The High Cost Of Virgin Plastic: What's The Price Tag?

Virgin plastic is cheaper than recycled plastic. The price of virgin polyethylene terephthalate (PET), the most recycled type of plastic used to make drink bottles, has fallen to US$500-600 a tonne, while the price of recycled PET flakes is now US$1,000 a tonne. The price of virgin plastic is linked to the price of oil, so when oil prices fell, virgin plastic became much cheaper. This has led to manufacturers choosing to revert back to virgin plastics to save money over the more expensive recycled polymers.

Virgin plastic is cheaper than recycled plastic

The high price of recycled plastic has tempted manufacturers to mix in much cheaper virgin plastic and sell it as 100 per cent recycled material. This is a market dynamic that has been observed in China, according to recycling industry sources, as the coronavirus-induced collapse in the price of oil—the raw material for making plastic—has brought the price of virgin plastic to a record low. The price of virgin polyethylene terephthalate (PET), the most recycled type of plastic used to make drink bottles, has fallen to US$500-600 a tonne, while the price of recycled PET flakes is now US$1,000 a tonne.

RPET tends to be more expensive than virgin, and buyers have been willing to pay extra, but only to an extent. Buyers are often willing to pay a 10%-20% premium on recycled plastics, but when the price difference rises above 20%, they become more cost-sensitive and are more likely to choose virgin plastic.

The lower prices of virgin plastic can be seen in the scrap bale market and, to varying degrees, in the recycled resin market. The supply of virgin PE, PP and PET is currently significantly higher than the demand, and this is leading to a steep decline in market prices.

The price of virgin plastic is linked to the price of oil

The price of virgin plastic is influenced by global fossil fuel subsidies that are holding the cost of virgin plastic down. The price of recycled plastic is influenced by the cost of collection, sorting and cleaning of material sent for recycling, as well as the cost of energy and equipment required.

The high price of recycled plastic has tempted manufacturers to mix in much cheaper virgin plastic and sell it as 100 per cent recycled material. This is a market dynamic unfolding in China, according to recycling industry sources, as the coronavirus-induced collapse in the price of oil—the raw material for making plastic—has brought the price of virgin plastic to a record low.

RPET tends to be more expensive than virgin, and buyers have been willing to pay extra, but only to an extent. Often, buyers are willing to pay a 10-20% premium on recycled plastics, but when it starts getting past that 20% is where we start having that cost sensitivity substitution. So if you look where we are now, the price difference is about 30%.

The price of virgin plastic is influenced by global fossil fuel subsidies

The high price of recycled plastic has led to manufacturers mixing in cheaper virgin plastic and selling it as 100% recycled material. This practice has been observed in China, where the coronavirus-induced collapse in oil prices has brought the price of virgin plastic to a record low. The price of virgin polyethylene terephthalate (PET), the most recycled type of plastic used to make drink bottles, has fallen to US$500-600 a tonne, while the price of recycled PET flakes is now US$1,000 a tonne.

The low price of virgin plastic is also affecting the US plastics recycling market, where recycling costs are not expected to come down to meet virgin pricing. Global fossil fuel subsidies are holding the cost of virgin plastic down, and in some parts of the country, landfill tip fees are low enough that it may be more financially viable to landfill scrap plastic rather than capture it for reclamation.

The price difference between virgin and recycled plastic is also affecting the demand for recycled plastic. Buyers have been willing to pay a premium for recycled plastic, but only up to a certain extent. When the price difference between virgin and recycled plastic exceeds 20%, demand for recycled plastic decreases. Currently, the price difference is about 30%, leading to a strain on material processors and a decrease in demand for recycled plastic.

Virgin plastic is being sold as recycled plastic

The price of virgin plastic is linked to the price of oil. As oil prices fell, virgin plastic became much cheaper, meaning manufacturers have started to choose to revert back to virgin plastics to save money over the more expensive recycled polymers. Recycled plastics prices are at their lowest levels in some time, putting significant strain on material processors.

RPET tends to be more expensive than virgin, and buyers have been willing to pay extra, but only to an extent. Often, buyers are willing to pay a 10-20% premium on the recycled plastics, but when it starts getting past that 20% is where we start having that cost sensitivity substitution. So if you look where we are now, the price difference is about 30%.

The cost realities have a significant bearing on the U.S. plastics recycling market, and it has been forecast that recycling costs will not come down to meet virgin pricing. It has been suggested that the drivers of what makes the price of virgin so unnaturally and artificially low need to be addressed, such as global fossil fuel subsidies that are holding the cost of virgin plastic down.

Virgin plastic is cheaper than recycled plastic because of the cost of energy and equipment required to recycle

The price of recycled plastic is influenced by the cost of collection, sorting and cleaning of material sent for recycling, as well as the cost of energy and equipment required. These costs are unconnected to the cost of virgin plastic, but contribute to the discrepancy in pricing between the two.

The coronavirus-induced collapse in the price of oil brought the price of virgin plastic to a record low. The price of virgin polyethylene terephthalate (PET), the most recycled type of plastic used to make drink bottles, fell to US$500-600 a tonne, while the price of recycled PET flakes was US$1,000 a tonne.

RPET tends to be more expensive than virgin, and buyers have been willing to pay a premium of up to 20% for recycled plastics. However, when the price difference exceeds 20%, buyers become more cost-sensitive and are more likely to choose virgin plastic.

The low price of virgin plastic is also influenced by global fossil fuel subsidies, which are holding the cost of virgin plastic down.

Frequently asked questions