Alexei Volkov
Plastic recycling is a costly process. The price of plastic recycling is based on the labour intensity of the process, the distance the plastic waste needs to be transported, and the type of plastic being recycled. For example, corrugated containers (PS 11) are currently trading at $76 per ton, while mixed paper (PS 54) is trading at $32 per ton. The high costs of recycling plastic, coupled with the low value of scrap and low oil prices, mean that recycling plastic now costs more than manufacturing virgin plastic.
| Characteristics | Values |
|---|---|
| Price for sorted, baled aluminium cans | 53.31 cents per pound |
| Price for corrugated containers (PS 11) | $76 per ton |
| Price for sorted residential papers (PS 56) | $43 per ton |
| Price for mixed paper (PS 54) | $32 per ton |
| Price for sorted office papers (PS 37) | $93 per ton |
| Price for plastic recycling | $500/ton |
| Transport costs | Higher prices for longer distances |
What You'll Learn
Mechanical recycling of PET and HDPE
Recycling plastic is expensive, with the global restructuring of the scrap market causing a disaster for the industry. The low value of scrap and high costs of recycling, coupled with low oil prices, means that recycling plastic now costs more than manufacturing virgin plastic. The labour intensity of plastic recycling is also a factor, as is the distance the plastic waste needs to be transported.
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The low value of scrap
The global restructuring of the scrap market has been a disaster for the plastic recycling industry. Many localities have resorted to incineration or landfill for scrap materials that are less valuable or that simply cannot be processed.
The economics of plastic recycling are also sensitive to transportation distances. While a model might allow for plastic waste to be moved up to 50 miles, higher prices are needed for transport over longer distances.
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The high cost of recycling
Recycling plastic is an expensive process. It requires a $500/ton product price to earn a 10% IRR off of c$1,000/Tpa of up-front capex. The mechanical recycling of PET, HDPE, polypropylene, PVC and polystyrenes is particularly costly. The process starts by aggregating plastic waste into bales, which are then transported to a recycling facility and shredded. The cost of this process is sensitive to transportation distances, with higher prices needed for longer distances.
The high costs of recycling plastic are coupled with the low value of scrap and low oil prices, meaning that recycling plastic now costs more than manufacturing virgin plastic. This has resulted in increased recycling costs and lower recycling rates, as many localities have resorted to incineration or landfill for scrap materials that are less valuable or that simply cannot be processed.
The price of recycled plastics continues to rise. For example, the national average price for sorted, baled aluminium cans (UBCs) is up 7% year-on-year, now at 53.31 cents per pound. The national average price for corrugated containers (PS 11) is currently $76 per ton, up from $32 per ton a year ago.
Despite the high costs, only 10% of today's end-of-life plastic is recycled, or around 40MTpa, within the global plastics industry. This is a problem as even highly-recyclable #1 (PETE) or #2 (HDPE) plastics will degrade in quality over time, with processing limits of just two to three cycles before they are no longer usable.
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The cost of transporting plastic waste
The cost of recycling plastic is high, with the global restructuring of the scrap market causing a disaster for the industry. The low value of scrap and high costs of recycling, coupled with low oil prices, means that recycling plastic now costs more than manufacturing virgin plastic.
Additionally, the cost of transporting plastic waste is impacted by the weight and volume of the waste. Plastic waste is often aggregated into bales to reduce the volume and make transportation more efficient. The weight of the plastic waste can also impact the cost of transportation, as heavier loads may require more fuel or specialised equipment to transport.
Overall, the cost of transporting plastic waste is a significant factor in the overall cost of recycling plastic. The economics of plastic recycling are sensitive to transportation distances, labour intensity, weight, and volume of the waste.
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The economics of plastic recycling
Plastic recycling is an expensive process. It requires a $500/ton product price to earn a 10% IRR off of c$1,000/Tpa of up-front capex, at a mechanical recycling facility with 0.3 tons/ton of CO2 intensity. This is up to 80-90% below virgin plastics.
The global restructuring of the scrap market has been a disaster for plastic recycling. The low value of scrap and high costs of recycling, coupled with low oil prices, means that recycling plastic now costs more than manufacturing virgin plastic. Plastic is also inherently problematic within the recycling industry, as even highly-recyclable #1 (PETE) or #2 (HDPE) plastics will degrade in quality over time, with processing limits of just two to three cycles before they are no longer usable.
The national average price for corrugated containers (PS 11) is $76 per ton, while sorted residential papers (PS 56) are $43 per ton. Mixed paper (PS 54) is $32 per ton, and sorted office papers (PS 37) are $93 per ton.
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Frequently asked questions
It costs $500/ton to recycle plastic.
$76 per ton.
53.31 cents per pound.
Transporting plastic waste up to 50 miles is included in the cost of recycling, but higher prices are needed for longer distances.
It is more expensive to recycle plastic than to manufacture virgin plastic.
