The trade war initiated by the United States’ Trump administration has led to a drop in the price of virgin plastic, hurting the market for plastic collected from the environment for recycling.
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Crude oil prices slumped to their lowest level this year last week amid concerns of weakening demand after China announced a retaliatory tariff on US crude oil imports.
This has resulted in a fall in the price of oil-derived virgin plastic, which has been exacerbated by an increase in petrochemicals production in China, and the price gap between virgin and recycled plastics has widened.
According to data from the Independent Commodity Intelligence Services (ICIS) which has been tracking US and China plastic and chemical trade, the price difference between virgin and recycled polyethylene terephthalate (PET) – the most commonly recycled type of plastic – is now US$300-700 per tonne in Asia, which is deterring brand owners from buying from recyclers in the region.
Major brand owners such as Coca-Cola and Unilever have already scaled back voluntary sustainability pledges to use more recycled plastic in their packaging in recent months to protect their margins as virgin plastic prices fall.
“Our concern is that if the price of virgin plastic is so cheap, there is no incentive for companies to keep buying recycled plastic,” said Alvaro Aguilar, head of business development and logistics for Prevented Ocean Plastic (POP), an Indonesia-based recycler.
“After the Global Plastic Treaty negotiations in Busan, South Korea, major brands decided to delay or change their commitments, and with the US out of the Paris Agreement, sustainability has become a second-tier topic. The focus for brands in 2025 is financial targets, not environmental targets,” he told Eco-Business.
POP has been offering discounts to buyers to sustain demand for recycled PET.
While the price of recycled PET has been relatively stable, the market for recycled polyolefins – a class of plastics that includes polypropylene (PP) and polyethylene (PE) – is so low that waste pickers in Indonesia have stopped collecting the material, Aguilar said.
Plastics are more likely to find their way into the environment if there is no market for collecting and recycling them, he said.
Price volatility signals need for local solutions
While a trade war could lead to lower oil prices and virgin plastic costs, other macroeconomic and geopolitical factors could push prices in the opposite direction, said Rob Kaplan, chief executive of Circulate Capital, a Singapore-based circular economy investment firm.
“We can expect monetary authorities to step in with expansionary policies to offset market disruptions, while ongoing instability in the Middle East, the war in Ukraine, and upcoming elections in key markets could have far greater effects on oil prices than tariffs alone,” said Kaplan, who is the former director of product sustainability at US retailer Walmart.
Regulations such as India’s minimum recycled content requirements, which come into effect this year, and Extended Producer Responsibility (EPR) schemes in key markets such as the Philippines and Vietnam could also create price stability by mandating demand for recycled materials, even when virgin plastic prices fluctuate, he added.
EPR schemes mandate that manufacturers and producers take responsibility for the collection and recycling of their products and packaging once discarded.
Kaplan noted that the trade war may not only impact oil prices, but disrupt supply chains in ways that push brands towards recycled materials. “The US is a net importer of virgin PET, with Mexico and Canada supplying nearly a quarter of the demand. If tariffs on these imports increase, virgin PET prices could rise, making recycled plastic a more attractive alternative.”
He noted that about two-thirds of recycled plastic imports to the US come from South Korea, Taiwan, and Southeast Asia, which means the regional market dynamics could “shift significantly” depending on trade policy.
“This only reinforces why investing in local and regional solutions is so critical. If trade disruptions limit the flow of recycled content, we need strong infrastructure in place to collect, process, and remanufacture materials locally,” said Kaplan, whose company invests in recycling businesses in India, Indonesia, and Thailand.
For that to happen, governments need to set policies that genuinely help to drive the recycling market, and the private sector needs to commit to long-term investment in supply chains that “don’t collapse when virgin plastic prices drop,” he said.
The slump in virgin plastic prices comes the week after US President Trump announced an executive order to reverse a ban on single-use plastic straws, which has received widespread condemnation from environmental groups.
