USA

The first half of 2024 was tough for US reclaimers struggling with the high cost of bales and cheap imports making it difficult to compete. Recent weeks have brought hotter weather, resulting in increased volumes and a long-awaited drop in some commodity bale prices. Geopolitical issues have caused an increase in freight prices, slowing cheap imports of virgin, flake and pellet. Meanwhile, the federal government held rates steady in June, leading to slower consumer spending and construction.

PET bale demand is relatively unchanged, with end-use markets failing to pick up steam at the start of the high season. Meanwhile, the fibre sector continues to struggle. Bottle-to-bottle demand has also been slow ahead of the summer, although Asian and European reclaimers continue to express interest in material from California. Mexico has eased its aggressive buying as hot weather has resulted in a jump in the country’s own beverage sales and collections. Consequently, consumption has finally caught up with supply. Prior to June, collections had been lower owing to both mild weather and low consumer sales.

In a new development, China is set to allow PET flake into the country, mostly from South East Asian countries. Previously, China had considered this to be waste and therefore did not permit imports. This is good news for South East Asia because shipping costs to the USA, Mexico and Europe have sky-rocketed from around US$ 1500-2000 per container a few months ago to US$ 8000-10,000. These increases are directly connected to the Red Sea crisis; one analyst has said that, if this crisis were to end today, it would probably take six months for the situation to return to normal.

One of the reasons why China is allowing flake imports (perhaps temporarily) is because it needs shipping containers to move its own goods out. But the plus side is that US reclaimers who have been dealing with cheap imports for the last year can now finally obtain some relief. Ocean freight rates have pushed import prices almost to the same levels as those for US reclaimers. Unfortunately, these domestic reclaimers are still struggling to sell all their inventory owing to a stagnant economy and sluggish end-user demand

The market for natural HDPE has shown steady growth over recent months, with prices increasing from US$ 0.28 to US$ 0.30 per lb. Export demand exists but remains less competitive, trailing domestic prices by an average of US$ 0.08 per lb. The primary domestic demand for natural HDPE comes from packaging manufacturers for use in products such as detergent bottles.

In contrast, colour HDPE has experienced a gradual decline in pricing. One of the largest domestic buyers has reduced its purchases owing to high inventory levels, contributing to decreased demand. The construction industry slowdown, driven by the sluggish economy, has further exacerbated this low demand. The piping industry, a significant user of colour HDPE, is not expected to contribute to demand until next year. Consequently, prices have fallen from US$ 0.15 to US$ 0.12 per lb. While the export market remains active, it is struggling to compete with higher domestic prices. However, if the price continues to drop, export buyers may become more active.

LDPE has experienced strong market conditions with stable prices, driven by robust demand from both export and domestic buyers. A recent development involves Dow Chemicals’ acquisition of a Californian reclaimer, with operations set to commence shortly. This move is expected to strengthen the supply chain. A significant change in market dynamics has resulted from a major US plastic lumber manufacturer switching to contractual purchases. This has ensured sufficient supply to meet the needs of other domestic producers and the export market, thereby maintaining market equilibrium.

Agricultural film made from LDPE is seeing limited market opportunities, with Mexico being a key buyer at very low prices.

Currently, PP demand is witnessing a geographical divide in the USA. Mexico dominates the market on the West Coast, purchasing the majority of available material. In contrast, the largest domestic producers on the East Coast pay double the price for PP material. This geographical split in demand results in differing market dynamics and pricing structures across the country.

High-quality densified polystyrene is currently enjoying a stable market, catering to both domestic and export demand. The export market is particularly strong, offering prices of US$ 0.30-0.35 per lb. In contrast, lower-grade PS and expanded PS face a scarcity of buyers.

Markets in the USA are currently mixed, largely owing to a flat economy and weak end-buyer demand. However, recent weeks have brought a glimmer of hope that the tide may soon turn and demand may increase. This optimism stems from several factors, including: a slowing of cheap imports which is expected to help balance supply and demand in the domestic market; increased collections which should lead to a drop in bale prices, thereby reducing reclaimers’ production costs; and rising export transportation costs which could support more competitive domestic pricing.

Furthermore, the long-awaited possibility that inflation is under control could lead the federal government to lower interest rates, thereby encouraging lending and investment. There are also discussions about the USA imposing tariffs on imports, which could strengthen domestic markets by making locally-produced goods more competitive.

These factors all contribute to a cautiously optimistic outlook regarding the potential for an increase in market demand and economic activity in the near future.