Resin demand receives a pandemic-related boost

The COVID-19 pandemic has increased demand for single-use packaging and personal protective equipment (PPE) made from plastics. At the same time, the supply of polyolefins, such as polypropylene (PP) and high-density polyethylene (HDPE), and polyethylene terephthalate (PET) have been reduced as hurricanes in 2020 and winter weather this year have affected virgin production along the U.S. Gulf Coast.

Joel Morales, the Houston-based executive director of Polyolefins Americas at IHS Markit, spoke during the Resin Market Update at the 2021 Plastics Recycling Conference, which was online April 7-8. During his presentation, he said the pandemic resulted in a great deal of demand for polyethylene (PE) in 2020.

While many industries braced for a “really bad year” in 2020 because of the pandemic, Morales said the opposite happened for a number of industries, including plastics.

Morales said sustainability took a back seat in 2020 as protecting people from the coronavirus took priority, increasing demand for single-use plastic packaging and for plastics used in hygiene and medical applications.

“Polypropylene is not the easiest product to sort and collect. People are not going to be using [recycled PP] because they are trying to save money over virgin.” – Joel Morales, executive director of Polyolefins Americas, IHS Markit

That increased demand was met by tighter supply that was exacerbated by weather events that affected resin producers along the Gulf Coast. Although sufficient nameplate capacity was available, he said it “couldn’t run fully” because of these events and social distancing measures meant to safeguard employees.

Virgin PP production also was affected by the weather along the Gulf Coast, with Morales saying that producers were starting to get closer to operating at full capacity as of early April.

Morales said recycled natural HDPE is a “premium, specialty product that has taken off in the last year” in terms of pricing. He said the shortage in prime material also contributed to the increase in demand and pricing for recycled HDPE in the last year.

Morales said he believes the historic run-up of recycled natural HDPE prices will end as virgin pricing recedes. “I don’t expect the drop in virgin will be seen one for one on the natural HDPE side.”

Recycled PP also is expected to decrease in pricing as virgin demand catches up, Morales said. He expects the decrease to be 60 percent that of the decrease in virgin pricing. “Polypropylene is not the easiest product to sort and collect,” he added. “People are not going to be using [recycled PP] because they are trying to save money over virgin.”

Also presenting during the session was Martin Wiesweg, executive director of Polymers EMEA at IHS Markit, who is based in Germany. He addressed PET markets.

Like HDPE and PP, PET also enjoyed an increase in global consumption in 2020, he said. Demand for PET is expected to double in the next decade, led by China as well as by Southeast Asia, the Indian subcontinent and Africa.

Wiesweg said 56 percent of postconsumer PET bottles are collected for recycling globally, totaling 12.5 million metric tons in 2019. He predicted that by 2028, 21.5 million metric tons of PET bottles, or 66 percent, will be collected for recycling.

Fiber still absorbs the lion’s share of recovered PET, he said, with bottle-to-bottle recycling accounting for 17 percent of global demand. Wiesweg said fiber markets will continue to dominate, noting that bottle-to-bottle recyclers must buy material away from fiber producers, which could consume all the material generated.