Falling prices define summer months

After starting this year at peak pricing, bales of natural high-density polyethylene (HDPE) have taken a tumble.

In January, curbside bales were fetching slightly more than $1 per pound in some cases. Then came a midyear drop, according to observers.

Emily Friedman, senior recycled plastics editor at London-based commodities consulting firm ICIS, notes that by the end of May, natural HDPE bale prices fell to 70-75 cents per pound. After a monthlong plateau, prices dropped again to the 50-cents-per-pound range by the start of July on the East Coast, in particular.

However, Friedman says the crash was anticipated.

“Players are not surprised. They’ve been waiting for this kind of market correction. It just remains to be seen where the floor settles out on natural [HDPE] bales and where we begin to climb from there.” – Emily Friedman, senior recycled plastics editor, ICIS

“The HDPE market is now known for its cyclic behavior of peak pricing, a market crash and then a slow build back up to peak pricing,” she says. “Players are not surprised. They’ve been waiting for this kind of market correction. It just remains to be seen where the floor settles out on natural bales and where we begin to climb from there.”

In her July plastics report for the Brussels-based Bureau of International Recycling, board member Sally Houghton, executive director of The Plastic Recycling Corp. of California, also notes the dramatic shift in HDPE natural bale pricing, adding that January’s peak could be attributed to new buyers entering the market and brokers speculating on rising demand.

“This speculation pushed up prices until the market crashed in May,” she writes. “The decline was accelerated by a major buyer pulling back and offering lower prices, while an influx of cheap imported resin continues to push down prices for domestic producers.”

The U.S. market for Grade-A polyethylene terephthalate (PET) bottle bales also has noticeably declined.

While the summer months typically see depressed bale pricing given a buildup of supply, this summer’s decline has more closely resembled a crash, Friedman says. Pricing that sat in the range of 15-17 cents per pound in May has trended closer to 6-12 cents per pound in some cases at the start of July, depending on the region.

“What’s compounded this to make it a crash is the fact we’ve seen significant drawback in recycler demand for bale material,” she says. “Some of that comes from facility closures. … We’ve seen weakness from fiber recyclers because of weakened global fiber demand dynamics. And those who were historically large players in this market are now pretty muted” in terms of demand.

“We’ve even seen other recyclers that have made feedstock decisions in regard to tariffs, such as imported flake, that have left them in a position where they’re not in need of as much local material, or they placed a bet that local material prices would fall if they stopped buying, and thus, it kind of initiated the market correction and the new lower prices we’re seeing.”