Feature: US recycled plastics market faces hurdles in achieving circularity

As the US recycled plastics portfolio expands, driven by ambitious goals to increase the use of post-consumer resin in plastic packaging, significant challenges have emerged in achieving these objectives.

Limited availability and high costs for high-quality post-consumer resin hinder packaging producers and brand owners. Materials recovery facilities and recyclers face low domestic demand and pricing volatility, complicating efforts to scale processing and maintain a consistent and profitable supply of recycled plastics.

According to a report published on April 17 by the US Plastics Pact, to overcome these challenges, a two-pronged strategy -- bold policy and proactive market action -- is essential to increase PCR content.

Participants in the recycled plastics markets have looked to the policy initiatives as an opportunity to ensure consistent demand for recycled plastics. Emphasizing that legislation addressing supply and demand simultaneously is crucial to accelerating PCR content inclusion in plastic packaging.

The US Plastics Pact report suggests that long-term purchase contracts for PCR could also help stabilize demand, reduce market volatility, and incentivize investments in collection and processing.

Despite consistent monthly purchases of post-consumer polyethylene terephthalate and high-density polyethylene, buyers remain hesitant to establish long-term contracts, waiting for market conditions to improve.

"Nearly no one is doing contracts for recycled plastics," a source said.

The US recycled plastics market is characterized by informal transactions and spot business, contrasting sharply with traditional polymer markets.

Recently, sources said that the disparity between raw material costs and market pricing for recycled materials has discouraged investment, as companies opt to retain cash reserves to cover operational expenses.

Amid federal policy uncertainty, state-led initiatives remain a critical force for change. Extended Producer Responsibility packaging programs aim to boost collection rates, develop markets for hard-to-recycle materials, and hold producers accountable for packaging waste.

Implementing comprehensive EPR programs can facilitate system-wide change, the report said. Where full EPR is not yet feasible, targeted initiatives such as Deposit Return Systems, PCR mandates, and landfill tipping fees can enhance collection, strengthen demand, and catalyze infrastructure development.

As of April 2025, five US states -- California, Colorado, Maine, Minnesota, and Oregon -- have enacted EPR laws with varying fee structures and regulatory requirements.

Plastic Credits could help accelerate recycling investment

Voluntary market instruments such as low-cost private financing or plastic credits, can help fund recycling infrastructure and drive investment in PCR supply, the report said.

The plastic credit mechanism aims to incentivize the collection and recycling of plastics, including hard-to-recycle materials, by creating certified transferable units that represent the impact of plastic waste management and recycling activities.

Similar to carbon credits, companies can buy plastic credits to fund projects that reduce plastic pollution.

By purchasing plastic credits, companies can offset their plastic footprint while supporting projects that enhance recycling infrastructure and positively impact local communities.

Sources have said that a robust plastic credits market could encourage prompt investments in recycling. However, issues of credibility and environmental concerns have surfaced in the developing plastic credits market.

Platts, part of S&P Global Commodity Insights, last assessed recycled PET food-grade pellets at 78 cents/lb FOB Los Angeles on April 17.