Insight: Cooling PET scrap imports, rising PET scrap exports detailed in latest US trade figures

HOUSTON (ICIS)–In light of the recent surge of ocean freight rates, US plastic scrap trade has slowed some to overseas destinations, but still remains robust within North American borders. Albeit lower this quarter, polyethylene terephthalate (PET) plastic scrap in particular continues to be strong in import and export volumes amid a moderate domestic market.

• US remains a net importer of plastic scrap
• US PET scrap imported decreased 11% Q2 2024 vs Q1 2024
• US PET scrap exported increased 62% Q2 2024 vs Q2 2023

IMPORTS SLOW ON GLOBAL FREIGHT, PET REMAINS STRONG

Q2 2024 trade data from the US Census Bureau shows US imports of plastic scrap – noted by the HS code 3915 – have fallen 10% quarter on quarter, but still having increased 7% year on year when comparing with Q2 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.

Imports totaled 114,969 tonnes in Q2 with drops seen across the major polymer groups for US scrap import. Polyethylene (PE) scrap was down 13%, while polyethylene terephthalate (PET) scrap was down 11% quarter on quarter.

Based on volume alone, the drop in PET imports by 6,857 tonnes is the largest contributing factor to the overall decrease.

While imports from Canada and Mexico still dominate total volumes, when looking at PET specifically, imports from Mexico have dropped off significantly.

Top sending countries for PET scrap are Canada, followed by Thailand, Ecuador, Japan, Indonesia and Honduras as of the 1H2024 data. This means less than 25% of US PET scrap imports came from North America, while over 43% of PET imports originated from Asian countries, a reversal of the statistics seen just two years prior.

While down quarter on quarter, PET scrap imports are still elevated in comparison to previous years, up as much as 24% year on year.

As of Q2 2024, PET makes up 50% of all US imported plastic scrap, followed by the “other” plastic scrap category at 29% and PE scrap at 13%.

US recycled polyethylene terephthalate (R-PET) market participants confirm they have seen a notable rise in imported R-PET activity from Asia and Latin America, particularly due to their cost-competitive position when it comes to feedstock, labor and facility costs.

Though towards the back half of Q2, ocean freight rates did substantially rise, likely curtailing the window of cost competitiveness for many.

Typically, imports from these overseas locations must be ordered weeks, if not months, in advance, and so Q2 import volumes largely represent demand from one to two months prior.

Even with higher ocean freight rates today, US converters and recyclers continue to buy imported flake and pellet to supplement operations, as it remains cost-competitive in most cases. R-PET demand on the East Coast has continued to strengthen during the summer months and is now looking solid through the end of the year, a deviation from the typical seasonal demand pattern.

Though imports come with additional transportation and cost risk, players accept that international supply is now woven into the fabric of the market, much like with virgin PET.

PET EXPORTS SURGING, OTHER PLASTICS SEE WEAK GLOBAL MARKETS

Despite the desire for a growing domestic recycled plastics market, feedstock material continues to bleed out of the country, specifically PET bales. US exports of plastic scrap have increased 5% quarter on quarter to a total of 112,385 tonnes, while PET scrap exports have increased 18% quarter on quarter, and a whopping 62% year on year.

Though the US has always exported a portion of domestic bale material to other countries, including Mexico and some in Asia,  exports to Mexico have surged in the last 10 months.

This growing trade relationship is largely attributed to new capacity in Mexico, paired with strong local demand which has elevated local bale prices. As a result, Mexican recyclers have been purchasing US PET bales as a lower cost option with high availability.

Overall, exports of other types of plastic scrap continue to slow, following the Chinese National Sword and Basel Convention adoption several years ago.

PE continues to be a leading polymer type for US plastic scrap exports, coming in at 33,556 tonnes in Q2 2024. According to 1H24 total PE imports, India is the largest destination at 25%, followed by Indonesia at 15% Canada at 14%, and Malaysia and Vietnam tied at 13%.

As of this past quarter, the US remains a net importer of plastic scrap.