Recycled plastics prices were up in the second quarter, but are now starting to come back down.

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Recycled plastics prices were up in the second quarter, but are now starting to come back down. Falling energy prices are contributing to declines in virgin as well as recycled grades. “People will look at falling virgin prices and ultimately they won’t use as much recycled material if prices are too high,” is one recycler’s typical comment. “If virgin prices plummet, so do post-consumer,” says another.

Recyclers are still confident that customers will pursue “green” initiatives. “I think that will support the recycling industry to a degree,” another recycler said. “However, if pricing becomes prohibitive for people to use recycled content in the containers, we are going to start losing market share.”

 

R-PET ON A ROLLERCOASTER

R-PET prices experienced a tremendous upswing but reversed direction in early June. Prices dropped for two weeks in a row, sources say. Pellet prices climbed as high as 70¢/lb, but now clear pellets are headed lower. “Most applications out there are predominantly flake, so you’ve got excess demand for flake,” said one recycler. Flake prices reportedly had been up to 60-62¢/lb but are now back down to the 58-60¢ range.

As always, the Chinese market is the driving force on the West Coast. PET flake prices there are in the high 50s , recyclers say. On the other hand, Chinese demand fluctuates unpredictably. “The Chinese market does not reflect oil prices, but rather just what is going on in demand in the Chinese market. I don’t know how to predict what will happen with the Chinese over the summer,” one source says. “It’s always a surprise.”

 

R-HDPE PRICES ‘CORRECTED’

HDPE flake prices are on their way down as well. Recycled HDPE prices were related to the high-priced virgin market early in the year. Virgin prices started to go up when suppliers scheduled reactor downtime. Then, with all of the cold weather, there were some unscheduled outages and suppliers took some time in bringing production back up, which created a tight supply situation and higher prices, which trickled down to the recycled product, one recycler explained.

Higher prices had caught everybody by surprise. Nobody thought the situation would go on as long as it did and now it is starting to correct itself, sources say. For the first half of June, flake prices were holding at about 45¢/lb, but by mid-month they were starting to drop. One reseller said, “We expect mid-June prices to go down 2¢ or 3¢, reaching around 42¢/lb by the end of June.”

Lower oil prices are expected to hold down recycled plastics prices for at least the next few months, another source predicts.

 

OTHER RECYCLED MATERIALS

Recycled polypropylene prices are going down on the secondary market, which is a reflection on what the primary market is doing. Recycled PVC and engineering materials like nylon and polycarbonate are remaining firm, however. Brokers say they are not sure why.

Over the summer, sources say they expect to see recycled commodity prices coming down and engineering grades still staying firm.