Quarterly Report – February 2021

The current markets for scrap plastic are varied to say the least. Despite continuing COVID restrictions, markets for some forms of scrap have gained in strength and value, whereas others have limited to no end markets.

Currently, there is a contrary market dynamic whereby export buyers, short of their own domestic material, are willing to pay more than US domestic buyers despite the major increase in freight rates. There is also a movement spearheaded by several large haulage companies which have stopped selling for export and are lobbying for the USA to become a signatory to the Basel Convention.

Among the various markets, lower winter volumes and strong end-user demand for rPET have pushed bale prices higher over several weeks. This situation has been compounded by the small increase in virgin PET that has made rPET more competitive than it has been in a long while. There is demand from outside the USA, with aggressive bids from Mexican buyers, owing to their reduced winter volumes. There is strong demand from reclaimers in California where there is greater involvement from brands looking to develop relationships as the recycled content mandate approaches.

The USA is lacking competitive markets for polypropylene (PP) and yet there is encouraging growth, with greater investment and grants for the further development of collection, sortation and end markets. There are stable end markets for bales of tubs and lids as well as rigid bales comprising buckets and crates. As with most plastics, the greater the sortation, the greater the value - and PP is no exception. Mixed rigid (PP & PE) bales have little value and more market growth is needed for this commodity.

The value of clear recycled HDPE has rocketed to meet demand, with baled HDPE doubling between June 2020 and January 2021. This increase is largely due to the expanded use of this resin for furniture, packaging and appliances.

LDPE has experienced mixed fortunes, with clear, clean shrink wrap - mainly from commercial accounts - in very high demand, whereas dirtier kerbside material has no viable market. The better the quality, the higher the value. There has been growth in capacity for grade A LDPE, driven by the 40% recycled content mandate in California; demand is so great that several manufacturers are experimenting with grade B in a bid to meet demand.

Polystyrene (PS) is the least sought-after commodity. If sorted and clean, however, EPS has value and a stable market both for export and domestically. This is not the case for mixed PS bales that have limited to no value and for which the market is flat.

The start of 2021 has brought some hope and positive growth for the industry. The combination of the Basel Convention amendments, mandated recycled content and an increase in oil prices has made for a brighter outlook. Expectations of further plastic packaging mandates have spurred manufacturers to take a more proactive approach and engage in long-term planning and investment in the recycling supply chain. Prospects for the plastics recycling industry are positive, potentially allowing it finally to decouple from the virgin resin industry.