A decline in the UK recycling plastics market resulting from the record-low oil prices could have implications overseas, including Europe.
The drop in oil price has driven down the cost of virgin materials – making them equally competitive with recycled alternatives.
At the end of last week, Chris Dow, CEO of the UK’s largest milk bottle recycling company, Closed Loop Recycling, told the Guardian newspaper that “without the support of the industry or the government it is inevitable we will go into administration”.
Dow added that: “We are collateral damage from the drop in the oil price.”
The government’s backed Waste & Resources Action Programme (WRAP) was reported as saying: “If we can agree on something then maybe we can save this company.”
A survey conducted by You Gov showed 68% of British adults asked supported a price increase of 0.01p on a two pint plastic milk bottle – the price increase needed to “secure the future of the company”, according to Closed Loop.
The East London-based company wouldn’t be the first blow for the UK’s plastics recycling sector.
At the end of last year, ECO Plastics announced that it was looking for a buyer following increasingly challenging operating conditions in the country.
Pan-European investor Aurelius then announced in mid December that it had acquired the struggling plastics recycling company, including its 150,000 tonnes-per-year plastic bottle recycling plant in Lincolnshire.
A voluntary commitment known as the Dairy Road Map scheme originally helped to drive up the recycling content in plastic milk bottles to nearly 30%.
Major retailers including Asda, the Co-Operative, Tesco and Morrisons together with processors including Dairy Crest signed up. Although reports suggest that only the Co-operative has publically agreed to renew its commitment.
Ray Georgeson, chief executive of UK industry body Resource Association said that the “clock is ticking and action from this day from the key influencers in this process – the retail and dairy signatories to the Dairy Roadmap – will still have the potential to salvage a critical situation”.
Earlier this month Defra Resources Minister, Dan Rogerson MP, called together industry representatives to discuss challenges in the plastics recycling industry.
At the time Georgson called on the signatories of the Road Map to “honour their commitments to recycled content”, saying that the situation needs “an urgent switch back to specifying rHDPR with immediate effect”.
Meanwhile UK body the British Plastics Federation (BPF) said today (March 31st) that plastics processors are currently facing shortages of key materials.
Director-general Philip Law said processors are being damaged through not being to secure the polymer they need.
He said: “There has been a spate of force-majeure declarations reminiscent of 2010. It certainly appears that some processors, of particularly LDPE, LLDPE and HDPE, are on allocation. This threatens their ability to fulfil contracts. It is important for their customers to recognise that they have genuine difficulties. This is not just a UK issue it certainly affects France, Germany and Italy.”
With the UK’s home-grown bottle recycling plants having been seen as domestic success stories, reducing reliance on overseas markets, continued support and agreement from the remaining signatories of the Diary Road Map could not come soon enough.