PCR vs Virgin Resin Battle Continues but PCR Receives Help from Governments

Date: April 5, 2024

Source: Plastics Recycling Conference

At the recent Plastics Recycling Conference, industry experts discussed the ongoing challenges faced by recyclers in the post-consumer resin (PCR) market, emphasizing the need for increased demand to counteract these obstacles. Competition with virgin resin, a mismatch between supply and demand expectations, and international economic trends are significant factors impacting the PCR business. However, solutions such as recycled content legislation, long-term contract negotiations, and innovative uses of PCR could help address these issues. Speakers highlighted the large influx of imported scrap PET into the U.S. and the global oversupply of low-cost virgin resin, particularly from China, as contributing to the competitive pressures on U.S. reclaimers. Currently, resin has a much higher consumer demand due to its price and availability, however that could soon change, due to increasing policy pressure from governments across the globe.

Recycled content mandates in states like California, Washington, New Jersey, and Connecticut are seen as crucial policies to ensure consistent demand for PCR, with New Jersey's recent law cited as a market-shaping example. Extended producer responsibility (EPR) laws with eco-modulated fees can also drive PCR demand by incentivizing companies to use more recycled content to reduce their EPR-related fees. Despite record-high demand for PCR, speakers noted that market realities are not reflecting this trend, with recyclers competing against increased production and lower costs of virgin resin. Virgin resin remains the cheapest option for most industrial uses, whereas PCR, due to the costs associated with the recycling process, is relatively expensive.

To stabilize the PCR market, speakers suggested that the industry needs to explore solutions across the supply chain, including transitioning from spot contracts to longer-term contracts to create "mandated demand." Brand representatives expressed challenges in sourcing PCR that meets their specifications, often resulting in the need to import materials. However, there is potential for creative solutions to incorporate more recycled content into products, as demonstrated by Berry Global's efforts with can liners, shrink film, mailers, and industrial containers. Ultimately, while EPR laws and other government imposed policies/incentives are doing a great deal to increase demand for PCR, reducing the price of PCR through investments in recycling infrastructure is still very much needed. Thus, EPR policies will need to work in conjunction with said investments, if governments want to truly reach their sometimes lofty recycling rate targets.

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