One of Sydney's largest recycling plants has become the latest casualty of a collapse in market prices for plastics and paper products two years after China slapped a ban on foreign waste.

Polytrade Recycling's plant at Rydalmere in the city's north west will close at the end of March, forcing four councils – Fairfield, the Inner West, Willoughby and Lithgow – to find alternative facilities to recycle materials residents drop in yellow-top bins.

Polytrade's recycling plant at Rydalmere will close at the end of next month. Credit:Anna Kucera

The company is the second largest recycler of contents from yellow-topped bins in Sydney after Australian waste giant Visy. Polytrade has been operating the Rydalmere plant since 2013, handling tens of thousands of tonnes of kerbside recyclables a year.

The closure comes three years after the plant received a $5 million grant from the NSW government to help pay for installing equipment that processes mixed plastics. Polytrade also received another $5 million in 2017 for a glass facility in Sydney.