Emily Friedman
Although uncertainty permeated into nearly every business sector in 2024, recycled plastics stands among the most unpredictable. From the enduring logistics challenges stemming from the Covid-19 pandemic to the widespread ripples caused by geopolitical change, recycled plastics stakeholders have found themselves in a perpetual cycle of lurching from one dilemma to the next.
And with so much still hanging in the balance in terms of potential impacts of the second Trump administration, trade policy and the ongoing UN plastics treaty negotiations 鈥� to name a few 鈥� recycled plastics insiders are rightfully working hard to come to grips with what 2025 might have in-store as well.
Below is a snapshot of some of the key trends that these insiders need to keep in mind as we prep for the year-ahead.
Bale Supply Remains a Pain Point
Much like 2024, domestic natural polyethylene (PE) and clear polyethylene terephthalate (PET) bale supply and demand challenges will likely be a fixture in the new year, with the bale market emerging as one of the areas to watch as fundamental growth in supply remains a challenge.
Supply and demand headaches are nothing new for the bale market. Fortunately, the current discrepancies between PET bale supply and demand will likely modulate somewhat as demand had slowed towards the end of the year, even as supply constricts due to dips in the consumption of bottled beverages during the winter months. That said, even with states such as Oregon set to launch their extended producer responsibility programs in 2025, with federal legislation to expand collection and incentivize recycling being unlikely under the new administration, U.S. bale supply will likely remain crunched.
These issues will be compounded by the planned by the incoming administration, making international plastic bale purchases 鈥� particularly those from Mexico and Canada which have been staples for stakeholders that are regionally proximate to each border 鈥� potentially financially infeasible. This all comes at a time when demand will likely continue to remain strong as converters and brands look to hoover up recycled plastics to meet their growing sustainability responsibilities.
Imported R-PET Flake Remains Popular but Access is Uncertain
听Arguably no feedstock has a bigger love-hate relationship with the U.S. recycled plastics sector than imported flake. While some recyclers depend on it as a feedstock to help manage costs, many US recyclers are in direct competition with imported flake, which is often of higher quality and is a more competitive price.
To this end, demand for domestic flake has remained weak 鈥� particularly on the West Coast 鈥� due to the competition introduced by imported flake and will likely remain so during 2025 as well. However, numerous points of uncertainty have resulted in recyclers hedging their bets when it comes to imported flake. For example, should prices surge as a result of the promised U.S. trade tariffs, or if supply is throttled due to the resumption of the dockworkers strike that briefly snarled many U.S. ports in Q4, recyclers will simply not have the same access to imported flake. So, while imported flake will remain a go-to for many, expect the industry to still proceed with caution instead of going 鈥渁ll-in.鈥�
R-PE: Macroeconomic Conditions Drain Cost-Sensitive Demand
Due to an uptick in virgin PE production and shaky economic conditions, 2024 was a particularly soft year for cost-sensitive grades of recycled polyethylene (R-PE). And given economic uncertainty is still lingering in the air, the outlook around cost-sensitive grades seems likely to continue for the foreseeable future.
Bearing the most significant brunt will be several grades of mixed-color, post-industrial R-PE that, having already been stuck at floor prices for essentially all of 2024, are unlikely to see a lift anytime soon as global economic fragility continues. Moreover, should a glut of virgin PE be stuck in the U.S. due to the export challenges posed by retaliatory tariffs, the market for R-PE could look even more grim in 2025 than 2024.
Seasonality will drive some upturns in pricing, particularly in the pipe and horticulture sectors as construction ramps up in the spring and into summer. That said, the continued impacts of disinflation will likely mean that the demand from 鈥渢ried and true鈥� end-markets like construction and automotive will continue to remain weak as these industries remain more and more price conscious.
Of course, should global economic fortunes take a dramatic upswing, or if virgin availability unexpectedly takes a hit, the outlook for R-PE as whole stands to respond in a similarly positive fashion.
Looking ahead
For the recycled plastics industry, 2024 saw one priority added to another as the sector grappled with global uncertainty. Unfortunately, given many of these challenges look likely to rumble on into the medium-term at minimum, and the number of new disruptions that lurk on the horizon, 2025 will likely offer very little in terms of a 鈥渞eturn to normal鈥� that the industry has been hoping for. However, by keeping a constant eye on these few key areas, the recycled plastics space can place itself in a better place to respond to headaches when they arise.