INSIGHT: 2023 marks first year as US net plastic scrap importer, driven by PET imports increasing 33% year on year

HOUSTON (ICIS)–2023 was a year of record changes within US plastic scrap trade. While some relationships remain steadfast, such as the plastic scrap trade between North American partners Canada, Mexico and the US, other relationships are growing in strength, such as US importing activity from Asia, particularly for polyethylene terephthalate (PET) plastic scrap.

• US becomes net importer of plastic scrap for the first time
• US PET scrap imported increase 33% year on year
• Canada, Mexico comprise 55% of US scrap exports, 58% of US scrap imports

Full year trade data from the US Census Bureau shows US imports of plastic scrap – noted by the HS code 3915- continue to increase, having jumped 5% year on year to a total of 446,778 tonnes in 2023. Plastic scrap imports include items such as used bottles, but also other forms of recycled feedstock such as purge, leftover pairings and now also flake material.

This comes at a time when domestic market conditions for recycled plastics are mixed.

Many grades of plastic which are used for cost-sensitive applications, such as those which go into construction materials or durable good and packaging, have seen a severe withdrawal of demand, as low cost virgin material continues to flood the market.

Even grades of sustainability driven recycled plastics, such as those going into consumer goods applications like beverages and personal care, have seen weaker market conditions domestically, as customers switch to imported recycled resin.

Supporting the increase in imported scrap plastic, US recyclers who continue to have strong order volumes were heard to be supplementing their operations with imported feedstock. Several recyclers now purchase cheap spot or imported R-PET flake to process into their food grade pellet product and redirect their internally produced flake from high cost domestic bale feedstock to sell directly to customers.

In the long term, the US will seek imports of bale or flake feedstock not just due to the cost driver but to feed growing plastic recycling capacities amid stagnant plastic collection rates domestically.

Intra-North American recycled plastic trade relationships continue to show strength, as Canada and Mexico not only dominate as the origin location of plastic scrap import but also as top export destinations for US plastic scrap exports.

58% of the plastic scrap imported by the US came from Canada and Mexico combined, though Mexico’s volumes notably dropped year on year, down 35% compared to 2022.

Picking up the slack, US plastic scrap imports from Thailand increased by 103% year on year. Thailand is now the third largest country of imported plastic scrap origin.

PET imports show tremendous growth

The majority of plastic scrap received from Thailand was of the PET subcategory, coming in at 23,346 tonnes, a 157% increase year on year from Thailand alone. PET imports from Thailand now make up 11% of the total US PET plastic scrap imports, trailing Canada at 29%.

Thailand’s PET scrap export activity to the US has grown significantly, increasing 415% by volume in comparison to 2019.

Similarly, Ecuador has step-wise increased the volume of PET scrap being sold to the US market, jumping 63% year on year and 414% since 2019.

Market participants confirm they have seen a notable rise in imported recycled polyethylene terephthalate (R-PET) activity from Asia and Latin America, particularly due to their cost-competitive position in light of cheaper ocean freight rates in 2023.

Imported PET scrap from Canada also saw a large change, increasing 21% by volume year on year to 59,247 tonnes.

When looking at the geographic regions of the top 10 origin countries of US PET scrap imports, Mexico and Canada make up 34% of volume, tied with Asian countries at 34%, then followed by Latin America at 15%, Africa 5% and non-top 10 countries at 12%.

In general, PET scrap imports increased substantially in 2023, jumping 33% year on year to a record setting 204,278 tonnes in 2023.

When looking at the data by comparing quarters year-on-year, it is clear the market continues to face increased volatility. This is showcased by the wide swings in import volumes since 2020, when prior, quarterly import volumes were much more stable.

Polyethylene (PE) also continues to be a leading polymer type for US plastic scrap imports, coming in at 63,206 tonnes in 2023. Of that volume, Canada is by far the largest contributor at 72%.

On the other hand, PE scrap exports have fallen 16% year on year, likely due to lessened manufacturing activity amid macroeconomic pressure in 2023.

Plastic scrap imports continue historic downward trend

Similarly , PET scrap exports fell 14% year on year to 65,556 tonnes, which was mainly driven by decreased export activity to Germany. Volumes of PET scrap sent to Germany dropped 40% year on year, down to 6,156 tonnes.

This is likely attributed to the fact that both the US and European recycled plastics markets saw lackluster demand in 2023, paired with fierce competition from lower cost virgin cargoes.

Contrary to that trend, exported of PET scrap to Mexico increased 15% year on year, making up 54% of all US PET scrap exports.

At present, aggressive buying activity from Mexican recyclers continues to drive up US PET bale prices. Exports to Mexico have always made up a small portion of US PET bale sales from southern California or states like Texas, though the current activity has been notably strong.

This is likely due to increased PET recycling capacity now in Mexico within the last year, as well as increased demand in Mexico from brand companies sourcing R-PET locally. Similar to the US, this time of year when the weather is cooler results in lower consumption of beverages and thus a tighter supply of bottles available for collection.

In general, US plastic scrap exports continue to follow a downward trend since 2017, dropping another 4% year on year.

This trend has resulted in the US becoming a net plastic scrap importer, as total scrap trade is import positive at 26,408 tonnes. To reinforce how significant this change is, as of 2014 the US was net exporting 1,765,917 tonnes.

Among the top destination countries for US plastic scrap exports were Canada, Mexico and India, Malaysia and Vietnam, with Canada and Mexico accounting for 55% of the overall volume in 2023.