The rise of plastic scrap prices

Recent trends in prices for recycled plastics have shown a considerable increase that could lead to demand changes.


Many consumers used to buy recycled material because of the cost advantage it offered compared to the virgin one. However, prices related to natural and mixed-coloured high-density polyethylene (HDPE) have been increasing until reaching a point of non-convenience for many users, especially for those companies that are not very committed to using recycled inputs in the production of their items.



According to Ajit Perera, the vice president of postconsumer operations at a reprocessor and compounder company in California, the price for natural HDPE bottle in bales now ranges from 60 to 65 cents per pound (approximately 500g) in California, while on the East Coast, where the competition is fiercer, it arrives close to 75 cents per pound.


He says: “regarding mixed-colour HDPE, bottle in bales are selling for 12 to 14 cents in California as of mid-February, a modest increase from the 11 to 13 cents of the previous month; while in the East Coast they are higher.” The trend for HDPE in bales prices is expected to continue, reflecting the increases in demand from the pipe and the automotive industries. Moreover, the prices of mixed-colour HDPE follow the increases in virgin HDPE pricing: when the latter gets higher, also colour starts to get scarce.



At the same time, PET pricing is beginning to increase in anticipation of summer demand, as well as polypropylene (PP) in bales which is following the same trend as HDPE. Data show how PP was priced $140 per ton in early January, while it has currently spiked up to $500 per ton. An example of this tendency could be the natural dairy bottles, which now are priced over $1,500 per ton.


The key starter of this change is to be found in consumers and their demand, while manufacturers are only following demand characteristics and slight changes in oil prices. In fact, the demand is solid: coloured HDPE, LDPE (low-density polyethylene), PP, ABS (acrylonitrile butadiene styrene), HIPS (high impact polystyrene), PC (polycarbonate) and PET have all increasing values, even though the domestic demand for expanded polystyrene (EPS) is limited due to seasonal issues.



Covid-19 has also played an important role in this recent tendency, as transportation shortages rapidly followed the start of the pandemic. The issues continued for 10 months, and prices for domestic shipments increased significantly until, in some cases, making the increased sales price for materials not keeping up with transportation cost increases. Many companies had to re-evaluate their buyers due to their distance from the core business.


Predictions affirm that trucking issues that got magnified by the pandemic will continue even after its end. This is in many cases not sustainable, as an order taken now but delayed two weeks or more for shipping, may already not be competitive: many companies are then trying to discount the recycled material where possible in order to mitigate the costs of logistics.

Sources:

https://www.recyclingtoday.com/article/plastic-scrap-prices-trend-upward/