Industry at a crossroads
Plastics recycling undergoing tremendous change
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Fernandina Beach, Fla. — The recycled PET sector, Alex Delnik believes, is at a crossroads. Make no mistake, Delnik is bullish on the business, as chief operating officer at Circularix LLC, which is planning a network of five PET recycling plants around the country in the next couple of years. Each one will process 75 million pounds of PET flake into new pellets. "There is no guaranteed success going forward," he said. "The industry has changed from our point of view over the last two or three years more dramatically than the previous 15 years." Societal forces play more of a role in plastics, and recycled plastics, than ever before in the United States . Countless companies have made environmental pledges to increase the amount of recycled PET used in their packaging, but the stark reality is that there simply won't be enough supply to meet all of the pledges, many tied to 2025 or 2030 target dates . "What we had prior to 2019, we had a fragmented group of companies," Delnik said. "Pricing was benchmarked to virgin resin. It led to extreme volatility. Virgin PET, highly volatile. It has tremendous periods of volatility, usually related to oil and natural gas pricing, but also in development of new capacity," he said. This led to a situation where recyclers were unable to forecast their own revenues because of the volatility of pricing. And that impacted existing businesses as well as the ability to finance recycling projects. "There was no reason to finance. No investor, no private investor, no institutional investor would do anything," Delnik said. "[Recycled] PET was considered an inferior substitute for virgin PET. It was kind of like PET, but not as good as virgin PET," he added. And customers demanded a discount off virgin resin pricing. Recycled PET, in the past, was also used in smaller percentages of finished products, so quality was less of an issue. That meant there was no reason to justify investments to improve quality. "That was the sorry state of the PET industry. Things have changed over the last couple of years," he said, starting in Europe, where higher-quality recycled PET became more normalized.
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