INSIGHT: Q1 2024 US imports of plastic scrap remain strong on cost savings opportunities

HOUSTON (ICIS)–US plastic scrap trade continues to show robust import activity amid flat export volumes in the first quarter. Polyethylene terephthalate (PET) plastic scrap in particular continues to see strong growth in import and export volumes despite domestic recyclers citing only moderate-to-weak demand.

This is likely due to the wide window of arbitrage for recycled flake and pellet resin into the US. On the other hand, US PET bale prices have minimally improved following last year’s market crash, creating export opportunities to other global destinations.

• US remains a net importer of plastic scrap
• US PET scrap imported increased 88% Q1 2024 vs Q1 2023
• US PET scrap exported increased 33% Q1 2024 vs Q4 2023

Q1 2024 trade data from the US Census Bureau shows US imports of plastic scrap – noted by the HS code 3915 – remain strong, having dropped only 2% quarter on quarter, but having jumped 38% year on year when comparing with Q1 2023.

Exports on the other hand were nearly identical quarter on quarter, having leveled off over the last several quarters around 100,000 tonnes.

US plastic scrap imports totaled 127,176 tonnes in Q1 2024, marking it the strongest first quarter in the last 10 years, and only the second strongest quarter ever, following Q4 of last year. 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.

PET SCRAP IMPORTS CONTINUE RECORD PACE
PET in particular continued to see growth in imported scrap volumes, increasing 88% year on year. PET scrap now constitutes nearly 50% of all US imported plastic scrap, followed by the “other” plastic scrap category at 29% and polyethylene (PE) scrap at 14%.

Overall plastic scrap imports from Mexico continued to drop, down both year on year and quarter on quarter, largely driven by declines in PET scrap imports.

Canada on the other hand increased year on year but declined quarter on quarter with the broader volume trend.

Together, plastic scrap coming from Canada and Mexico continues to constitute nearly half (46%) of US plastic scrap imports.

Material from Thailand comes in as the third largest region for US plastic scrap imports at 7% of the total volume. When considering just PET scrap, Thailand continued their strong growth trajectory with nearly identical volumes to Q4 2023. US PET scrap imports from Thailand in Q1 2024 increased 82% year on year.

Despite this growth, Canada still sends the largest volume of PET scrap to the US at 11,960 tonnes in Q1 2024.

When considering other countries, PET imports from Asian-based countries now makes up over 40% of the total PET scrap import volume, passing up Canada and Mexico at a combined 21%.

Market participants confirm they have seen a notable rise in imported recycled polyethylene terephthalate (R-PET) activity from Asia and Latin America, particularly due to their cost-competitive position when it comes to feedstock, labor and facility costs in light of cheaper ocean freight rates.

Though, other regions may not always be in a cost-competitive position, as most recently seen in South American countries like Peru and Colombia, where local bale prices have increased significantly, while US feedstock prices remain relatively stable.

Supporting the increase in imported scrap plastic, US recyclers who continue to have strong order volumes were heard to be supplementing their operations with imported feedstock. Several recyclers now purchase low-cost spot or imported R-PET flake to process into their food-grade pellet product and redirect their internally produced flake from high-cost domestic bale feedstock to sell directly to customers.

This in turn has alleviated pressure from US PET bales, thus enabling price stability for pellet material which is formulated to US bale feedstock costs.

In the long term, the US will 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.

PET SCRAP EXPORTS TO MEXICO ACCELERATE
Unlike many other polymer types which continue to see declining volumes following the Chinese National Sword and Basel Convention adoption several years ago, exports of PET scrap have increased, as many global regions with growing R-PET capacities see a cost-play opportunity.

PET scrap exports, which could include PET bales, rose 33% quarter on quarter and 21% year on year, coming in at 21,662 tonnes in Q1 2024.

Specifically, exported PET scrap to Mexico increased 38% year on year, making up 61% of all US PET scrap exports.

At present, aggressive buying activity from Mexican recyclers continues to drive up West Coast 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.

PE SCRAP TRADE REMAINS ROBUST
PE continues to be a leading polymer type for US plastic scrap exports, coming in at 35,359 tonnes in Q1 2024. Of that volume, India is the largest destination at 25%, followed by Malaysia and Canada tied at 16%.

On the other hand, PE scrap imports show mixed trends. While Canada and Mexico continue to make up nearly 75% of imported PE scrap volumes, US imports from Mexico increased 24% quarter on quarter. On the other hand, imports from Canada decreased 40% quarter on quarter.

This time last year, India did not export any PE scrap to the US, and now is the third largest per Q1 data.