company news about Plastic Reclaimers Grapple with ‘Rock Bottom’ Pricing

Recycled plastics prices are at their lowest levels in some time, putting significant strain on material processors. Meanwhile, some resin buyers are abandoning post-consumer resin to purchase virgin plastic instead. The lower prices can be seen in the scrap bale market and, to varying degrees, in the recycled resin market.

“The price of resin has definitely dropped significantly and it all boils down to supply and demand,” noted Tony Moucachen, who leads a family of plastics recycling companies, including prominent Pacific Northwest reclaimer Merlin Plastics. “The supply of virgin PE, PP and PET is currently significantly higher than the demand,” Moucachen added, “and this is leading to a steep decline in market prices. This also has a negative impact on the whole supply chain.”

In some cases, the market is such that it’s leading to landfilling of recyclables. “It’s not a fantastic time. We all know that,” Andrea Bassetti, senior analyst for plastics recycling at consulting and research firm ICIS, said during the 2023 Resource Recycling Conference earlier this month. “The demand is just not there and the supply is high,” she added. “We have a lot of recyclers calling us, telling us, “You know what, we have bales in our warehouses. It’s cheaper for us to send it to the landfill with a one-time fee rather than selling it at these prices at which they are now.'”

A number of data sources can be used to illustrate the steep drop in bale pricing that’s been experienced in recent months. For example, according to RecyclingMarkets.net, bales of PET, natural HDPE, color HDPE and PP from municipal recycling programs are averaging around 6.3 cents, 22.9 cents, 5.7 cents and 5.1 cents per pound, respectively. Those prices, which reflect the average across the U.S. (with some Canadian facilities also reporting) are down 55%, 69%, 65% and 51% since May, only three months ago.

Specific geographies are also showing the same general trend.

The Solid Waste Authority (SWA) of Palm Beach County, Fla. sends out the monthly results of bidding on bales from its publicly owned MRF. The details of these bids are publicly available. For SWA shipments this month, Cellmark won several PET bales with its bid of 3.8 cents per pound and Gama USA won several PET bales with a bid of 4 cents per pound. Five months ago, in March, GP Harmon Recycling won PET with its bid of 16.5 cents per pound, roughly four times today’s price. And this month, GP Harmon Recycling had the highest bids for both natural and color HDPE at 27.8 cents and 10.6 cents, respectively. Back in March, Cellmark won natural HDPE at 74.6 cents per pound and Nathan H. Kelman Inc. won color HDPE at 17.3 cents per pound.

Canada is seeing the same dynamics. A price sheet produced by EcoCompass Inc. for the Continuous Improvement Fund (CIF), which is part of Ontario’s extended producer responsibility (EPR) system, noted that PET averaged 12.9 cents U.S. per pound during the first half of 2023, down 39% from the average last year. The largest garbage and recycling companies in North America are feeling the pinch. Waste Management (WM) is North America’s largest operator of materials recovery facilities (MRFs), which sort and bale curbside recyclables. When the company released its second-quarter earnings earlier this month, executives noted that depressed plastics pricing had forced them to re-evaluate their commodity sales expectations for the whole year.

The plastic impact on WM is particularly notable because paper and corrugated cardboard make up the largest percentage of weight handled by those companies, and markets for those materials have been slowly but steadily climbing this year. “If you think about our fiber pricing, we’re expecting a slow ramp in fiber pricing, and that’s really being driven by some mill capacity coming on-line domestically,” Tara Hammer, WM’s chief sustainability officer, stated during a July 26 conference call with investors. “The bigger story really is on the non-fiber pricing and related to plastics, which is a smaller part of our volume but a higher-value commodity. And we’ve seen prices decline roughly 30% to 55% from May to July. So that’s what’s driving our recycled commodity price outlook for the second half of the year.”

Hemmer pointed to low virgin plastics prices pressuring the recycled resin pricing. Republic Services, the second-largest garbage and recycling company on the continent, is also seeing volatility in bale pricing. Pete Keller, Republic’s vice president of recycling and sustainability, told Resource Recycling that a few factors are affecting PET pricing, including slowing of the U.S. textiles and carpet sector. Europe, which has historically imported PET, has reduced its consumption, he said.