Textination Newsline

The recycling of used textiles is facing a potential collapse. Industry experts agree that the current crisis is more serious than the COVID-19 crisis at the time.

In the case of Covid-19, there was a foreseeable period of a few months, after which the industry recovered quite quickly and the effect of pent-up demand caused prices to return to a normal level within a short period of time.
 
“We now have a completely different situation that threatens the existence of many of the established used textile recyclers in the industry,” says Stefan Voigt, Chairman of the bvse's Textile Recycling Association (FTR).
 
The global market for used textiles has been in a deep crisis for some time, which has now reached a level that can only be described as a free fall. Since the spring, the prices for original collected goods no longer cover the enormous costs for container provision, collection and administration.

The price of original goods traded on the market has now reached an all-time low, causing existential hardship for many market participants.

The sale of original and sorted goods has become almost impossible. The loss of established market players has destroyed supply chains that have been tried and tested for years, and stocks of original and sorted goods have reached unprecedented record levels. Some market participants are forced to replace the usual sales business with bartering.

According to industry information, downstream players in the recycling chain, such as shredding and spinning mills, are also under pressure and have made massive staff cuts. The production of cleaning cloths has also reached an all-time low. Due to the relocation of production abroad and reduced domestic production, demand for cleaning cloths has fallen and prices have slipped to a very low level.

Consumer behavior and international markets exacerbate the crisis
Due to the generally high cost burden on the population, the consumption of textiles has collapsed. The negative trend of consuming low-quality fast fashion is now being reinforced by ultra-fast fashion of even poorer quality. This has disastrous effects on value creation within the recycling chain for used textiles.

“During the sorting process, increasingly large quantities of relatively new textiles are being found that are already so defective that they are no longer suitable for further use and therefore have to be fed into the recycling process,” explains Voigt. However, there is no money to be made here either, as the same cost structures apply to this part of the original goods as to wearable goods and the recycling process is also very cost-intensive.

Industry calls for the introduction of an EPR system
Until now, the recycling of the proportion of sorted goods has been subsidised by the proceeds from wearable goods, but this system has not worked for some time. The industry is desperately waiting for the introduction of a national EPR system for textiles in order to stabilise costs.

The EU Commission's recently published draft of the revised EU Waste Framework Directive provides for the introduction of a system of extended producer responsibility for textiles. The existing collection and recycling structures in Germany, which enable the separate collection of used textiles close to the public, are to play a central role in this.

The draft of the National Circular Economy Strategy (NKWS) of the Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV) also emphasises the importance of the national recycling industry for used textiles. Without it, the establishment of a closed-loop system for textiles would not be feasible.

Crisis not limited to Germany
The crisis has also made ripples internationally. Countries such as the Netherlands, traditionally the largest buyer of used textiles from Germany, have already addressed the crisis in the national media. Almost 250 companies there are involved in the collection, sorting and international marketing of used textiles.

Around 60 per cent of the original goods are recycled as sustainable clothing after sorting, meaning that the industry is reliant on stable markets in which recycling proceeds can be generated. But this is precisely the problem. ‘Due to the effects of the Russian war of aggression in Ukraine, the Eastern European market can only be served in fragments,’ explains Voigt.

In addition, despite its potential, the African market is currently facing enormous challenges because there is practically no money left in the system, he adds, explaining the concerns he receives from many interviewees in the industry: ‘The enormous drop in the value of many currencies in various African countries    means that it is becoming increasingly difficult for African customers to buy urgently needed second-hand clothing for hard currency,’ Voigt continues.

For example, the currency in the extremely important African market of Ghana has lost roughly 20 per cent against the euro over the last six months of 2024. In addition, the transfer of foreign currency now takes up to two months, meaning that it now takes up to six months to return the proceeds of realisation.

In addition, the African market is increasingly dominated by Chinese influence. ‘The actually better quality of high-quality used European second-hand clothing can hardly compete with new Asian goods,’ reports Voigt. Ultra fast fashion from China is flooding the market with extremely low prices, making it increasingly difficult to market sorted, second-hand clothing.

In addition to economic problems, there are also logistical challenges. ‘Our customers are reporting increasing difficulties in obtaining the necessary visas for a business visit to Europe within an acceptable waiting period,’ explains Voigt. The waiting time for an appointment at the consulate can currently be up to two months.

Call for short-term measures
In order to prevent the system from collapsing in the short term, Voigt believes that the usual remuneration structures for local authorities and providers of parking spaces for collection containers need to be reconsidered. ‘Recycling revenues have not been realised for some time now, so they can no longer be paid out or must be adjusted to the current situation,’ says Voigt.

The industry expects the current crisis to last even longer. ‘Not everyone will survive,’ predicts Voigt. Many collection areas are already being offered on the open market and various collection capacities are being cancelled without replacement. The future of the used textile recycling industry remains uncertain and there is no end to the crisis in sight.