Narrowing arbitrage between USWC, Mexico PET bales boosts demand for curbside bales

Arbitrage opportunity for post-consumer bottle polyethylene terephthalate bales between the US West Coast and Mexico continued to narrow entering Mayas US West Coast supply decreases, mainly driven by strong export demand.

In Mexico, strong demand, coupled with limited supply, has sustained high bale prices since the second half of 2024, driven by the expansion of production lines among recycling companies in Mexico and the efforts of brand owners to meet their sustainability goals. According to market participants in Mexico, the current post-consumer PET supply is insufficient.

As a result, Mexican participants have been actively seeking competitive-priced feedstock bales in the US West Coast, placing pressure on the US recycling infrastructure to increase collection rates to meet both domestic and export needs.

However, the rising prices of bales on the US West Coast have narrowed the arbitrage opportunity between premium bales on the US West Coast and bales in Mexico.

Post-consumer bottle bales in Mexico are of higher quality compared to US bales, meaning bales produced in Mexico have a higher PET post-consumer bottle content, commanding higher prices.

According to market participants, buyers in Mexico favor US premium bales over curbside bales due to their higher PET content, despite being lower than the content found in bales from Mexico.

However, sources said Mexico-based buyers increased their buying appetite for curbside bales as the spread between USWC premium and Mexican bales narrows.

"[Mexican buyers] are now willing to get curbside material," a source said.

Platts, part of S&P Global Commodity Insights, last assessed post-consumer PET curbside bales at 20 cents/lb FOB Los Angeles on May 1, while premium bales at 34 cents/lb. Platts assessed post-consumer PET bales at Mexican Peso 19.25/kg (44.4 cents/lb) ex-works Central Mexico April 30.