FALLING OIL PRICE PUTS PRESSURE ON PLASTICS RECYCLERS

While a lower oil price is welcome to most people, as it results in smaller energy bills for households & businesses (due to lower petrol/ diesel & heating bills) the implications go far beyond ‘energy’. In recent weeks we have heard about the effects of reducing oil price on world stock markets & economies (& in turn on things such as pensions).

Naturally, the continued drop in the price of crude oil is also leading to concerns by plastics recyclers about the demand for plastic recyclate.

The declining value of oil is resulting in a corresponding reduction in the cost of ‘virgin’ polymers, which in turn puts downward pressure on the value of recycled plastics, because there is less of a cost advantage for using recyclate.

Last week Brent Crude was trading at less than $50/ barrel, less than ½ its value 12 months ago & the lowest since 2009.

This is already starting to have an impact on local government authorities collecting household plastic scrap (such as bottles).  And it could well have implications for the use of recycled plastics in automotive applications and for plastics recovered from shredder residue.