April/May 2020

The repercussions of the “Shelter in Place” order in the USA have been extensive. Eight out of the 10 states with container redemption systems have enacted temporary measures limiting deposit returns in some way. Redemption of containers basically stopped from the moment the order was enacted. The negative impact has been wide-ranging for recycled material.

Reclaimers are struggling with reduced volumes as they compete to supply their customers and adapt to the new reality. In some cases, production has been halted temporarily owing to employee infections and/or volume limitations. Since April 1, California alone has seen the closure of over 500 buy-back centres and 15 material recycling facilities. Since then, many of the larger certified recyclers/processors have reopened for inbound traffic to certified recyclers and commercial accounts only. However, these centres have reported that their volumes are down 50% to 60% from this time last year. In addition, there are still over 200 buy-back centres in California that are closed.

In contrast, packaging firms are designated as “essential services” and are therefore continuing to operate. In fact, beverage container sales have risen as more households are buying and consuming drinks and packaged food at home.

The “Shelter in Place” order has been very tough on recycling centres, with aluminium prices at a 10-year low coupled with low plastic scrap prices. A number of facilities will not be able to recover from this current situation unless they have immediate financial relief and ongoing operational relief. Likewise, plastic reclaimers are unable to meet the demand for post-consumer resin (PCR) as their volumes have so dramatically decreased and prices surge.

The current state of affairs is causing a new set of problems for the future of the PET recycling industry. Low volumes caused by the lockdown have seen bale prices rise while, in contrast, virgin PET is at a historic low. This is putting downward pressure on rPET flake/pellet prices to compete with the virgin PET, forcing end users - especially users of flake for packaging - to move away from rPET flake and seek out vPET resin.

The story is varied for other plastics. Just a couple of months ago, natural HDPE was at an all-time high but that market has stabilized and the price is currently in the low US$ 0.30 per lb range. In contrast, coloured HDPE prices are at a historic low of US$ 0.05 per lb as most big purchasers have stopped buying for the month of April owing to very low demand.

On a more positive note, A grade LDPE film is steady, with both export and domestic buyers maintaining volume demand; the price is hovering around US$ 0.10 per lb. There is a similar story of domestic stability for PP, with prices ranging from US$ 0.06 to US$ 0.09 per lb depending on the quality.

Lower-grade plastics - such as HDPE mix rigid, colour film, 3-7 grades - have been much harder hit and are struggling to find domestic outlets; the export market is even worse. Both have been affected by COVID-19.

The global pandemic is putting further pressure on a plastics recycling industry that is still recovering from low scrap prices, negative public attitudes to packaging, and oil and resin prices that are at historic lows. Once the global economy reopens, it will require concrete commitments from packaging companies and their customers to use PCR to stimulate and secure an industry that is struggling to stay competitive.


Sally Houghton - Sally Houghton (United States)

Sally Houghton

The Plastic Recycling Corporation of California (USA), Board Member of the BIR Plastics Committee

United States
April/May 2020