Page 50 - Plastics News February 2025

PRODUCT NEWS
Bayliss said.
Contracts are already common in the RPET
market, Hano said. “Given the age of the RPET
market, that tends to be a little bit more formu-
laic,” and resin pricing tends to be more formally
based on bale prices. However, “since the olefins
market is still kind of developing, and there’s a
lot of newer players, I think pricing is more spot,
less formal, because there are so many competi-
tive dynamics,” he said.
Hano added that Berry buys most PCR except
RPET on a spot basis, by submitting a bid and
“letting people kind of fight for the volume that
they’re interested in.”
Although spot pricing and “used-car sales hag-
gling” style negotiations may suit suppliers for
one commodity, Bayliss said, a small startup may
offer a unique material that a buyer wants to
lock down and help ensure the business remains
viable.
Longer-term contracts can be tied to a pricing
index, based on a cost-plus model, correlate to
price movements for raw materials, feature price
floors or ceilings, and so on, she said.
Regardless of the pricing mechanism, a contract
helps ensure continuing and consistent demand,
which also allows a supplier to continue to in-
vest. “I think as folks understand the true need to
make sure their packaging is recycled and that
being tied to them bringing in the same quality of
PCR, including the back-end packaging, you will
see some of those contracting methods evolve
to meet those needs,” she said.
Hano agreed, saying Berry’s customers “des-
perately” want pricing to be indexed, “but PCR
markets haven’t been booming like virgin, and
there’s not reliable enough indices yet. So that’s
50 PLASTICS NEWS
the next big, kind of structural thing that I think
folks hope for.”
Berry started indexing some raw materials, but
vendors would move pricing to remain competi-
tive, Hano said. “If they thought they had the
upper hand, price would go up; if I could intro-
duce another player, prices would go down. But
they’re stabilizing enough and there’s enough
industry-wide capacity that I hope they’re be-
coming a little bit more commodity-like.”
Although Bayliss expects PCR procurement
eventually will be indexed like other commodity
markets, the recycling industry presents unique
challenges. Traditional polymer markets tend to
have only one or two supply chain links, where-
as PCR has several – MRFs, traders or brokers,
reclaimers, secondary sorters, converters and
brand owners – who each may have their own
pricing mechanisms.
“So it’s not necessarily just a straight pass-
through, because they need to factor in any ad-
ditional costs they’re having on different equip-
ment or material handling or whatever the case
may be,” Bayliss said.
Common complaints include reclaimers who say
they don’t have enough demand for their prod-
ucts, and brand owners who say they can’t get
the recycled resin they need because the prices
are too high. “And that, to me, makes no sense,”
she said. “How are the sellers saying they don’t
have any markets and the end users are saying
they can’t get it?”
“I think we’re seeing a true disconnect in the sup-
ply and the demand for the types of PCR, and
that only gets solved by investment to be able
to produce more of the higher quality grades,
which is what the brand owners are needing,”
Bayliss said. “It’s not as efficient as I would have
February 2025