National Harbor, Md. — Higher prices for recycled resin, relative to virgin plastics, are here to stay, according to a longtime observer of the materials market.

And Joel Morales, executive director of polyolefins Americas for IHS Markit, an information and analytics firm, expects recycled resin to be priced more independently from the virgin market moving forward.

"We have seen [recycled material] accelerate at a much higher level than virgin here since the pandemic. And frankly, it's demand-driven. The demand for post-consumer recycled [content] from brand owners not only in North America but other parts of the world has been really high and the market has really taken off," Morales said at the recent Plastics Recycling Conference in National Harbor.

"For recyclers, I think the news is good going forward because we're going to have a higher price forecast for crude for this year, for next year. Imports of resin will be expensive for this year and next year, which means resin prices, even though there's more supply coming, they will be higher than you think, which should support recycled prices for the foreseeable future. So that's good news," Morales said.

Morales told the conference crowd that he expects demand from brand owners, including many that have set recycled resin utilization goals tied to 2025, to continue.

"For those who are expecting PCR [post-consumer resin demand] to go back to where it was pre-COVID, I would say you would need significant demand destruction or you need significant supply to pop up pretty quickly. And I don't see either one of those coming. Now if we have a global recession again and there's pressure from brand owners to cut costs, that could change things. But I would budget significant premiums over virgin for PCR," he said.

"Going forward, we don't see one-for-one relationships between recycled and virgin. As we see more brand owners putting value onto the recycled component, we would not expect it to move one for one, but we would expect it to trend together, just not one for one," Morales said.

Roxanne Spiekerman is the vice president of business development at plastics recycler PreZero US and board chair of the Association of Plastic Recyclers. During some comments before Morales spoke, she said a variety of circumstances is driving higher pricing for post-consumer resin.

"You know that there is demand for it. Either you have to use it because it's required or you want to use it because the demand is there," she told the conference. "Another thing that's happened with post-consumer is that the quality and the performance has increased drastically so you can use it in higher volumes.

"Because of the demand increase and performance of post-consumer, not only does this have a potential impact on the virgin resin market, but at some point, it does have strong potential to displace a portion of the market," Spiekerman said.

"You know that in any normal year, whatever 'normal' means, that we are subject to extreme material volatility. That's just the way of our world, right? But 2021 was not normal by any means," she added.

The pandemic as well as inclement weather last year combined with new challenges this year, such as global strife, increased sustainability objectives, legislation and regulation, influence the recycled resin market, Spiekerman said.

The higher pricing trend for both recycled and virgin resin is coming at a time where demand continues to be strong.

"What we've seen in the last couple of years has been nothing short of amazing for polymer consumption. So demand for polyethylene and polypropylene in '21 grew roughly at 9 percent, which is the best we've seen since 2010 at a time when price just keep going up," Morales said.

"Last year, there was no demand destruction because of price. Amazing," he said.

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