US recycling industry participants rethink legislative framework amid challenges

The US recycling industry's legislative framework is failing to boost the sector, according to market feedback. Several sources told Platts that high operational costs, strong competition from imported materials and low demand for post-consumer resin continue to threaten the viability of recycling companies.

To improve conditions, market participants suggested strengthening regulations on collection responsibilities and infrastructure, mandating minimum recycled content for domestically sourced material, and providing direct support and incentives for manufacturers.

Addressing converter closures

The US saw several supply readjustments over 2025. In February, Evergreen closed its sort and wash department in Riverside, California. That facility used to purchase 2,240-2,520 metric tons of bales annually. A little over half a year later, recycler rPlanet Earth, then the main buyer of curbside bales regionally and responsible for roughly 4% of nationwide US R-PET capacity, halted operations in the Los Angeles area.

Similarly, Alpek closed two PET recycling facilities within six months, while recycled polyethylene plastic film processor Natura PCR shut its doors in October 2025.

"There are more closures than new facilities, and the only way the industry can improve is through regulation," a converter said.

Sources said the current legislative framework was inadequate for fostering growth in the recycling industry. And this is in part due to a lack of understanding of the recycling sector's complexities, which led to inadequate legislative initiatives, a buyer said.

A source from a materials recovery facility suggested that any new legislation on the matter should consider collection responsibilities, investment in infrastructure, accountability across market participants, audit legislation and mandatory buyback programs for brands. These measures, the participant said, are essential for closing the loopholes that hinder the industry's progress.

At the same time, opinions on what to prioritize in the legislation are mixed.

Trade flows vs. operational costs

Some say that implementing regulations requiring the use of a certain percentage of domestically sourced recycled materials is essential to reducing the consumption of imported materials. This approach not only supports local recycling efforts but also promotes sustainability within the industry, some participants point out.

"In order to keep it viable, the government could mandate the use of certain recycled content domestically sourced," a supply-side source said.

During 2025, the US imported 95 million tons of PET plastics, including virgin resin and recycled resin. Of that total, 35% came from Thailand, Japan and Indonesia.

Platts assessed recycled-PET clear flakes FOB Southeast Asia prices at $690/mt Feb. 26, while recycled-PET clear flakes EXW Los Angeles were assessed at 46 cents/lb ($1,013/mt) Feb. 25.

But others said they believed that the legislation on trade flows offers limited advantages, as the measures' benefits are inconsistent and do not address the industry's real problems.

"There is no need to impose regulations against imported materials, as domestic and imported materials offer distinct value propositions, such as consistency of availability and shipping times," a trader source said.

Instead, these participants suggested focusing on domestic demand, operational costs and the viability of recycling companies to ensure their continued operations.

"Tariffs helped the market at times, keeping imported flakes out of the market; some legislation even incentivized keeping the material on the West Coast, but demand is insufficient," a second buyer said. "There are not enough consumers."

'The real issue'

A distributor said that "legislation is just a Band-Aid; the real issue is operational costs."

Several market participants have specifically pointed to production costs in the West Coast region being so high that they challenge profitability. Sources on the supply side have cited high labor costs and a lack of automation or technological development as key factors hindering cost reduction.

"The government needs to step back and realistically assess how production can be profitable," a second distributor said.