The October report explores pricing – as well as government policies such as bottle deposit systems, minimum recycled content mandates, virgin plastic taxes and more – that affect pricing in India, Indonesia, Thailand and Vietnam. The study focused on collectors, aggregators and recyclers of PET, HDPE, LDPE and PP.
In general, the study, which was conducted by The Circulate Initiative and its research partner, Anthesis Group, found that a lack of pricing transparency leads to widely differing expectations among collectors, aggregators and recyclers about how much recycled plastic is worth. For example, collectors lack knowledge about how much the final recycled resin is selling for, hampering their ability to charge appropriately for their scrap.
The researchers even found wide variations in scrap prices among the same types of players – different collectors, for example, are selling similar scrap plastic products at a wide range of prices.
The report also noted that the profits from plastics recycling tend to be concentrated at the recycler level, with less money filtering up to the collectors, many of whom are informal sector workers. The recyclers have the highest fixed and operational costs and tend to experience the largest financial risk among the stakeholders, so they need to make sufficient profits, the report states.
“However, the share of total profits that flows through the value chain, and to informal waste workers in particular – without which there would be no supply of recycled plastic in many countries – needs to increase if we are to significantly increase plastics recycling, and in turn for brands to meet their recycled content goals,” according to the document.
What does it all mean?
As a result of the market imbalances, not all policies would be effective at raising prices throughout the chain and stimulating higher recycling rates. For example, policies aimed at increasing the value of PCR or stimulating investments in recycling infrastructure help recyclers but don’t necessarily translate directly to higher prices paid to the collectors.
What’s needed, the researchers concluded, are “additional practical interventions that support sharing of knowledge within the market. These could involve digital tracking of plastics, published market price points, and more involvement from industry bodies and regulators in standardizing material specifications. The benefits of rising market demand and any potential increase in the price of recycled materials need to be distributed through the value chain to provide the right economic signals to stimulate local investment.”
The researchers also ranked different policy interventions in terms of their effectiveness stimulating increased plastics recycling in the different countries. They also created an online tool to demonstrate the relative impacts of each policy.
The Circulate Initiative was started with support from Circulate Capital, an investment firm focused on reducing plastic waste around the world, particularly in developing countries. Rob Kaplan, founder and CEO of Circulate Capital, is among The Circulate Initiative’s board members.
