Hurricanes impacted recycling markets as collection rates decreased

US material recovery facilities have been struggling with lower recycled plastic collection rates in the Southeast following the impact of recent major hurricanes Helene and Milton.

In the 2024 June 1-Nov. 30 Atlantic hurricane season, two major storms made landfall in the Southeast: Helene, which caused devastating floods in much of Southern Appalachia in late September, and Milton, which struck Florida's southern Gulf Coast in October. Recyclers have identified both of these storms as having impacts on collection rates.

The damage left by the storms have severely disrupted recycling efforts as waste companies prioritized removing debris as opposed to picking up curbside material, according to a material recovery facility source.

"When disasters hit and there's massive cleanup efforts -- curbside recycling is not on anyone's radar," the source said.

MRFs sort post-consumer plastics, such as water bottles and milk jugs, into bales that are then used in the manufacturing of recycled plastics end products. As severe weather disruptions drastically reduced collection rates, the tightening supply has impacted prices for some post-consumer plastics.

"The storms that we went through are having an impact on the inbound material that we are receiving and are a large factor as to the drop in available material we are projecting to have for next month," another source said.

Auction settlement prices for recycled high density polyethylene natural balesskyrocketed for November, increasing 6.86 cents/lb, while recycled polyethylene terephthalate bottle bale prices saw a 0.96 cent/lb increase from October pricing levels. Prices have continued to climb, with December settlement prices for HDPE natural rising by another 10.50 cents/lb.

The same source attested the surge in prices from the reduced supply stemming from hurricanes.

Spot prices for post-consumer PET bottle bales ex-works Southeast, meanwhile, saw a 1 cent/lb slip in mid-October, Platts data showed, following reduced collection rates.

"It is odd hearing lower prices in the Southeast," a recycled PET source said. "Normally less supply means higher prices; however, it could be that recyclers are all backing down on buying."

Higher availability for post-consumer PET; HDPE tight

The availability of post-consumer PET is usually greater than that of recycled HDPE, primarily due to larger volume of PET packaging available in the end-consumer market, along with increased recycling initiatives for PET relative to HDPE and other plastics, sources said. This limited post-consumer HDPE availability has led to buyers aggressively competing for material, a situation further exacerbated by the supply disruptions caused by the hurricanes.

"I hope that within the next few weeks that material will start to pick up again," a Florida-based source said.

Platts assessed HDPE natural bales at 63 cents/lb FOB Chicago on Nov. 26, up 26 cents from June 1, at the start of hurricane season.

Some sources added that supply for HDPE natural is expected to remain tight for the rest of the year, unlike HDPE mixed color, which hasn't seen its usual seasonal demand and price surge.

Platts assessed HDPE mixed color bales at 8.5 cents/lb FOB Chicago on Nov. 26, just over a third of the 22 cents/lb assessed on the year-ago date.

HDPE mixed color is primarily used for manufacturing pipes, particularly for agricultural irrigation. However, according to sources, the agricultural sector prefers cheaper virgin plastic over recycled material.

As the year-end approaches, buying appetite often diminishes as companies focus on destocking to lower their tax obligations on inventories.

Companies saw hurricane impacts

Waste Connections, a major waste services company, reported financial and physical impacts from the extreme weather, executives have said.

"September was the weakest month, down 5% year-over-year and reflected the initial impact of Hurricane Helene in several markets in Florida, Georgia, North Carolina and Tennessee," CFO Mary Anne Whitney said in Waste Connection's third-quarter earnings report, released Oct. 24.

Queries to Waste Connection for the current impact of Hurricane Helene were not answered.

Advanced Drainage Systems, a leading manufacturer of water management solutions that often uses recycled material, experienced financial impacts from the hurricanes as well, executives said during ADS' earnings call on Nov. 8.

"Weather played a factor in both the company's' second quarter and the start of third quarter in key geographies," CEO Scott Barbour said.

A spokesperson with ADS did not respond to requests for comment.