The U.S. and Israel attacks on Iran and the escalation in conflict over the last two days has injected a renewed sense of volatility and uncertainty into
the global energy and freight markets, trickling down into Europe’s recycled plastics market, sources told OPIS Monday.

Market participants suggested the effects are primarily upstream, centered on shipping risk, freight volatility and broader market sentiment, with no material shift yet observed in recycled polymer demand or availability.

Nevertheless, while the conflict primarily affects the energy and shipping sectors, its ripple effects are exacerbating existing fears over rising energy costs and economic concerns for the European recycled plastics industry, sources told OPIS Monday.

If virgin plastics prices rise in Europe, amid gains in crude oil and natural gas, there is a possibility for recycled plastics pricing to increase also. Should virgin prices dramatically increased, this could push more buyers into the recycled industry for the highest quality materials, which in turn would generate recycled plastic price gains from an upswing in demand.

With global trade routes, including the Strait of Hormuz, compromised, logistical disruptions are highly anticipated, with cargos expected to be delayed. Freight costs are also expected to jump, according to market sources.

In Europe, despite mounting pressure for domestic bale pricing to rise in face of potential supply constraints, overall the recycled plastics market has yet to see significant impact, Instead, many sources said they were in wait-and-see mode amid an increasingly precarious geo-political landscape.

“The potential impact this could have on the recycled plastics market going forward depends on the psychology of the buyers,” one trader told OPIS Monday. “If they are running low on stock levels, they could panic and move to buy. If supply tightens this will drive prices upwards.”

While further disruption could instantly shift market dynamics, market participants will continue to keep an eye on developments going forward, they said.

“There is nothing like a supply disruption to make people think twice,” said a second recycled plastics market source in Europe.

Reporting by Ellis Nicoll, enicoll@opisnet.com; Editing by Rob Sheridan, rsheridan@opisnet.com