Recycled polymers trade at discount to virgin for first time globally

Global pricing dynamics between recycled and virgin polymers have shifted dramatically since April, with recycled polymers now trading at a discount to virgin materials for the first time, data from Platts, part of S&P Global Energy, showed.

Historically, clear-colored recycled polyethylene terephthalate and recycled polyethylene often commanded a premium over their virgin counterparts. This trend has reversed in recent weeks across all regional recycled-virgin spread that Platts calculated, as virgin PET and PE prices increased in the US, Europe and Asia, while recycled grades saw only modest gains at most.

Demand for R-PET clear flakes

In Europe, demand for R-PET was robust in the second quarter as buyers sought alternatives to increasingly expensive virgin PET. Thermoforming packaging producers received strong interest from recyclers, who are substituting PET with R-PET to manage costs.

In the US, R-PET prices rose across all grades and regions, driven by a rebound in bale demand that pushed up prices for flakes and pellets.

R-PET demand in Mexico has also been sustained by high virgin PET prices. The closure of a major converter, primarily a flake buyer, has increased flake availability, while strong collection rates and imports of low-cost US material have kept the market well supplied. New legislation mandating minimum recycled content is also creating optimism for future demand, even as details are still being finalized.

"From our side, R-PET demand is quite stable, but virgin prices are super high due to the increases in oil and the conflict in the Middle East," a Mexican R-PET buyer told Platts.

Asian R-PET demand remains elevated compared to prewar levels as buyers seek alternatives to costly and scarce virgin material. However, R-PET prices have started to fall in the past two weeks due to weakening demand and stabilizing bale prices. Existing buyers are unable to accept further price increases and attracting new customers from the virgin side remains difficult due to quality and hygiene requirements, recyclers said. As a result, recyclers serve a niche group of buyers, limiting their ability to expand market share.

Platts calculated R-PET clear flakes spread to virgin PET at a $459/metric ton discount on an FD Northwest Europe basis, at $373/mt discount on an FOB Southeast Asia basis, and at a $362/mt discount on a US West Coast basis, according to the respective virgin and R-PET price assessments May 13.

Demand emerges for R-PE

The narrowing price spread between recycled and virgin PE is influencing purchasing decisions in Europe, as converters monitor the differential to optimize their material blends. Demand from irregular buyers -- those not typically active in the recycled market -- persisted, as converters explored R-HDPE as a substitute for virgin material.

In the US, the price spread between high- and low-density PE is diverging sharply compared to virgin resin. Trex, a major user of recycled LDPE, reported a significant cost advantage over competitors using virgin PE, particularly amid oil and resin price volatility. Recycled PE prices tend to lag behind virgin resin prices by several quarters and are less volatile, allowing companies like Trex to maintain stable costs despite rising input prices.

"The uncertainty with war and high prices of oil makes virgin less attractive," a broker said.

In Southeast Asia, recycled PE production volumes are typically smaller than those of virgin producers, making it difficult for recyclers to meet large-scale demand. Quality variability in recycled PE -- color, odor, strength and feedstock -- also challenges buyers seeking consistency. The war has also constrained feedstock supply, making scrap plastics scarcer and more expensive, and limiting recyclers' ability to attract large-volume virgin PE customers.

Platts calculated R-LDPE translucent pellet spread to LDPE at a discount of $1,169/mt on a DDP Northwest Europe basis, R-HDPE natural pellets spread to virgin HDPE at a discount of $148/mt on an FD Northwest Europe basis and R-HDPE film FOB Southeast Asia spread to virgin HDPE CFR Far East Asia at a discount of $343/mt, according to the respective price assessments May 13.