The plastics raw material crisis: an ecological opportunity for Europe

THE RAW MATERIALS CRISIS

A STRUCTURAL PROBLEM FOR EUROPE

"A perfect storm" is how AGI (Agenzia Italia) defines it. It is not just a matter of COVID, the pandemic has only revealed the problem. The causes of this situation are structural and are the consequence of a dangerous policy of Europe deindustrialisation, which firstly transferred production and then the interest of sellers towards the markets of CHINA and the USA. All this has led to a dependence on these countries (which are, moreover, recovering strongly) for both semi-finished products as well as raw materials.

To these we must then add the “safeguard measures” provided by European legislation, which impose the application of duties of 25% when the import limits for certain raw materials from “non-EU countries” are exceeded.

THE RISING COST OF OIL-RELATED PLASTICS
Also contributing to the crisis is the sharp rise in the price of "Brent" from the lows reached in April (+148%). Polymers of reference for the manufacturing industry such as ethylene, polypropylene and PVC reported price increases of 58%, 34% and 42% respectively. Source: AGI | Agenzia Italia

THE POOR AVAILABILITY OF RAW MATERIALS
To the problem of cost, we must also add the problem of low availability. Indeed, with the strong growth in domestic demand by China and USA and in global demand from the second half of 2021 onwards, the availability of raw materials is expected to be an even more damaging problem than cost, by putting the production of many other industrial sectors at risk, certainly including steel and plastics, both of which are strategic for a modern economic model such as Europe's.

THE SECOND LIFE RAW MATERIAL ALTERNATIVE
In a scenario where "virgin raw materials" are scarce or too expensive, the use of “second life raw materials” could open up new perspectives.

Research shows that many second life (recycled) materials could be a viable alternative to virgin (first choice) raw materials, especially if adopted by mature markets with infrastructure which are ready to support a circular economy such as Europe.

In this area and in recent years, important progress has been made in many sectors such as ferrous alloys, municipal waste in general and polymers.

A REVERSAL PERSPECTIVE FOR THE CIRCULAR INDUSTRY
In the last two years we have seen in Europe a worrying slowdown in the circular industry and in particular in recycled plastics. This was due to the free-falling prices of virgin material and to the slowdown in production due to Covid-19.

"If the situation is to persist and no actions are taken to remedy the sector, plastics recycling will cease to be profitable, hampering the attainment of the EU recycling targets and putting in jeopardy the transition towards circular plastics’. In such a case, recyclable plastic waste will have no alternatives but to be sent to landfill or incineration.". Ton Emans, President of Plastics recyclers Europe

However, from Q1 2021 onwards, we are witnessing a new paradox with the cost of products made from virgin PP rising exponentially in relation to the cost of C3 (the basic material for making polypropylene).
This obviously has a major impact on the final cost of the product.

Cost trend €/t PP in Europe.
In orange the average PP cost. In blue the cost of C3 (basic material to produce PP)

The only justification we can give is unprecedented speculation on the part of the respective manufacturers.

It has to be said that the recycled raw material is also undergoing a cost increase, but the impact on the end product is simply proportionate and not exponential.

THE COMPETITIVE ADVANTAGE OF EUROPE AND THE OPPORTUNITY FOR ECOLOGICAL TRANSITION

Europe has one of the most mature and competitive circular industries on the planet. It has infrastructures and technologies capable of recovering raw materials that have already been used, transforming them into new raw materials so to be used in a new production process by creating new products and thus reducing their environmental impact.

This is especially true for the circular plastics industry. The use of inert plastics such as PP (Polypropylene), which are particularly suitable for recycling, is widespread in all EU member states. For several years now, production based on recycled plastics has been present in all sectors such as: automotive, industrial design, logistics, construction, food, etc.

In the NextGenerationEU plan, the ecological transition is one of the key action points. With a budget of EUR 672.5 billion, 37% of which is earmarked for green policies, we expect a significant development of the circular economy throughout Europe. Among the main incentives for this development are the funds granted to EU member states which aim is to achieve carbon neutrality by 2050 with precise references to recycling policies.

Europe's guidelines aim to turn the fight against climate change into an opportunity for new, sustainable economic growth and also to protect new generations. The NextGenerationEU is designed to invest heavily in research and development for green economy.

MPS PLASTIC SUPPORTS THE CIRCULAR INDUSTRY
MPS Plastic is a company with a strong commitment to the environment and for several years has been expanding a specific production line for recycled. Our aim is to research and develop production methods and technologies to progressively convert as many products from virgin raw material to recycled.

THE GREEN INITIATIVE OF “UNICO SPA”

Unico Spa is an Italian company specialised in pharmaceutical distribution. Founded in 2002 from the merger of the distribution branch of several Italian pharmacists' cooperatives, it has a widespread and efficient national distribution network, capable of making 15,000 daily deliveries with 510 vehicles operating for 7,500 customers in 17 Italian regions.



Until 2019 it used virgin plastic boxes for its organised logistics, purchased on the free market, specifically for use in automated systems, for transport in temperature-controlled vehicles and for delivery to pharmacies.

In 2019, the company began a process of converting its virgin plastic boxes and progressively replacing them with recycled PP analogues.

Thanks to the collaboration with MPS and its consolidated experience in the production of recycled PP, a new box has been designed in order to be perfectly compatible with the requirements of automated plants and transport systems, while maintaining its corporate identity (colour and logo).

Thanks to the new recycled PP boxes, Unico Spa is progressively converting its logistics with a new perspective that is more consistent with the company identity and with a clear green vision.

The benefits of adopting recycled PP and the direct collaboration between Unico Spa and the manufacturer MPS go even further: cost savings and branding are just some of them.

Finally, considering the vicissitudes linked to the increase in costs and the difficult availability of virgin material products, highlights that the choice made by "Unico Spa" was appropriate and advantageous, thus becoming a "guiding example and promoter" for other companies wishing to take the same path.