Recycling Price Trends in the US at the start of 2023

So how is the market looking in 2023 for US recyclers of metals, plastics, paper, and cardboard?

The anticipated recession in the US has not yet materialised but according to S&P Global’s  economic forecast for Q2 2023, the collapse of Silicon Valley Bank on 10 March has increased chances of a ‘hard landing’ for the US economy. Deloitte had said in an earlier Q1 forecast that a soft landing ‘might just be in sight’.

Inflation is believed to have peaked in Q3 of 2022 but is expected to remain high in the US. As the Guardian reports, against a backdrop of the highest inflation rate in a generation, in March the US Federal Reserve raised interest rates by a further quarter-point to a range of 4.75%-5%.

The Fed’s FOMC (Federal Open Market Committee) press release said inflation “remains elevated,” while recent indicators pointed to “modest growth in spending and production.” It added: “Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation. The extent of these effects is uncertain. The Committee remains highly attentive to inflation risks.”

The US Inflation Reduction Act, passed in 2022, which offers various incentives to accelerate the transition to a clean energy economy, started rolling out this year. It includes tax credits for both individuals and businesses, seeking to reduce their energy consumption and shift to cleaner and domestically sourced renewable energy, which is likely to attract investment into the US from abroad, as reported by Reuters.

According to the US Census Bureau, new orders for US manufactured durable goods (closely linked to demand for and generation of recycled materials) fell between January and February 2023 but showed an increase of 2% compared to January-February 2022.

Meanwhile, data for new house sales (crucial to recyclers through demand for both construction and packaging material) in February 2023 showed an increase of 1.1% on the previous month. But this was down by double digits compared to the previous year.

However, the return of shipping costs to pre-pandemic levels is a positive for US recyclers, with export demand helping to fill gaps from depressed domestic demand.

But what is the state of the market for each of the various secondary materials in 2023?

Scrap metals / Ferrous metals 

US ferrous scrap prices were expected to continue the upward movement that has been in place since the start of the year, due to limited supply and high demand.

Ferrous price trends for bundles and busheling grades over the last 12 months, reached a peak in April 2022, then fell continuously until November 2022, before starting to climb again. A similar, but less pronounced pattern was seen by the prices of heavy melting and shredded grades.

BIR’s (Bureau of International Recycling) February ferrous market report noted the upturn in the US ferrous scrap sector: “A tipping point was reached in December, since when there have been three consecutive months of price gains on the back of tighter scrap supply exacerbated by persistent harsh weather in many parts of the country. Strong export markets and rising new steel prices have also played their part in this turnaround.”

Following its devastating earthquake, it is expected that rebuilding activity in Turkey – the top destination for exported US ferrous scrap – will increase demand for the remainder of 2023 and subsequent years, as reported in Recycling Today.

Non-ferrous metals

As the BIR non-ferrous market summary indicates, demand at US aluminium mills has not improved since the end of last year.

This is echoed in Recycling Today, which explains that while the US automotive and construction sectors are generating scrap, lacklustre domestic demand means that this material is going overseas, mainly to Asia, Europe, and India.

The BIR report adds: “Secondary scrap aluminium prices have been rising in the USA as export demand has been strong, while healthy domestic and export orders are reported for copper grades.”

The largest US export market for copper scrap is China, followed by Canada and India. In 2022, US exports of copper scrap to China rose significantly by 233.78% compared to 2019 levels.

In March 2022, dry bright wire copper was trading between $8,820 and $9,600 per tonne. It dropped below $6,000 in July 2022, but had recovered to be currently trading between $7,600 and $7,825 in March 2023.

Stainless steel & special alloys 

The start of 2023 has shown upward movement in scrap prices and some strong demand in the stainless steel and special alloys sector, according to a BIR committee report.

It noted the announcement from North American Stainless of a US$ 244 million expansion at its Ghent facility, in Kentucky, that will boost the company’s production capacity by 20%.

It added: “Among the other feedback from the USA is confirmation that overseas demand for US stainless scrap has been beating expectations, jumping 32% year on year in January-November 2022 to 358,000 tonnes on improved demand from Mexico, Taiwan, Canada, and India. If, as widely anticipated, the US Federal Reserve winds down the pace of interest rate hikes, this could act as a further spur to capital investment and trade flows.”

More generally, the report noted that superalloy manufacturers “expect their order books to remain strong for the foreseeable future amid healthy aerospace demand and good performances from the industrial gas turbine and medical sectors.”

Recycled paper and cardboard

The US fibre markets are experiencing testing market conditions. Most containerboard and boxboard manufacturers are believed to have taken unprecedented levels of downtime in December, as US consumers shifted their spending from goods – needing boxes and packaging – to services post-pandemic.

As reported by Freightwaves, The Fibre Box Association in January 2023 that demand for output for cardboard boxes fell sharply in the last quarter of 2022 – the most severe quarterly decline since the Great Financial Crisis in Q2 2009 .

The BIR reported that the start of 2023 had seen “generally static prices for the major brown grades such that bulk values are far less than half of what they were a year ago”.

Meanwhile, the American Forest & Paper Association (AF&PA)’s January 2023 Packaging Papers Monthly report showed that shipments of bag & sack were down 4.2% from the previous year. Figures from December 2022 showed that unbleached packaging papers & specialty packaging shipments in December decreased 12% compared to December 2021.

Plastics

Notable price rises in March have been reported in the US for Polyethylene terephthalate (PET), natural High-Density Polyethylene (HDPE), coloured HDPE and Polypropylene (PP). Compared to February prices, PET prices increased by around 6%, while PP shot up dramatically by 51%.

Both US PET and natural HDPE prices have increased month-on-month since September 2022. Data for March 2023 shows a national average price for PET beverage bottles and jars of $307.32 per metric tonne, up from $236.99 in December, but still significantly below the $516.32 achieved in March 2022.

The national average price for natural high-density polyethylene (HDPE) in March 2023 was around $1,503.98 per metric tonne, compared to $1,367.51 the previous month and $870.82 in September 2022.

PP, after being flat since last Autumn, saw a dramatic increase in March, jumping up to $179.23 per metric tonne from $118.61 the month before.

BIR noted in its February market report: “Trade has been helped by a return to pre-COVID freight rates for Asia-bound shipments from Europe and the USA, as well as for most of the Asian cargo heading in the opposite direction.

“In the USA, there is some hope of a market improvement, as inflation appears to be easing and the anticipated recession has not yet materialized. PET market demand remains stable, and reclaimers are purchasing at consistent levels; major refurbishment of several facilities in California will provide greater volume for bottle-to-bottle production to help meet the state’s ambitious content mandates.

“For polypropylene (PP), meanwhile, a major US East Coast buyer has increased its purchases and has returned to buying on the nation’s West Coast, providing some relief and even buoyancy to the market. Likewise, export buyers of PP are competing and can match the prices offered by domestic purchasers, although levels are down 50% compared to this time last year.”

Resource Recycling recently reported that the two largest waste management companies in North America, Waste Management (WM) and Republic Services, will be investing tens of millions of dollars in expanding their downstream plastics processing in the coming years. This follows WM buying a controlling interest in a US plastics recycling business last year.

In conclusion

While there are year-on-year price decreases across materials, there are signs of recovery, and the US economy is showing resilience. Evidence of continued investment, by the key players, in upgrading and acquiring facilities, as well as government support through grant funding for recycling infrastructure, as part of the Bipartisan Infrastructure Law, show the expectation of future long-term opportunities and a brighter horizon in the US Market.

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