US president Donald Trump has revised US tariff policies to include both virgin polyethylene terephthalate (vPET) and recycled polyethylene terephthalate (rPET) in an executive order, effective on Monday.
PET resins imported under the 3907.61.00 or 3907.69.00 HTSUS codes will now be subject to standard tariff rates, up to 50pc based on country of origin. PET resins were originally exempt from tariffs, allowing for countries to continue shipping more competitively priced PET to the US with no extra hurdles.
Historically, PET produced in the US had higher production costs compared with PET produced in Asia, which kept an open arbitrage into the US market. US PET buyers remained incentivized to import cheaper PET from Asia.
Since 2021, PET imports to the US have averaged nearly 1.25mn metric tonnes (t)/yr, according to Global Trade Tracker data.
The low PET production rates were felt up the product chain in US paraxylene (PX), which thinned out chemical demand and turned many toluene and mixed xylene (MX) sellers to sell more often into the gasoline blending pool.
Recyclers and reclaimers active in the US rPET market are hopeful that the addition of PET to the list of products subject to reciprocal tariffs from the US will help to stop the slide in prices in the rPET market.
US west coast rPET bale grade A prices have fallen by 60pc from a high of 32.5¢/lb in mid-May to 13¢/lb last week, falling on weak demand and ample availability. West coast rPET flake prices have also fallen over the period, but not by the same magnitude, dropping by 15pc from 62¢/lb in May to 52.5¢/lb in September. West coast rPET pellet prices have fallen by 6.2pc from 81¢/lb in May to 76¢/lb in September.
Prices have fallen, in part, as cheap imported PET flakes and pellets have continued to limit demand for domestic material. Imported virgin PET pellets were heard available around the 50¢/lb level in California, with large-volume deals heard in the 40s¢/lb level this month. Imported rPET flake was heard in the low 50s¢/lb level, similar to domestic rPET flake.
However, now that vPET and rPET imports into the US will carry duties of as much as 50pc, it is likely that the imported resin and flakes will be less competitive with domestically production, sources said.
Upstream, increased run rates for MX-PX units can be expected, another source said, which would boost demand for toluene and MX from chemical producers. Selective toluene disproportionation unit operators could raise rates should byproduct benzene prices also rise, which would turn up US PX output.
"It's the only bit of good news that I've heard in recent months," said one US recycler. "The domestic industry certainly needs more demand … hopefully this will have a positive impact."
Market participants said there was likely a limit to how immediately the change could affect pricing in the market, noting that those who import resin have long-term supply commitments because of the longer shipping times.
"It's not like turning off a light switch," said a second US recycler, speaking of switching from imports to domestic resin.
In the long run, the tariffs should make domestic resin more competitive, but it won't fully solve the problem of weak demand, sources said.
