SWOT and PET bottles recycling in UK

RECOUP - the English container recovery organisation is made a business-report on the recycling of PET bottles in the UK in cooperation with PETCORE. The report begins with a review of the PET reprocessing process, with each operation described, suitable equipment identified, and operating requirements and costs reported.

A SWOT analysis is used to identify factors relevant to a PET reprocessing operation. Consequently the factors are considered in more detail, providing an introduction to the issues associated with entry into the plastics reprocessing business. Business scenarios are then considered using information from both the technical overview and SWOT analysis.

Market overview

The level of plastic bottle collection for recycling has increased steadily in the UK over the last decade.
The UK, however, lags behind the other EU countries in the recycling of plastic bottles. A total of 11.300 tons of plastic bottles were collected for recycling in the UK in 1999; including an estimated 4.500 tons of PET-bottles – less then 5% of the bottles used. Compared to the 70-80% of PET bottles collected in Sweden and Switzerland a very meagre figure.
Globally around 17% of PET bottle consumption is collected for  recycling, about 900.000 tons, with 219.000 tons (about 14% of consumption) collected in Europe, in 1999.
Italy, France, Belgium and Switzerland account for 75% of the European total.
The principal barrier to the collection of post consumer plastic bottles for recycling in the UK, is the lack of funding to cover the cost of collection and sorting, activities generally carried out by local authorities in response to demand from residents.
41% of UK local authorities now include plastic bottle collection in their recycling programmes, with more than 2.8 million households (11.4% of the UK) served by kerbside collection of mixed recyclables including plastic bottles.
There are indications that the amount of plastic bottles collected for recycling in the UK will increase significantly over the next five years.
The UK government’s Waste Strategy 2000 introduces statutory recycling targets for English and Welsh local authorities to meet national household waste recycling and composting targets of 25% by 2005, 30% by 2010 and 33% by 2015.
Local Authorities in England and Wales achieved an overall recycling rate of 9,5% in 1998/1999 with only one in three Local Authoroties recycling more than 10%.

Results SWOT analysis

Strengths

• UK post-consumer bottle collection infrastructure is expected to increase, with more PET bottles being recovered for recycling.
• Shortages of PET recycling capacity are predicted for the UK within the next couple of years.
• UK local authority plastic bottle collection schemes may have environmental policies, which encourage them to use local (UK) reprocessors.
• The UK market for virgin PET packaging is one of the largest in Europe, the UK has only one indegious reprocessor, which has limited capacity, due to a lack of collected bottles.

Weaknesses

•  If the predicted growth in UK collection of post consumer PET bottles does not occur, competition for collected material will drive costs up and may force out marginal reprocessors.
• A newly established business may be disadvantaged relative to existing reprocessors with regard to supply of post-consumer bottles, due to existing business relationships/contract.
• The economics of recycling used plastics packaging sourced in the UK are supported by the value of the Packaging Recovery Note (PRN) which is difficult to predict.
• A  UK based reprocessor may incur higher transport costs for material from mainland Europe than  reprocessors on the continent.

Opportunities

• The amount of PET used in packaging is increasing rapidly, PET is taking market share from glass and PVC.
• New markets for recycled PET are being developed, allowing recycled PET to be sold into high value volume markets.
• A new reprocessing plant equipped with the latest reprocessing equipment should give technical advantages over reprocessors using older equipment.
• Environment Agency accredited reprocessor status will enable PRNs to be issued against material reprocessed.
• Demand for PRNs is expected to exceed supply in 2001, driving PRN value upwards.
• The Waste management Strategy will increase the number of local authority collection schemes for recyclables.

Threats

• Commercial competition from UK and overseas reprocessors for post-consumer PET bottles (mechanical and chemical recycling) may drive up the cost of post consumer bottles.
•  ‘Non-standard’ PET bottles which are generally incompatible with existing PET reprocessing may gain market share, driving up reprocessing costs.
• The cost of virgin PET may fall, reducing achievable sales values.

Conclusion

Although more detailed analysis should be considered preliminary investigations of the conditions relating to the establishment of a new PET bottle reprocessor in the UK supports the view that the potential exists for a profitable business.