PRC ’24: US rPET market deviating from historic trends in 2024

HOUSTON (ICIS)–As beverage and thermoform packaging demand ramps up amid seasonally tight polyethylene terephthalate (PET) bottle supply, the US recycled polyethylene terephthalate (rPET) market is showing split trends across regions.

In many ways, the market is deviating from historic patterns heading into this year’s Plastics Recycling Conference (PRC).

While demand on the East Coast remains robust, bale markets have yet to reflect any issues in supply, likely due to the continued import of rPET flake feedstock.

On the West Coast, demand remains poor as customers have switched from domestic rPET to cost-competitive imported rPET or virgin material. At the same time, West Coast bale markets juggle limited seasonal supply and aggressive Mexican export interest.

BALES
In line with traditional seasonal supply tightening, availability post-consumer PET bottle bale feedstock remains constrained on the West Coast.

As cooler weather persists across the country, it causes a decreased consumption of bottled beverages and thus, lower collection volumes.

West Coast domestic recyclers are in heavy competition for limited feedstock with export interests, particularly from Mexico.

Despite rapidly rising prices, several in the market believe Mexican buying activity will remain strong to feed local recycling capacities which have recently expanded. Even East Coast deposit bales were heard being routed to Mexican buyers.

On the East Coast, supply remains balanced which is counter to the historic trend.

Though demand for rPET pellet is robust on the East Coast, recyclers are supplementing operations with imported flake feedstock, which has alleviated pressure from bale markets. Imports of PET scrap into the US have jumped 33% year on year.

As a result, market prices have minimally increased. As the weather continues to improve through the spring and into the summer, bottle bale supply is expected to lengthen.

Even as the market passes the peak winter supply tightness, imported feedstock will be necessary as the US market continues to develop, as pelletization capacity has increased domestically, but annual collection of PET bottles remains stagnate, according the latest data from the National Association for PET Container Resources.

Furthermore, some recyclers see the need to secure new sources of feedstock to protect future supply continuity.

Within the last several months, Republic Services, a major waste management company and owner of 90 material recovery facilities (MRFs) nationwide, has opened their first of four recycling facilities. Now, rather than selling sorted PET bales on the market, this facility will consume those bales and produce rPET flake.

FLAKE AND PELLET
As markets readjust to 2024 economic outlooks, demand across several industries is expected to increase in the second half of the year. That being said, this may be too late to significantly impact preparation efforts ahead of the summer beverage season, a key demand driver for the US rPET market.

Recyclers located on the East Coast have found success in catering to beverage bottle demand, and are seeing steady orders, though volumes are by no means record breaking.

Activity from fiber recyclers on the East Coast has been muted on soft downstream consumer demand in textiles and carpet.

Much like in 2023, consumer brand companies are expected to continue to increase usage of post-consumer recycled (PCR) plastic in their product packaging to meet voluntary commitments and regulatory requirements.

According to several industry groups, many brand companies are still far from reaching their targets.

This comes as California, Washington and as of this year, New Jersey, mandate recycled plastic content in both food and beverage packaging as well as other plastic items such as bags in 2024.

Though, not all US recyclers are feeling the impact of growing PCR usage. On the West Coast, recyclers continue to see weak sales and have had to scale back production rates significantly as customers are heard to have switched to imported rPET or virgin to save on cost.

As a result, West Coast recyclers are now being squeezed between rising bale feedstock costs due to export competition, and low flake and pellet sell prices and volumes due to import competition.

Though freight rates have increased since the start of the year due to the strain on the global logistics system from delays around the Panama and Suez canal, opportunities for imported materials continue to emerge from Asia and Latin America.

As the US rPET market continues to develop amid a changing global backdrop, trends are expected to defy historic patterns.

Several recyclers note the impact of the beverage season and overall, PET seasonality trend is weakening on the US rPET market.

Now, imported flake lessens the criticality of winter bale supply tightness and sustainable packaging programs, which impact various types of consumer goods products, have provided some stability in demand across the full year.

To learn more on seasonality and other fundamental recycled plastic pricing trends, ICIS recycled plastics experts Emily Friedman and Andrea Bassetti will be giving a presentation “Insights from the Analysts” on Wednesday, 27 March at 10:00 CST.

The Plastics Recycling Conference (PRC) takes place on 25-27 March in Grapevine, Texas. Please reach out on LinkedIn to connect with us at the show!

Insight article by Emily Friedman