The extraordinarily high prices could mean virgin plastics will still be cheaper than recycled ones, even after paying the UK’s virgin material levy.

High prices for recycled plastic, which have reached record levels in the last twelve months, coupled with the UK plastic packaging tax, could have repercussions for manufacturers looking to increase levels of reusable materials in their products.

The new tax would be imposed next April at a rate of £200 per tonne on plastic products that do not have at least 30% recycled content. The extraordinarily high prices, however, could mean that virgin plastics will remain cheaper than recycled ones, even after the tax has been paid.

Helen McGeough, Senior Analyst and Global Analyst Team Leader for Plastics Recycling at commodity intelligence firm ICIS, mentioned this week that: “Many recyclers and packaging producers have mentioned the possibility of substituting recycled content with PET. virgin, particularly in the sheet and thermoforming sectors which are not under the same regulatory pressure as the beverage bottle sector, but only if PET prices remain around current levels and availability improves.

“For most end-users manufacturing food contact products, this will deter them from increasing recycled content levels due to cost, effectively thwarting their progress towards higher recycled content ambitions this year.”

McGeough said large-scale substitution of recycled for virgin plastic was unlikely before the second quarter of this year, when the availability of virgin plastic could potentially improve with the arrival of delayed imports from Asia.

He also mentioned that although the UK market was not facing the shortage of rPET flakes and pellets seen in other parts of Europe, it was dealing with higher levels of contamination with bale yields of around 50% for mixed bales, according to a recycler with whom he had contacted.

“Some companies have speculated that others will simply pay the tax and continue to use virgin, especially in the sheet sector,” the analyst noted.

As long as the price difference between recycled and virgin plastic is above the level of the tax, “there will always be an argument to avoid pressure to secure the supply of a high-priced raw material.”