Anne Marie Mohan:
Hi, I am Anne Marie Mohan with Packaging World Magazine, and I’m coming to you live from the Plastics Recycling Conference in San Diego. I’m here with Andrea Bassetti, America’s Team Lead for Recycling for ICIS. ICIS is a global provider of data analytics and intelligence for the chemical energy and fertilizer market. And I’m going to talk to Andrea about the current state of the recycled plastics market and what it means for CPG brand owners who are navigating supply, pricing and sustainability commitments. So welcome, Andrea. Thanks so much.
Andrea Bassetti:
That was quite the introduction.
Anne Marie Mohan:
So there’s a persistent belief that recycled resin supply is constrained, yet ICIS suggests that supply largely responds to demand. So what are brand owners still getting wrong about the market today?
Andrea Bassetti:
Well, I think there’s a lot behind that question. I think one of the biggest things really is you can’t just look at the total supply. You have to look at the supply of what you’re actually targeting. So is it that high-quality PET that you’re looking for? And I would say yes, maybe there is a constraint for domestic material to meet that. But at the end of the day, I think with where we’re at with the demand right now, which is maybe on the softer side with respect to what we’ve seen in past years, I would say yes, there is a good amount of supply, but also we can’t look at domestic supply without really thinking about import material. Is that import material coming in at a cheaper price and a higher quality? And how is that really undercutting the market at all times?
Anne Marie Mohan:
Okay. So I have a question about some of these recycled content commitments by some of the big brand owners. So the fact that they’re pulling back on a lot of these, are we seeing a temporary pause in the demand or a more structural reset in the PCR market?
Andrea Bassetti:
I think maybe one of the misconceptions there, and to make sure that we’re choosing our words really carefully, is they have pulled back on the speed of growth necessarily, but from what we’re seeing and hearing in the market, what they have achieved to this date is staying. And then their growth on top of that has been slowing down a little bit. So I do think that’s really an important distinction to make because the demand that had been created, for the most part we think is actually going to stay. But it’s a question of there needs to be an incentive for them as well to continue growing that demand. And if they’re in a situation in which they’re already cost constrained, I can understand why maybe that’s a difficult decision. So we look at them kind of as a true north to drive that demand, but in a moment in which the market isn’t at its strongest, should we actually be looking at legislation as a different source of demand driver that is maybe more stable, more reliable, and can be enforced without really that ability to pull back when the situation gets tough.
Anne Marie Mohan:
Okay. So we’re hearing a lot about EPR here. I think almost every session has an EPR component. So it sounds like you really believe that that would be a good driver of increased PCR use.
Andrea Bassetti:
Yeah, I think EPR and minimum PCR mandates, I think minimum PCR mandates translate a little bit more directly into that demand side of things. EPR, it’s still a little bit of a black box. We’re in that phase where it’s gotten passed, now we need figure out how to implement it. The fees need to be determined. And until all of that is really sorted out, I struggle to see how it’s going to translate into a significant amount of demand. But I do think it’s our biggest hope in two to three years down, further down the timeline to essentially provide a stable demand that isn’t going anywhere and that we can really rely on to make investments towards. So I do think it’s essential. I don’t think it’s going to resolve where we’re at today for the next year, but two to three years further down the timeline, that’s really what we’re going to see, having it having most of its impact.
Anne Marie Mohan:
Okay. Okay. So yesterday you led a panel that talked about a lot of these different issues, and one of the things that came up, and you and I were just talking about this, is that PCR is currently more cost competitive relative to virgin than it has ever been before, but yet it’s still, the adoption hasn’t accelerated the way you would imagine. So you talked a little bit about it in terms of the brand, some of the brand challenges. What do you really think is holding brands back?
Andrea Bassetti:
Yeah, I think obviously as you said, what we’re seeing today, the spread between virgin and PCR prices both for PET and HDPE is probably at the lowest, and it’s been in the last three years for HDPE better than 2025, maybe not better than 2024, but it really is more competitive. And so we would expect to see that switch over from virgin to PCR because that spread is narrower. But I think that really points to the broader situation of where the market is at right now of everybody’s trying to cut costs because consumer spending is lower, the economic conditions aren’t great, there isn’t that much demand out there. And so that really points to the fact that we’re in a pretty critical moment in the market and that the market is struggling and even a lower spread doesn’t necessarily translate to more PCR usage and more demand creation.
Anne Marie Mohan:
Okay. So we talked a little bit about how imports are really causing a problem with domestic demand or that they’re winning on price and quality in some cases. How so should CPG companies think about the trade-offs between domestic sourcing imports and supply security?
Andrea Bassetti:
I think that’s a tough one because often if you look at imports as a possible solution that is cheaper and of higher quality, you get the critique of, well, that isn’t really circularity because you’re bringing material in. And I understand that critique, but I think we also need to be realistic of where the market is at right now. It is true that imports provide, in some cases not all. So for example, for high-quality PET, this is true, but not necessarily for HDPE, but it does provide a viable solution. And it’s not about that decision point of where we should be focused but really looking at what’s leading us to having to make that decision. It’s the fact that we need to invest more in getting more collection systems in the U.S., getting better quality material from curbside, from deposit, from bottle bills. And I think EPR really is targeting that, and so it’s not going to solve things immediately. But by being able to solve that piece, you then set brands and CPG companies, and you put them in a position where they don’t have to choose that imported material.
Anne Marie Mohan:
So if you were advising a major CPG company today, what would you tell them to do differently in their procurement or packaging strategy over say the next three to five years?
Andrea Bassetti:
Yeah, that’s a great question. I’ll speak to what I think we’ve seen work in the market in the last year or so, and some strategies that have allowed some manufacturers or strategic companies to weather the storm. And the main one that we’ve seen is standardization. Instead of having a product that has 40% PCR, another one that has 5% PCR and so on, and making it very difficult to have this variety, just standardizing everything to say 15%. I’m throwing numbers out there, but overall, if you put 15% across everything, the volume of PCR that you’re using ends up being essentially the same. And so you don’t have to give up on the numbers that you want it to achieve. You kind of simplify some of your supply chains. And that’s something that I’ve heard as a strategy in the market. Obviously that can’t be applied to everyone if you have certain specification needs, but sort of making our lives easier by finding one source with X amount of PCR that works for the majority of your products, and just introducing that without having to again, give up the total volume of PCR that you’re using.
Anne Marie Mohan:
Okay. Great advice. Great advice. Thank you so much for joining us and going through all these questions from us. I really appreciate it.
Andrea Bassetti:
Thank you so much.
