rhythmic nature not only of production, but also of shipments and deliveries. Based on this approach, there is extensive work being done with the support of the Russian Transport Ministry and RZD Russian Railways to ensure that petroleum products are shipped quickly, without bottlenecks. This is beneficial to everyone, and we see its impact on exchange prices," he said.

The modernization program is continuing despite problems, he said. "This allows us to additionally ensure production of motor fuels. Not only production, but also an increase in productive potential is important," he said, noting the surge in demand pressure due to refineries undergoing repairs.

The current situation "with both prices and volumes that are sold in the wholesale segment is stable; there are no issues with supplies or prices for agricultural producers," the head of the Russian Antimonopoly Service's department for regulating the fuel and energy complex and the chemical industry Elena Tsyshevskaya said.

Sales on the exchange exceed the established thresholds, she said, with gasoline sales over 20% compared to the minimum of 15% and diesel sales at 18-20% compared to the minimum of 16%. "Everything is going well in this segment," she said.

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