Plastic scrap prices rise amid tight supply

Whether you’re talking polyethylene terephthalate (PET), high-density polyethylene (HDPE) or polypropylene (PP) scrap, supply has tightened, while pricing has increased to new highs.

One PET reprocessor based in the Northeast says bale supply is “very tight,” and pricing is increasing as a result. High-grade PET bales have reached 30 cents per pound in California, while pricing is in the 20-cents-per-pound range in the Midwest and Southeast as of the third week of May, he says.

His company has offered to raise its pricing to draw in more material, but the supply is not available. “The collection rate is poor but starting to improve.” He says that is in part because cooler weather has lingered in the Northeast, affecting generation of water and soft drink bottles.

“We are fighting over every bottle out there,” the reprocessor says. “There is not enough material now to go around.”

Demand for his company’s rPET flake also has increased, which he says is a very different situation from late 2020. “There was almost no demand for this stuff,” he says, adding that his company was inventorying a great deal of material as a result.

But demand started to grow in March, he says. “People are falling over themselves to try to buy this stuff. It’s gotten a little nuts.”

RPET demand is increasing in part because of the supply constraints affecting virgin material in North America. Dak Americas’ Alpek polyester business has issued force majeure because of a water shortage at its terephthalic acid facility in Altamira, Tamaulipas, Mexico.

Supply disruptions are being felt more broadly in the virgin plastics sector. Nova Chemicals Corp. also has claimed force majeure, limiting polyethylene resins sales after a mechanical failure at a production site in Ontario.

These supply disruptions come as chemicals producers along the Gulf Coast continue to recover from winter weather-related disruptions in production earlier this year. In February, LyondellBasell and Ineos Olefins and Polymers USA both declared force majeure for polypropylene.

Scott Saunders, general manager of KW Plastics’ Recycling Division in Troy, Alabama, says, “Scrap is very tight because the market is so hot.” He credits this to the strong economy and to the tightness in virgin polyolefin availability.

Securing sufficient supply is one of his company’s biggest challenges, he says.

He cites “all-time highs” for natural and colored HDPE bales and for polypropylene tubs and lids bales. Saunders says natural HDPE bottle bales are selling in the range of 96 to 98 cents per pound, while mixed color HDPE is selling in the range of 45 to 46 cents per pound. PP tubs and lids bales are in the 37-to-39-cents-per-pound range. Even bulky rigids bales have gained in price, he says.

Demand for natural HDPE has exceeded supply, Saunders says, adding that the price of the material has decoupled from virgin pricing. “It’s trading as its own commodity for now,” he says.

Saunders says he’s hoping the higher prices will bring out more material, though he says it usually takes a while for that to happen.

Higher PP prices could lead more material recovery facilities to invest in recovering this material, he says, particularly among those that are already making and marketing Nos. 3-7 bales.

KW Plastics is selling all the recycled HDPE and PP that it can produce, he says. Saunders credits COVID-19 with some of that demand as people spent more time and home, increasing demand for items packaged in HDPE. He adds that some of that demand could be reduced as pandemic-related restrictions lift; however, other products also are being launched that could end up increasing demand.

“All commodities are tight,” Saunders says. “People think they know why, but I’m not sure they do. Last year, we heard about how all of this polyolefin capacity was coming online and how it was going to kill recycling, and now we don’t have enough” postconsumer resin. “I don’t know what to think.”