Chloe Zhang
The price of recycled plastic varies depending on the type of plastic, region, and time. As of May 2024, the national average price of post-consumer natural HDPE was 32.44 cents per pound, while color HDPE was at 23.94 cents per pound. Prices for recycled plastics have been on an upward trend, with the national average price of post-consumer PET beverage bottles and jars also increasing. The cost of plastic recycling itself is significant, requiring a $500/ton product price to achieve a 10% IRR with a certain level of CO2 intensity. Labor is the largest cost in the process, with transportation costs also being a significant factor.
Characteristics and Values of Recycled Plastic Prices
| Characteristics | Values |
|---|---|
| National average price of post-consumer natural HDPE | 32.44 cents per pound |
| National average price of color HDPE | 23.94 cents per pound |
| National average price of post-consumer PET beverage bottles and jars | 15.09 cents per pound |
| National average price of post-consumer PP | 6 cents per pound |
| National average price of Grade A film | 17.63 cents per pound |
| National average price of color HDPE (in 2021) | 18.91 cents per pound |
| National average price of post-consumer polypropylene (in 2021) | 18.44 cents per pound |
| National average price of Grade A film (in 2021) | 11.13 cents per pound |
| National average price of Grade B film (in 2021) | 4.38 cents per pound |
| National average price of Grade C film (in 2021) | 0.81 cents per pound |
| National average price of corrugated containers (PS 11) (in 2021) | $76 per ton |
| Cost of plastic recycling | $500/ton |
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What You'll Learn
The price of recycled plastic is rising
The price of post-consumer PET beverage bottles and jars has also increased, now averaging 15.09 cents per pound, with some regional contracts yielding 16-18 cents. Grade A film has seen a marginal rise to 17.63 cents per pound, while post-consumer polypropylene has remained steady at 6 cents per pound. In February 2021, the national average price of colour HDPE was 18.91 cents per pound, up from 17.19 cents the previous month, and some regions reported highs of over 23 cents per pound. Grade A film was trading at 11.13 cents per pound, while Grade B film was 4.38 cents, up from 3.63 cents the month before. These prices are reported on the Secondary Materials Pricing (SMP) Index, which details what is being paid for post-consumer recyclable materials in a sorted, baled format at major recycling centres.
The rising price of recycled plastic is influenced by various factors, including the labour-intensive nature of the recycling process, transportation costs, and the development of recycling technologies. For instance, Washington state's extended producer responsibility bills and Canada's Nova Chemicals' focus on mechanical recycling facilities contribute to the increasing costs and complexity of plastic recycling. Additionally, the Missouri state recycling program has generated significant revenue and saved the state substantial waste disposal fees.
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The cost of plastic recycling
Firstly, it's important to understand the different types of plastics commonly recycled. High-Density Polyethylene (HDPE) and Polyethylene Terephthalate (PET) are two widely recycled plastics. HDPE is used in a variety of products, from milk jugs to detergent bottles, and is known for its strength and rigidity. PET, on the other hand, is commonly used for beverage bottles and food packaging due to its lightweight and flexible nature. The recycling prices for these plastics fluctuate over time; for instance, the national average price of post-consumer natural HDPE was 32.44 cents per pound in May 2024, while the price of PET beverage bottles and jars averaged 15.09 cents per pound during the same period.
The recycling process itself incurs various costs. Mechanical recycling, the most common method, involves several steps: collecting and aggregating plastic waste, transporting it to a recycling facility, shredding the plastic, sorting, washing, drying, and finally, melting and re-pelletizing the clean plastics. The largest operational expense in this process is labour, particularly for the precise sorting of waste materials. Additionally, transportation costs can vary depending on the distance travelled, with longer distances requiring higher prices.
To break down the costs further, let's look at an example. According to Thunder Said Energy, plastic recycling requires a product price of $500 per ton to achieve a 10% IRR (Internal Rate of Return) with an upfront capex (capital expenditure) of $1,000 per ton per annum at a mechanical recycling facility. This example assumes a CO2 intensity of 0.3 tons per ton, which is significantly lower than that of virgin plastics. It's worth noting that only about 10% of end-of-life plastic is recycled within the global plastics industry, highlighting the need for improved recycling rates.
While plastic recycling comes with certain costs, it also provides economic benefits. For instance, the Missouri state recycling program generated tens of thousands of dollars in revenue while also saving the state hundreds of thousands in waste disposal fees. This example demonstrates the potential financial gains that can be achieved through effective plastic recycling programs.
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Post-consumer recyclable materials
The price of post-consumer recycled plastic is influenced by several factors, including supply and demand, the cost of collection and recycling, and the quality of the recycled material. The demand for post-consumer recycled plastics is increasing due to companies' sustainability goals and consumers' environmental awareness. Additionally, improvements in plastic recycling technology are making recycled plastics more suitable for various applications.
However, the collection, sorting, and recycling of post-consumer plastic can be more expensive than virgin plastic production, which can impact the final packaging price. Post-consumer recycled plastic may also have lower quality and durability than virgin plastic, which can affect the lifespan of the packaging.
Despite these challenges, the market for post-consumer recycled plastics is growing, particularly in developing countries with rapid urbanization and economic growth, such as India, China, Brazil, and South Africa. These countries have a large availability of recyclable materials and face challenges with waste management, providing opportunities to establish efficient and sustainable recycling systems.
To ensure the safety and quality of recycled plastics, homologation plays a crucial role. Recycled plastic must be homologated for use in the manufacturing of new products, undergoing tests and analyses to meet rigorous criteria and ensure it is free from hazardous substances. This promotes environmental awareness, transparency in the recycling process, and the creation of more sustainable packaging.
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Regional price differences
In the United States, national average prices for recycled plastics are reported with some variations across regions. For example, in February 2021, the national average price for color high-density polyethylene (HDPE) was 18.91 cents per pound, with some regions reporting highs over 23 cents per pound. Similarly, the national average price for post-consumer polypropylene (PP) experienced a jump, trading at 18.44 cents per pound compared to 11.69 cents in January 2021.
Additionally, Washington state has been at the forefront of extended producer responsibility initiatives, which could impact the regional price differences within the state. By holding producers responsible for the entire life cycle of their products, including packaging and beverage containers, Washington's approach may influence the supply and demand dynamics of recycled plastics in the region, potentially affecting pricing.
It's worth noting that the economics of plastic recycling are sensitive to transportation distances. Longer transportation distances incur higher costs, which can influence the regional price differences of recycled plastics. This factor emphasizes the importance of localized processing and the impact it can have on reducing transportation costs and, consequently, regional price variations.
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The economics of plastic recycling
Cost Structure of Plastic Recycling:
The cost of recycling plastics can vary depending on several factors, including the type of plastic, collection methods, sorting and processing requirements, transportation costs, and the scale of the recycling operation. Mechanical recycling, which accounts for most plastic recycling today, involves multiple stages, including aggregation, transportation, shredding, sorting, washing, drying, melting, and re-pelletizing. Each of these stages incurs costs, with labour being the most significant expense due to the need for precise waste sorting. Additionally, transportation costs can vary based on distance, with longer distances requiring higher prices.
Market Prices for Recycled Plastics:
The prices of recycled plastics fluctuate over time and differ based on the specific type of plastic and its grade. For example, the national average price of post-consumer natural HDPE has been reported to be around 32.44 cents per pound, while colour HDPE trades at slightly lower prices. Prices for recycled plastics have generally been on an upward trend, with some regional contracts yielding higher prices per pound. Grade A film, for instance, has seen marginal increases in price, while Grade B and C films trade at lower rates.
Impact of Regulations and Policies:
Government regulations and policies can significantly influence the economics of plastic recycling. Extended producer responsibility bills, such as those introduced in Washington state, can impact packaging, beverage containers, and other consumer goods. These policies can create incentives or requirements for companies to incorporate recycled materials into their products, driving up demand and prices for recycled plastics. Additionally, global initiatives like the United Nations Environment Programme's plastic pollution management treaty reflect a growing international focus on addressing plastic pollution, which may lead to further market shifts.
Comparison to Virgin Plastics:
The economics of recycled plastics must also consider the cost and market for virgin plastics. Recycled plastics can offer cost advantages, with mechanical recycling producing plastics at 80-90% below the cost of virgin plastics. This price differential can make recycled plastics more attractive to manufacturers and contribute to the growing demand for sustainable materials.
Revenue Generation and Cost Savings:
Plastic recycling can generate revenue for recycling companies and local governments while also providing cost savings. For example, the Missouri state recycling program generated tens of thousands of dollars in revenue and saved the state hundreds of thousands in waste disposal fees. Such initiatives demonstrate the economic potential of plastic recycling on a larger scale.
In summary, the economics of plastic recycling involves understanding the interplay between costs, market prices, regulations, and the demand for sustainable alternatives to virgin plastics. As environmental concerns continue to rise, the economic viability of plastic recycling becomes increasingly important, driving innovation in recycling technologies and creating new opportunities for sustainable businesses.
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Frequently asked questions
The price of recycled plastic varies depending on the type of plastic and the region. As of May 2024, the national average price of post-consumer natural HDPE is 32.44 cents per pound, while color HDPE is at 23.94 cents per pound. Other types of plastic, like PET and polypropylene, also have different prices, with PET beverage bottles and jars averaging 15.09 cents per pound and polypropylene steady at 6 cents per pound.
The price of recycled plastic is influenced by several factors, including the type of plastic, the region, and the demand for recyclable materials. The cost of labor and transportation can also impact the price, with longer transportation distances resulting in higher prices.
To find the price of recycled plastic in your specific region, you can refer to local recycling programs or scrap trading platforms, such as ScrapMonster for North America. These sources will provide you with the most up-to-date and accurate information on plastic scrap prices in your area.
The cost of recycling plastic can vary depending on the process and technology used. Mechanical recycling facilities typically require a product price of $500/ton to earn a 10% IRR off of $1000/Tpa of upfront capex, with a CO2 intensity of 0.3 tons/ton. However, the largest opex cost line is usually labor due to the precise sorting required.
