The continued closure of the Strait of Hormuz, through which almost a quarter of the world's oil transits,
has led to a surge in virgin resin prices,.While the closure has caused considerable anxiety among plastics
processors buying resin at elevated prices and adversely affected the global economy at large, it may be
an opportunity for recycled plastics to gain market share, according to some analysts.
Today, with higher volatility in oil prices and often trending higher, the calculus [for recycled plastics] is
changing, Virgin polyethylene (PE), polypropylene (PP), and polyethylene terephthalate (PET) prices are
rising and becoming more volatile, eroding the historical price advantage of newly produced plastic. This
creates a rare opening for recycled resins to compete not just on sustainability, but on economics.
Recycled PET
With the cost of virgin bottle-grade PET slightly higher than recycled PET (rPET), competitiveness has
improved but is not yet translating into meaningful, substitution because of cautious procurement behavior.
Recycler closures are reducing off-take capacity and continue to generate oversupply in regional bale markets.
In the last year or so, seven out of 30 major PET recycling facilities in the US closed, wiping out 25% of
domestic capacity, according to Packaging Dive.
Increasing demand for bale exports out of the US are supporting upward price pressures.
rPET flake and pellet pricing continues to be supported by freight, import costs, and virgin PET dynamics,
rather than demand and consumption fundamentals.
Recycled polyethylene
Supply-side fundamentals on the recycled polyethylene (rPE) front have shifted from a relatively long position
at the end of last year to decidedly more snug at the tail end of Q1 and into April.
Stronger demand pull from brand owners and some pre-buying in relation to the US-Iran conflict has
tightened supply from the bale to the pellet.
Recycled high-density PE prices continued to rise in April amid improved recycler demand, stronger downstream
sentiment, and support from higher virgin resin, although buying activity was reported to be more measured in
April after earlier restocking in the first quarter.
Recycled polypropylene
Post-consumer PP bale pricing firmed in April carrying momentum from Q1 gains. Bale supply remained ample
amid steady material recovery facility output.
Recycled PP (rPP) pellet prices moved higher in April on firmer virgin PP, with gains concentrated in natural and
lighter grades supported by steady packaging demand.Darker grades saw only limited increases, constrained by
soft automotive and durables demand.
Demand for rPP remained cautious in April, with recyclers buying hand-to-mouth and working through Q1 inventories,
while rigid packaging provided baseline support and industrial sectors remained weak.