USMCA PET Resin SUPPLY vs DEMAND

Simply filling the shortage with imported PET is just not that simple. Consider these challenges to the use of high percentages of imported virgin PET. (A) Imports require ample and predictable ocean-going container ships. Many ships were pulled from use during the COVID economic downturn. Onboard space is limited and at a premium price. (B) Once sea containers arrive at port, inland freight via trucks is required if only to move a short distance to a trans-loading site into railcars. As earlier mentioned, truck freight premiums caused by driver shortages, higher wages, and the spike in diesel fuel prices are all contributing factors. (C) Also of significance is that a huge percentage of the sources of imported virgin PET are owned by the same companies that have virgin PET assets in the USA. Look at the list of leading importing countries into the USA year-to-date. Five of the top 10 have PET assets owned by the same companies who own PET assets in the USA. See fig. 2. (D) Generalized System of Preferences (GSP), which allows duty free imports, expired at the end of 2020 costing an additional 6.5% for all importing countries except for Oman and South Korea which enjoy free trade. So, importing PET to fill the supply shortage is just not that simple or easy. And remember, other global regions are also short on supply at the same time.

Filling the shortage with rPET is not that simple either. As previously covered in the January and April issues of Month in Charts, demand for rPET to meet sustainability goals has its own problem as the USA recycle rate does not create adequate rPET. The ”Battle for the Bales” is in full swing, with prices rising to record heights from bales to flake, to rPET pellets. This will be covered in more detail next month. So, if you are relying on rPET to fill the supply shortage, it will be at a premium price to high vPET prices. The second major issue is sourcing enough containers. As a brand owner, if you do not have enough PET containers, or if you want a higher recycle-content rate for your brand, there is a solution. Switch to aluminum beverage cans. But even as new capacity for billions of aluminum can units is being installed over 2021 and 2022, there is still a shortage. Note the increase in imported aluminum beverage cans to satisfy demand (fig. 3). All of this is contributing to the next crisis...runaway inflation. Good luck managing that!