Economic Slowdown Decelerates Recycled Plastic Market Growth in Germany

Frankfurt, Germany: The ongoing hostilities between European nations and Russia have severely impacted the manufacturing activities of several key industries in Germany. The burgeoning energy values have deteriorated market sentiments toward Recycled Plastics nationwide. The soaring energy prices and the threat of a winter gas shortage have weighed on the German economy. As per the latest data, the Business Climate index reported a steep decline last month and has fallen to its lowest value since June 2020. Against a feared recession, the fragile terminal market has also significantly pressurized the price value chain of Recycled Plastics among the market players.

The dropping Purchasing Manager Index has sparked pessimism among the manufacturers of Recycled Plastics in the domestic region. The market participants have reported that fewer offtakes from the downstream packaging sector have pushed them to reduce their offers to maintain a balanced supply chain. The existing high inventories were observed to be sufficient to fulfill the current contracts as the ordering activity remained dull in August 2022. The data shows that the price realizations of Recycled High-Density Polyethylene (R-HDPE) have plunged by approximately 2.2% and demonstrated a decrement of USD 50 per ton on August 3rd, 2022, compared to last week's observed costs. Similarly, Recycled-Linear Low-Density Polyethylene (R-LLDPE) prices have plummeted by USD 20 per ton in the same timeframe.

On the other hand, the price offers of Recycled Polyethylene Terephthalate (R-PET) have modestly surged by 10 USD from last week's prices. The curbed supplies of upstream PET have prompted supply-side concerns for post-consumer bales for recycling firms. The shortages of raw materials have forced European producers to halt production; thus, a surge has been observed in spot offers for R-PET in the regional market.

As per ChemAnalyst, the pricing dynamics for Recycled Plastics will likely witness a downward trajectory in the near term. The major energy supplier, Rheinenergie, has announced a hike in its natural gas prices, dampening the region's market sentiments for Recycled Plastics. The high input costs are anticipated to directly impact the benchmark prices of recycled plastics, tumbling the demand fundamentals in the forthcoming weeks.