As oil prices surge, petrochemical firms turn to recycled plastics

A rare price reversal has emerged for the first time, with recycled plastics becoming cheaper than conventional plastics amid the fallout from the Middle East war and high oil prices. As the global plastics market price structure wobbles, South Korea's petrochemical industry is also accelerating investment in recycling technologies, viewing them not just as a response to environmental concerns but as part of a resource security strategy to cut costs and stabilize raw material supply chains.
■ Price reversal in Europe and Asia
According to S&P Global Energy on the 18th, the global pricing structure between recycled plastic materials and conventional plastic materials changed sharply starting last month. For the first time, recycled materials began trading at lower prices than new products.
Until now, clear recycled PET (rPET) and recycled polyethylene (r-PE) were often sold at higher prices than new products, supported by growing demand for eco-friendly materials and policies requiring the use of recycled feedstock. Because they are recycled materials, their production costs were generally higher than those of conventional materials.
Recently, however, the price trend has reversed across the United States, Europe and Asia. Political instability in the Middle East and rising international oil prices have driven up petrochemical feedstock costs such as naphtha, pushing up the prices of new PET and PE products quickly, while the increase in recycled product prices has remained limited.
According to Platts, as of the 13th, the price of clear recycled PET feedstock was $459 per ton lower than conventional PET in Northwestern Europe and $373 lower in Southeast Asia. The price of recycled low-density polyethylene feedstock was also $1,169 per ton lower than conventional LDPE in Northwestern Europe.
Recycled high-density polyethylene feedstock was also traded at lower prices than conventional products in European and Asian markets, data showed.
■ Expanding investment in recycled plastics
South Korea's petrochemical and refining industries are interpreting the price reversal as a warning sign for supply chain risks. Given an industrial structure heavily dependent on crude oil and naphtha from the Middle East, repeated geopolitical shocks could make raw material price spikes and supply disruptions a constant threat. In response, major companies are accelerating efforts to secure chemical recycling technologies that convert waste plastics into recycled feedstock or pyrolysis oil.
SK chemicals is targeting the chemical recycling market with depolymerization technology, which breaks down waste plastics at the molecular level and returns them to raw material form. The company is building a production base for recycled feedstock with Chinese recycling firm Kelinle and is pushing to expand recycled PET production on that foundation.
LG Chem is focusing on developing supercritical pyrolysis technology that converts waste plastics into crude oil substitutes. In 2024, it completed the country's first pyrolysis oil plant in Dangjin, South Chungcheong Province, and is now conducting trial operations. GS Caltex is also devoting efforts to developing technology that feeds recycled oil from waste plastics into actual refining processes to produce circular petroleum products. Its strategy is to reduce dependence on crude oil by linking recycled oil with existing refining facilities.
An industry official said, "Recycled plastics are evolving beyond a simple ESG response into a strategic business that also takes supply chain stability and cost competitiveness into account." The official added, "Depending on whether Middle East risks persist over the long term, the pace of related investment could accelerate further."
solidkjy@fnnews.com Gu Ja-yun Reporter