Price spread between color, natural HDPE at record high

The price spread between natural and color HDPE reached a record high in February, as natural bales pricing increased while mixed-color bales remained near historic lows. 

The spread stood at 85.07 cents per pound for February, according to RecyclingMarkets.net data, the highest level the index has tracked in at least seven years. 

The difference between the two grades typically peaks over the winter, as demand for mixed-color HDPE used in agricultural drainage tile and pipes ebbs seasonally while natural-color demand remains fairly stable. However, in December 2023-May 2024, the spread was around 8-11 cents amid low overall demand and competition with inexpensive and abundant virgin resin.

A narrow price spread indicates that buyers who can use either grade may opt for natural HDPE, and subsequently subdue demand for color bales. 

Of the two grades, natural HDPE is far more versatile, with its ability to be dyed to desired colorways, while mixed-color HDPE is limited to black or gray and is largely used in drainage applications. Natural HDPE is also benefiting from progress toward recycled-content goals for packaging, market sources told Plastics Recycling Update.

Looking ahead, major color HDPE buyer Advanced Drainage Systems indicated in a recent earnings call uncertainty about the upcoming peak spring and summer construction season. 

Color bales have been priced under 6 cents per pound since December, a far cry from the 2024 peak of 23.94 cents reached in May but not far from their all-time low of 3.61 cents in May 2020. The highest historical level was 58.13 cents, seen in September 2021, when raw materials prices throughout chemical value chains were spiking due to high consumer demand for goods amid weather-related production constraints. 

In contrast, natural bales at 90.88 cents are nearing their historical high of 108.44 cents, also seen in September 2021.