What to expect for the recycled plastics industry in 2025
While many hoped for an industry-wide stabilization, some grades of plastic have seen a rebound while others have continued to struggle
This has once again been a volatile year for the broader business world as U.S. organizations tried to navigate numerous disruptions throughout 2024, ranging from dock strikes to geopolitical uncertainty. The recycled plastics industry was no different.
Recycled plastics have quietly emerged as one of the commodities areas to watch during 2024. While many hoped for an industry-wide stabilization or uptick to occur following the COVID-19 pandemic and its related supply chain hurdles, 2024 proved to be much more of a mixed bag with some grades of recycled plastic seeing a rebound, while many others have continued to struggle. Moreover, those that have seen an upturn have faced stiff headwinds in the form of import competition, among other factors.
This has set the stage for a very interesting 2025 for the recycled plastics space. With that in mind, here are some of the most pressing questions that surround the recycled plastics industry as the new year gets underway.
How will local R-PET supply catch up with demand?
As brands continue to double down on voluntary recycled material usage commitments and more ambitious sustainability regulation continues to be rolled out, demand for recycled polyethylene terephthalate (R-PET) in the U.S. continues to grow. However, plastics producers continue to muddle through a continuous supply/demand mismatch.
Domestic supply — which was already struggling to keep up — fell even further behind in mid- and late-2024 as bottled beverage purchases shrunk as consumers battled inflationary conditions. This has fuelled strong import numbers throughout the year. For example, the U.S. imported over 57,000 tonnes of polyethylene terephthalate (PET) scrap in Q2 2024 alone.
As supply issues look likely to persist, the recycled plastics industry will continue to be dogged by shortages through much of 2025, and stakeholders will have to continue to grapple with how to exactly close the gap.
To make matters worse, while imports have helped to plug the gap a bit, the potential January resumption of the Q4 dockworkers strike that briefly derailed U.S. supply chains means supply issues could become significantly worse in early 2025 as companies seek to restock following the end of the year.
Will the R-PE market see more collective stability?
Recycled polyethylene (R-PE) markets have also seen inconsistent growth. Driven by demand from the consumer-packaged goods (CPG) industry, sustainability-driven grades like food-grade, natural plastics will continue to see strong demand to kick off the year.
Spurred on by a lack of recycled plastic feedstock, these grades of post-consumer recycled (PCR) resin continue to push double-digit premiums to virgin. However, cost-sensitive grades — like post-industrial, mixed-coloured resins — have faced stiff competition from more cost-friendly virgin plastics. These grades, which are typically utilized in automotive, construction, and other sectors that have faced challenging economic times, have remained relatively flat as durable goods companies remain cost-conscious in the face of economic uncertainty.
Markets such as packaging are heavily driven by brand sustainability targets and regulations, while other markets, such as construction, mostly purchase on cost saving against virgin. However, should positive economic conditions take hold in 2025, these grades could see a boost as well.
How will U.S. recyclers cope with medium-term demand uncertainty?
A key priority for the recycled plastics community — particularly U.S. R-PET sellers — in 2025 will be determining exactly what demand looks like for 2026 and beyond. While demand has increased in the U.S. in the lead up to 2025, U.S. recyclers continue to face competition from import substitution as well as premium price pressure.
At the same time, many brands have yet to announce sustainability commitments for the next decade and beyond. It is possible that we could see demand fall off if overall economic conditions force brands to slow their sustainability pushes.
This confluence of factors has already seen U.S. recyclers quietly hedge against these challenges and double down on their messaging to make US R-PET the raw material of choice.
For example, U.S. recyclers underline the benefits of domestic R-PET on meeting local circularity goals while promoting the consistency of domestic R-PET in comparison to imported material, which can upend U.S. converter operations.
Moving forward
Even with all of the uncertainty in 2024, 2025 has the potential to be just as unpredictable for the U.S. recycled plastics industry. Economic signals are cause for optimism as the Federal Reserve lowers rates and inflation eases.
Although automotive sales will likely remain flat, we forecast U.S. housing starts to improve significantly, from about 1.37 million to 1.43 million in 2025. With a new administration entering the White House and an economy that is still looking to officially complete its "soft landing," recycled plastics decision-makers will have no shortage of priorities and hot-button issues to contend with as they look to drive success in the new year.
Emily Friedman is the recycled plastics senior editor at Independent Commodity Intelligence Services.
