Strong demand and diminishing collection volumes are driving an ever-tighter supply-demand balance for natural HDPE bales in the US market, leading to significant price volatility that makes forward planning much harder for participants across the supply chain.
Many fast-moving consumer goods (FMCG) companies have made commitments to use more recycled resin in their packaging, and virtually all of them want to ensure that their recycled packaging can be recolored to fit their brand image. This has led to the widespread adoption of natural rPE.
Manufacturing rHDPE natural grades means using bales reclaimed from used milk bottles, a reliable food-grade feedstock. But at the same time that brands are moving to use more recycled plastic, fundamental supply limitations are holding back the US recycling industry.
Feedstock limits
Legislation and corporate commitments have accelerated usage of rHDPE food-grade resin even while many grades of recycled plastic experience a downturn in demand in recent years. But, as reclaimers have made moves to increase production capacity of food-grade polyolefins, including natural rHDPE, feedstock availability is becoming increasingly problematic.
The amount of HDPE bottles recovered for recycling in the US [fell in 2021 and 2022], according to plastics research group Stina’s Annual Plastics Recycling Study. This is because large parts of the country have a fundamental problem with a lack of growth in collection of recyclables.
State and local governments have been slow to improve collection systems, and many states across the US such as West Virginia and Tennessee offer virtually no recycling services.
“It’s not the private sector that has dropped the ball, it’s state and local governments,” KW Plastics general manager Scott Saunders told Argus. “The brands want more material and reprocessors have expanded production. Meanwhile, I haven’t seen any major new MRF [materials recovery facility] projects in about 20 years.”
And, as new players have entered the market, there are more companies taking feedstock from a smaller pie. Tight supply has caused the price of natural HDPE bales to rise to 96¢/lb in March 2025 from 35¢/lb in July 2024.
Milk consumption
Specifically in the HDPE natural market, bale supply is further pressured by declining milk consumption. Data from the US Department of Agriculture (USDA) Economic Research Service found that milk drinking in the US has been trending downward for 70 years, and consumption fell even faster during the 2010s.
And, while traditional milk consumption is declining, consumption of alternatives, which are often stored in different forms of packaging, is picking up. Plant-based milks and ultra-filtered milks, which have become increasingly popular, often use paperboard, glass or alternate plastic packaging instead of natural HDPE. These alternate packaging types hold back the theoretical production limit of natural rHDPE.
Coca Cola’s brand of ultra-filtered milk, Fairlife, surpassed $1bn in retail sales in 2022 and uses a white rPET bottle.
Falling milk consumption has reduced the amount of natural HDPE bales available to recycle, while legislation and corporate commitments have increased demand significantly for the feedstock.
Ups and downs
Brand owners remain keen to progress towards sustainability commitments, and to preserve relationships with local suppliers.
“Brands are currently willing to pay high prices because they don’t want to lose their position as a customer and lose allocation of natural rPE for their products,” Saunders said.
But there is a finite limit to the amount of money they will pay as a premium for sustainable packaging materials. Market participants know that there is a limit to how high HDPE natural prices can rise, and history shows a risk of prices crashing if the market becomes overinflated.
The price of natural HDPE bales has fallen suddenly twice since 2020, most recently [in July 2023] when prices fell by nearly 70pc over the course of two months. At the time of writing, HDPE natural bales are more than twice as expensive as virgin HDPE BM spot prices in the US, and rHDPE natural pellets are even more expensive again.
Another price crash is a definite possibility if natural HDPE bales continue increasing in price. But, at the same time, the situation has changed since 2023. Washington and New Jersey have both [implemented recycled content mandates] on rigid packaging, which could make buyers more resilient to higher pricing. Determining where buyers will stop buying natural rPE is tricky, creating difficulties for business planning.
Possible solutions
In order to improve supply of natural HDPE, most market participants agree that large expansions are needed in collection and sortation across the US, but progress has been largely stagnant since 2021, according to Stina data. Recyclers do not expect that to change unless more state and municipal governments begin significant investments into new MRF sites.
US Environmental Protection Agency (EPA) awarded grants of [$73mn to municipalities and $32mn to states and territories] to invest in recycling infrastructure in September 2023. But further funding may face cuts from new administrator Lee Zeldin, after President Donald Trump announced a 65pc budget cut for the EPA during his first cabinet meeting on 26 February.
Extended producer responsibility schemes, which have passed in five US states, may help provide financial support to the recycling industry, which could help improve supply of the valued material.
Recyclers including KW Plastics have begun introducing white rHDPE, which they anticipate will become an important alternative to natural rHDPE for post-consumer recycled packaging, particularly during significant price surges.
Some of these measures may improve supply of natural rHDPE, but legislation is slow to be enforced, and market preferences for rHDPE grades are likely to take time to shift. It is therefore unlikely that the fundamentals of the resin will change in the short term unless there is a dramatic improvement in collection.
Author: Zach Kluver, Reporter, Chemicals
