US plastic scrap Q2 trade data reinforces interdependence of North American recycled plastics industry
HOUSTON (ICIS)–As global recycled plastics markets face extreme volatility, Q2 2022 US trade data on plastic scrap material continues to show increased domestic recycling activity, noted by decreasing exports and increasing imports.
Though at present US post-consumer recycled polyethylene terephthalate (R-PET) and recycled polyethylene (R-PE) markets are experiencing demand softness and thus a temporary oversupply of material, both markets suffer from long-term systemic shortages in collected plastic waste. This has encouraged material imports from other North American countries and from Asia.
According to trade data from the US Census Bureau, plastic scrap imports, noted by the HS code 3915, have been following an upward trend since 2012.
Based on 1H 2022 data, Canada and Mexico combined made up nearly two-thirds of plastic scrap imports, totalling over 151,500 tonnes.
During Q2 2022 alone, nearly 120,000 tonnes of scrap plastic was imported into the US.
On the other hand, plastic scrap exports from the US have been decreasing, showing a 74% drop when comparing Q2 2022 to Q2 2017, following the February 2017 announcement of the Chinese National Sword policy to limit shipments of scrap material to China.
Plastic scrap derived polymers of ethylene – HS code 391510, continues to be a primary driver of US plastic scrap exports.
PE-based plastic scrap accounted for 44% of plastic scrap exports in Q2 2022.
Canada and Mexico were also main destinations for exported scrap plastic, receiving 50% of total exported plastic scrap in 1H 2022.
Based on this data, it is clear that intra-North American recycled plastics markets are becoming more and more interdependent, leveraging the various strengths of collection and recycling infrastructure from each region.
Though this data confirms the continuation of plastic scrap macrotrends, Q3 data may tell a different story due to changing global market trends.
Domestic polyethylene terephthalate (PET) bottle bale prices fell significantly beginning in July on seasonal oversupply and weak demand from large end markets like fibre, and have persisted at ICIS record lows ever since.
At that time, European R-PET markets remained relatively stable at record high prices, which may have incentivised additional exports of PET waste plastic material. At one point, European PET bottle bale prices held a 35+ cents/lb premium in comparison to US prices.
Similarly, US mixed coloured high density polyethylene (HDPE) bottle bale prices have fallen 73% in under 4 months in order for downstream flake and pellet material to remain competitive with rapidly dropping virgin HDPE resin, while European polyolefin bale prices remain strong, opening a potential period of arbitrage.
Despite these opportunities, market participants may be discouraged from shipping material abroad due to local regulations, such as REACH certification in the EU, or the Basel Convention restrictions among several countries.
188 countries have self-imposed restrictions on the export of mixed plastic waste, in line with the Basel Convention Amendment which went into effect on 1 January 2021. The US has not ratified the Basel Convention.
Furthermore, all global markets continue to be in a state of fluctuation, which introduces additional risk, as market conditions may have significantly changed by the time shipments arrive at their destination.
What is for certain is that as the industry expands and grows, new global relationships and trade flows will be established, enabling regionalized recycling infrastructure to be maximised to its fullest potential. Only time will tell how the US plastic scrap trade will be fully impacted by this transformation.
Focus by Emily Friedman
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