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- PET bale prices effectively negative
- Landfilling questions arise
- HDPE, PP bale pricing firms
In mid-March, when pricing for post-consumer plastics bales typically starts ticking up with seasonal demand, several grades are seeing divergent trends, with PET bales searching for a bottom and polyolefins on the rise.
Even as freight costs soar, curbside PET bottle bale values have plummeted in recent weeks, with the national average under 2 cents/lb picked up (ex-works), and the average for the Northeastern US moving close to zero, according to RecyclingMarkets.Net data.
To start the year, bale prices for Northeast PET bales were at 6-7 cents/lb after several weeks of stability. But Alpek’s late January announcement that it would close its Pennsylvania RPET plant sent prices falling even further from historic lows.
“With fewer end markets and rising logistics challenges, PET is under severe pressure,” said Sanjay Bhura, of exporter Sigma Recycling.
In early March, regional PET bale prices were lowest in the Northeast and Midwest, reflecting capacity closures from reclaimers including Evergreen Recycling in Ohio and New York, a Phoenix Technologies facility in Ohio, and Alpek in Pennsylvania.
MRFs that sort and sell most bales have finite storage space, and recycling volumes continue arriving regardless of offtake. Unlike virgin plastics producers, municipal sorting facilities cannot simply reduce operating rates.
“For many MRFs and recyclers, the biggest priority has become creating space in their facilities,” Bhura said. “That means selling material at the lowest possible prices — and in some cases even at negative values — just to keep material moving.”
Availability of cargo ships for exports also may be constrained, cutting off another avenue for US material. On March 13, global shipping company Maersk suspended bookings to and from the United Arab Emirates, Iraq, Kuwait, Qatar, Salalah in Oman, and Bahrain.
The company is accepting bookings from Sohar in Oman, Jeddah and King Abdullah ports in Saudi Arabia, Khor Fakkan in UAE, Lebanon and Israel, however.
Will domestic production increase?
Negative bale pricing could ultimately benefit recyclers, as pricing for virgin PET as well as imported RPET is pressured up with increases in crude oil and freight rates.
“I think bales will be competitive pretty quickly, as flake, virgin and repro is going up quickly,” said James Derrico, vice president of new business at distributor Cellmark. “You’re also going to see increased steamship line rates, making domestic PET a better value proposition for domestic consumers.” He added that most shipping lines have nominated general rate increases (GRIs) for April, and “some are pretty significant.”
Alexandra Tennant, executive director of global recycled plastics at Chemical Market Analytics from OPIS, a Dow Jones company, said the question is really what it would take to restart idled RPET capacity — or more likely, increase utilization at plants that are still operational.
She said that a sharp increase in demand for domestic RPET would likely require a global supply disruption for PET resin in tandem with the ability for RPET to be cost-competitive with virgin and/or imported resin.
The landfill conundrum
While some municipal contracts restrict landfilling of recycled commodities, in other cases landfill fees may be less expensive than paying buyers to take bales. The challenge may be in deciding which is the better of two unattractive options: negative values that may or may not allow domestic reclaimers to compete with importers, or landfill the material for less.
“I haven’t seen anyone landfilling yet but we are certainly seeing large volumes getting backed up in less desirable freight locations,” Derrico said.
However, with oil prices increasing quickly, virgin PET made with oil derivatives could become more expensive as well, and imports would be subject to rising deep-sea freight rates and delays. This could make rPET more attractive and economical for converters who can quickly and easily make the substitution.
Polyolefins on the rise
The late February winter storm in the Northeastern US has caused supply interruptions for HDPE natural bales, due to delays in collecting curbside recycling after 1 to 3 feet of snow dumped over the region.
The national average pricing for HDPE natural bales rose by 15% over the past month, buoyed by significant increases in the Northeast, Midwest and Southern US, according to RecyclingMarkets.Net data.
Polypropylene bale prices continued to climb upward east of the Rocky Mountains, in regions closest to most PP recyclers. Drivers for the higher pricing were heard to be upcoming capacity increases in the southern tier of the country, as well as the inconsistent presence of a major buyer.
