US high density polyethylene (HDPE) bale prices fell dramatically this week after demand dipped among reprocessors.
Natural HDPE bales, which are made up of milk bottles and jugs, took the hardest hit, falling by 40pc. Mixed HDPE bales also fell by 30pc.
Reclaimer inventories of HDPE natural bales had expanded over the past few weeks, lessening demand for bales at higher prices. A sudden decrease in demand led material recovery facilities (MRFs) to drastically drop their prices in a move that caught many in the recycled market by surprise.
News of the price drop of the highest grade of HDPE bales led to the price of mixed HDPE bales dropping over the course of the week by 5.5¢/lb, even in spite of data released on 20 June by the US Census Bureau showing a 21.7pc increase in private housing starts in May. Mixed HDPE is commonly used for construction and piping purposes.
MRFs indicated that the sudden price drop tracks with previous years, when market slowdowns and vacations among market leaders lead PET and polyolefin bales to fall in price before rising again in late summer.
Reprocessors indicated that natural rHDPE resin prices would likely fall in July and August because of the sharp decline in feedstock cost.
Buyers of recycled natural resin had expressed concerns in previous weeks after natural rHDPE resin prices rose to more than twice the price of injection-mould and blow-mould grade virgin HDPE.
The decline in recycled HDPE prices tracks declines in virgin HDPE injection spot export prices, which have fallen by more than 18pc since a peak on 10 March. Virgin prices have fallen because of weak demand and growing producer inventories, as well as increased supply with the start-up of new production.
By Zach Kluver
