US recyclers pause purchases amid potential port labor strike

The potential port strikes set to ensue Oct. 1 are worrying US recyclers, leading many to put off buying recycled low-density polyethylene amid elevated shipping charges and fear of a price drop.

The International Longshoremen's Association and the United States Maritime Alliance, which represents maritime industry port employers, have yet to reach an agreement.

The potential strike has driven up shipping costs, with CMA CGM announcing a local port surcharge effective Oct. 11, which will raise rates for imports and exports through the US East and Gulf coasts.

Several sources have halted their purchases of recycled material that trade through the Gulf and East coast regions to avoid the extra charges.

"Shipping lines need five days to settle a one-day strike," a source said. "If this strike takes a few days, it could take months to get back to normal."

The situation is especially critical for recycled materials like LDPE, which is often exported to Asia, where processing costs are lower.

Unlike recycled HDPE, LDPE requires more processing because of its toughness and color. It is commonly used in plastic bags, agricultural films and plastic lumber.

Platts, part of S&P Global Commodity Insights, last assessed post-consumer LDPE grade A bales at 17.5 cents/lb FOB Chicago and post-consumer LDPE grade B bales at 12 cents/lb FOB Chicago.

If the strikes occur, domestic mills could face a flood of recycled LDPE, according to a domestic recycler, as the inability to export would lead to oversupply and potential price drops in the US market.

"We're focusing on securing domestic orders for October, though we anticipate domestic mills will be flooded with offers, which could drive prices down as long as export remains off the table during the strike," a source said.