Global interest in US R-PET market intensifies in both feedstock, finished product

HOUSTON (ICIS)–As global markets continue to become more interconnected, many regions outside the US have taken interest in the domestic recycled polyethylene terephthalate (R-PET) market as both a potential area of feedstock supply, as well as a destination for finished flake and pellet cargoes.

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 in light of cheaper ocean freight rates in 2023.

US recyclers were heard to be supplementing their operations with imported feedstock.  Several recyclers now purchase cheap spot or imported R-PET flake to process into their food grade pellet product, and potentially redirecting their internally produced flake from high cost domestic bale feedstock to sell directly to customers.

In the long term, the US will have to seek imports of bale or flake feedstock, not just due to the cost driver but to feed growing plastic recycling capacities amid stagnant plastic collection rates domestically.

Recently released trade data from the US Census Bureau shows US imports of plastic scrap – noted by the HS code 3915- continue to increase, having jumped 5% year on year to a total of 446,778 tonnes in 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.

Specifically, polyethylene terephthalate (PET) scrap imports increased substantially in 2023, jumping 33% year on year to a record setting 204,278 tonnes in 2023.

When looking at the geographic regions of the top 10 origin countries of US PET scrap imports, Mexico and Canada make up 34% of volume, tied with Asian countries at 34%, then followed by Latin America at 15%, Africa 5% and non-top 10 countries at 12%.

The largest sender of PET scrap was Canada at 59,247 tonnes, increasing 21% by volume year on year.

The second largest sender was Thailand, coming in at 23,346 tonnes, a 157% increase year on year. PET imports from Thailand now make up 11% of the total US PET plastic scrap imports, trailing Canada at 29%.

Thailand’s PET scrap export activity to the US has grown significantly, increasing 415% by volume in comparison to 2019.

Similarly, Ecuador has step-wise increased the volume of PET scrap being sold to the US market, jumping 63% year on year and 414% since 2019, and thus becoming the third largest sender in 2023.

Despite recent increases in ocean freight due to ongoing logistics challenges in the Red Sea and Panama Canal, imported flake prices continue to be price competitive in the US market.

Imported flake prices on the West Coast were heard at 45-46 cents/lb DEL. East Coast imported flake was heard in the range of 52-55 cents/lb DEL.

When looking at PET scrap export trends, volumes have fallen in 2023, but appear to be picking up again in the first quarter of 2024.

PET scrap exports fell 14% year on year to 65,556 tonnes, which was mainly driven by decreased export activity to Germany. Volumes of PET scrap sent to Germany dropped 40% year on year , down to 6,156 tonnes.

This is likely attributed to the fact that both the US and European recycled plastics markets saw lackluster demand in 2023, paired with fierce competition from lower cost virgin cargoes.

Contrary to that trend, exported of PET scrap to Mexico increased 15% year on year, making up 54% of all US PET scrap exports.

Across the northern hemisphere where cooler weather persists, R-PET markets typically experience peak of bottle bale supply tightness due to lower bottled beverage consumption. As a result, several regions have seen increased PET bottle bale pricing as supply has been limited.

While the US is also has seen lower PET bale volumes, prices have yet to substantially move, thus making bale export opportunities much more attractive.

At present, aggressive buying activity from Mexican recyclers continues to drive up US PET bale prices. Exports to Mexico have always made up a small portion of US PET bale sales from southern California or states like Texas, though the current activity has been notably strong.

This is likely due to increased PET recycling capacity now in Mexico within the last year, as well as increased demand in Mexico from brand companies sourcing R-PET locally.

Mexican PET bale prices were heard as high as 37-39 cents/lb locally.

On the East Coast, deposit bales continue to be used domestically but also exported to Asian recyclers.

While the US R-PET market in some ways has benefited from theses global trade partnerships, others note that competitive pellet imports continue to destroy domestic demand and foreign interest in bale feedstock has driven up pricing.

As the US R-PET market continues to develop, there is no end in sight to influence from other regions.

Focus by Emily Friedman