National Harbor, Md. — Higher prices for recycled resin, relative to virgin plastics, are here to stay, according to a long-time observer of the materials market.
And Joel Morales, executive director of polyolefins Americas for IHS Markit, an information and analytics firm, expects recycled resin to be priced more independently from the virgin market moving forward.
"We have seen [recycled material] accelerate at a much higher level than virgin here since the pandemic. And, frankly, it's demand driven," he said. "The demand for post-consumer recycled from brand owners not only in North America but other parts of the world has been really high and the market has really taken off," Morales said at the recent Plastics Recycling Conference in National Harbor.
"For recyclers, I think the news is good going forward because we're going to have a higher price forecast for crude for this year, for next year. Imports of resin will be expensive for this year and next year, which means resin prices, even though there's more supply coming, they will be higher than you think, which should support recycled prices for the foreseeable future. So that's good news," Morales said.
Morales told the conference crowd that he expects demand from brand owners, including many that have set recycled resin utilization goals tied to 2025, to continue.
"For those who are expecting PCR [post-consumer resin demand] to go back to where it was pre-COVID I would say you would need significant demand destruction or you need significant supply to pop up pretty quickly. And I don't see either one of those coming. Now if we have a global recession again and there's pressure from brand owners to cut costs, that could change things. But I would budget significant premiums over virgin for PCR," he said.
"Going forward, we don't see one-for-one relationships between recycled and virgin. As we see more band owners putting value onto the recycled component, we would not expect it to move one for one, but we would expect it to trend together, just not one for one," Morales said.