Rising Virgin Prices Bode Well for Recycled Resins

For a few reasons, 2015 so far has been a challenging year for companies searching for waste plastics to collect and reprocess. First, due to a harsh winter, there were fewer bales to buy. Second, virgin prices have been competitive or in some cases lower than recycled product. That situation may be about to change as virgin prices begin to creep up.

R-HDPE SCENE WAS ‘CONFUSING’
In January and February, demand for recycled HDPE was stronger than expected, but because of crashing oil prices, virgin resin was, in some cases, cheaper than recycled resin. When, virgin prices went up in May, “We started seeing a bump up in demand for recycled product,” says one reprocessor. “With spring, there is always a bit of growth in demand as well. I think people were letting their inventories go down low because they thought virgin prices were going to go down lower, but now it’s time to replenish, and recycled material is looking more appealing.”

Another source says increased demand in January and February was encouraging at the time, but because of the bad weather in the Northeast, milk consumption was down and a lot of empty bottles did not get collected. That pushed up recycled prices. Reprocessors had to go outside the country to find natural material, but they couldn’t afford to buy the bales and then sell recycled resin at a price to compete with virgin.”

It was all very confusing, one source said. “We should have loaded up on bales in March because that was the bottom of the scrap market. We could have bought bales of natural at 20-21¢/lb. They are now at 36¢. Then there is the mixed-color side of the market. In some cases, mixed color was selling above natural in March.”

Now, reprocessors expect mixed color bales to come down substantially, perhaps to 18-22¢, down from about 24¢ at the end of June. Overall, recycled HDPE market demand is expected to be flat over the summer.

R-PET PRICES UP
Scrap has been plentiful in the marketplace, holding R-PET prices down. While that is good news for buyers of recycled material, it has been a tough year so far for reprocessors. They welcome the fact that prices are now creeping up, and bales are a little higher, too. They were 18¢/lb two months ago, but now are at 22¢ on the West Coast. R-PET pellets have gone up across the country to 63-69¢/lb, compared with a low of 58¢ three months ago. “Of course, we don’t want prices too high because people will not buy,” says one West coast recycler. Virgin PET pellet prices seem to have stopped rising, so R-PET probably will too.