US recycled plastics markets largely holding steady this week despite the outbreak of war in the Middle East, as participants adopt a "wait-and-see" stance amid emerging feedstock and shipping uncertainty.
Recycled polyethylene terephthalate (PET) prices remained unchanged for the week ending 6 March, recycled polypropylene (PP) edged up only 1¢/lb to 9¢/lb, and natural polyethylene (PE) increased by 13¢/lb to 72.50¢/lb, with no evidence of panic buying or meaningful shifts in demand.
Virgin PE and PP markets have reacted more immediately to the war-driven rise in crude, however, as US producers issued March contract increases of up to 10¢/lb and signaled additional increases of as much as 10¢/lb for April. Virigin blow-molding fas Houston export prices were assessed at 46¢/lb this week and PP homopolymer fas Houston export prices were assessed at 49.5¢/lb.
But even with the rising prices for Virgin PET and PE, recycled material are still significantly more expensive and remain uncompetitive, although there is no "magical number" that will spark the change, market participants said. Some recyclers note that China's heavy reliance on Iranian crude and the potential for continued export disruptions could tighten Asian polymer supply and influence global price spreads. This could eventually filter into the US markets if shipping routes remain constrained.
The recycled market tends to react slowly, even on sharp crude price increases, because it takes a while for the higher virgin resin prices to flow through to the bale market. Plentiful domestic supply can also help buffer the market from geopolitical shocks.
A few recyclers are monitoring freight markets closely but see no immediate impact on domestic supply availability. Any potential upside for recycled markets stemming from tighter virgin supply could be offset if geopolitical tensions lead to broader shipping delays, higher freight rates or interruptions in imported bale and flake flows.
