Mexico’s Plastics Recycling Industry

Mexico is recognized worldwide for its high rate of recycling products made from polyethylene terephthalate (PET). However, the country’s 17% overall recycling rate indicates that there is still much to do in recycling other types of plastic waste. How can U.S. exporters take advantage of this?

Mexico’s industry generates a considerable amount of polyethylene (PE), polypropylene (PP), polystyrene (PS) and polyvinyl chloride (PVC) which to a large extent end up in landfills. About 60% of Mexico’s recycled plastics are consumed in the domestic market while the other 40% is exported. After China banned 24 types of solid waste in January 2018, Mexican recyclers have tried to expand their recycling capacities to process other types of plastic waste. New governmental directives require that industries include recycling activities as part of their corporate social responsibility programs, paving the way for increased exports of recycling technologies.

Market Overview         

Mexico’s recycling industry began 15 years ago and has expanded recycling capacities rapidly. Although the industry has focused its efforts in the recycling of food grade containers (PET), there are other recyclers working with non-food grade containers, synthetic fibers, thermoformed laminates and packaging materials. All these companies find their customers in industries including:

  • Packaging products:  bag wrapping film, rigid packing
  • Bottles and containers
  • Agriculture:  fibers, irrigation products
  • Construction:  roof tiles, insulators
  • Furniture:  wooden-like plastics, outdoor decking
  • Manufacturing:  thermoformed parts
  • Material handling products:  totes, bins, reservoirs
  • Consumer products

Market Trends 

Mexico’s Plastics industry is undergoing an aggressive campaign for environmental awareness of single use PE and PS plastics. New recycling initiatives from government and private organizations have derived from those campaigns and are causing the creation of circular economies where any participant in the value chain have active role in designing bio-degradable, reusable, recyclable or disposable plastic products. Plastic recycling technologies will be in demand in the next few years, especially manufacturing processes that can produce high purity pellets (less than 100 ppm contaminants), including waste-to-energy technologies that can aid in the reduction of plastic waste ending up in landfills.

Import Market

Data from the Foreign Trade Division show that, U. S. trade balance with Mexico on plastic waste in 2017, was in shortage by USD$60 million in all HS3915 codes except PVC products which was in surplus by USD$6 million. The above confirms that Mexico is rather an exporter country of recycles. The U.S. stands as the preferred destination for Mexican exports of HS3915, with exception of PE scrap which, until January 2018, was destined to China in its entirety.

Mexico’s demand of recycled PET is supplied domestically, and the other type of plastics, not accepted by China’s new barriers, are forcing recyclers to find alternative user industries in Mexico or export to other countries.

Nonetheless, U. S. exports of plastic waste of PVC, PE, and PS to Mexico, are significant and growing by a gross 10% annual rate, and it will continue so, unless the country becomes self-sufficient in the short term. This trend is clearly seen in the table below, with data from the Foreign Trade Division. At the end of 2014, USD$19 million were exported and 46% of that was PVC and PE; by the end of 2017, that percentage reduced to 36%, roughly. The overall growth of U. S. exports to Mexico of plastic waste is due to exports classified under HS 391590 which have increased 34% since 2014.

Competition 

Mexico is world’s second largest PET consumer and home of Petstar, the world’s largest PET recycling plant, owned and operated by Arca Continental. Most of Mexico’s exports of recycled PET and other resins are manufactured by small and medium sized recyclers. Large recyclers produce for their own consumption as their way to assure compliance with health and environmental standards (NMX-E-263-CNCP-2016, ISO 17422:2002, ISO 15270:2008, among others).  Foreign suppliers of recycled PET find very few opportunities in this market.

Mexico’s post-industrial waste recycling is, by far, the most attractive business for local recyclers. Post-industrial plastic waste is easier to collect and to classify. It also contains less contaminants and, therefore, its recycling process is more cost-effective. The largest number of recycling companies operate in this segment.

Mexico’s post-consumer recycling industry is not strong in processing PE, PS, PP, and PVC. Foreign recycling companies of PE, PS, PP, and PVC products may successfully compete and integrate into the Mexican supply chain. 

According to INEGI, the National Statistics and Geography Institute, the supply chain of Mexico’s recycling industry is integrated by 2,767 establishments; of that, approximately 95% are considered small or medium size both in capacity and contribution to national production. Medium size companies employ less than 50 workers; smaller companies may have less than 20 workers; small companies work recycles of paper and metal or are devoted to waste collection only. Mexican recyclers’ main challenge is maintaining a continued supply of plastic waste; medium size recyclers compete for plastic waste volumes collected by “Centros de Acopio” (collection centers) and waste management firms.

While some medium size companies are producers of significant volumes of near-prime/off grade recycled resins (serving a niche market), production of high quality recycled resins in Mexico is done by a handful of large companies; these latter serving to large plastic product manufacturers.

End Users 

The market for recycled plastic materials find its users in sectors like packaging (including bottles, food containers, skids, bins, etc.), electrical parts, electronics, appliance manufacturing, construction, toys and agriculture. Recyclers sell directly to these industries or through distributors. Three of the most active segments are explained below.

Packaging. This is with no doubt the most competitive segment for recycles of PET, OPS, PVC, HIPS and ABS. Bottles, bags, wrappings, fillers, dunnage, skids and containers are popular products manufactured by the large number of small and medium size companies around Mexico. Some applications of thermoformed packaging for material kitting and in-process handling are in demand in manufacturing.

Construction. The construction sector has lots of new applications for recycled plastics including insulators, gutter ducts, water containers and pipe, electrical parts and decoration, among others. Recycled plastics may used to produce plastic wood which is used in construction of urban products like benches, fences, roof tiles, etc., but this segment is not common in Mexico due to their different construction methods.

Agriculture. Mexico consumes approximately 280,000 tons of plastics for agriculture every year. As Mexico’s agriculture sector increases production, the opportunities to selling machinery for production of agricultural plastics made of recycled materials, ramp up. Mexican agricultures are increasing their use of plastic products including irrigation pipe and tubing,reservoirs, nursery containers, greenhouse, mulching films, silage bags, bales,wrap film among many other. Some of these products are being manufactured or start being manufactured by Mexican recyclers; as of today, the national demand of agricultural plastics depends highly on imports.

Market Access

Mexico’s imports of plastic waste materials of the HS3915 series of U.S. origin are free of duty, non-originating materials are subject to additional duties ranging 7% – 15%. U. S. exports of plastic waste materials of the HS3915 series are increasing since 2014 at an annual rate of 10%, while Mexican exports of HS3915 materials to the U. S., amounted to USD$85 million in 2017, decreasing at a 9.42% annual rate since 2014. Machinery For plastic resins and plastic waste processing of U. S. manufacture are free of duty.

According to OEC, the Observatory for Economic Complexity, Mexico only buys 0.34% of global imports or 5.1% of North American production of plastic waste calculated in USD$11.7 million. U. S. exporters of plastic scrap have fewer opportunities to integrate the supply chain than those providing recycled pellets. Off grade and year virgin resin pellets, engineering resin, regrind plastics, rHDPE andcompound plastic suppliers may find it attractive to exhibit in plastic related shows and compete for the hundreds of importers attending. Direct sales strategies are recommended only if the U.S. exporter has representation in Mexico for it requires intensive traveling and door knocking before a good customer base is grown.

Opportunities

Mexico’s recycling industry undergoes stringent measures to overcome plastic waste pollution. Several states are in alliance to ban plastic bags, straws and BPA plastics, originating a new area of opportunity for U. S. exports of bio-degradable materials and processing technology.

U. S. exporters seeking to expand in Mexico are recommended to approach the various industry associations that have committees dedicated to plastics. They typically have a section devoted to plastic recycling and facilitate business among their affiliates. Joining as members may not be sufficient as the association will only procure sector statistics and lobbying; being an active member of the special committees would bring far more opportunities in terms of networking and first-hand market information.

Key Contacts

  • Asociación Nacional de Industrias de Plástico, A. C.
  • Centro de Investigación de Química Aplicada (CIQA)
  • Asociación de Recicladores de Plásticos Agrícolas Mexicanos, A.C. (ARPAM)
  • Secretaria de Medio Ambiente y Recursos Naturales (SEMARNAT)
  • Ecología y Compromiso Empresarial A. C. (ECOCE)
  • Cámara Regional de la Industria de la Transformación (CAREINTRA)

Upcoming Trade Shows/events

  • Expo Plásticos, Guadalajara, MX (November)
  • Plastimagen, Mexico City, MX (April)
  • Expo Pack, Guadalajara, MX (June)
  • Green Expo, Mexico City, MX (September)
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