Not all HDPE pellets are created equal. Even though HDPE refers to high density polyethylene, there are still variations in the density of the polyethylene that make it suitable for some applications, and not for others. This is where the grading system has been instituted by many purveyors of HDPE pellets and manufacturers of HDPE products. The grade of HDPE is generally determined by its MFI, or melt flow index. This is related to the molecular weight of the HDPE, which can vary greatly. It is not an exact science by any means, and as HDPE can be treated in various ways that change its grade, a manufacturer has some leeway when purchasing HDPE pellets.
This is more true with film grade HDPE pellets than most other grades. Whist blow molding applications require a very viscous HDPE product to be used, and injection molding applications require a very thin, runny HDPE product, film applications represent the middle ground. Like Goldilocks, most film applications require a mid range product to work best, but it is also possible to use other grades successfully, depending on the specific application.
In some cases, HDPE film has even been created from bottle grade HDPE (generally known as blow molding grade HDPE). It is relatively easy to increase the melt flow index of HDPE (and therefore make it more runny) with the use of additives, or by blending LDPE or other plastics into the feedstock.
Film grade HDPE pellets are made in much the same fashion as other HDPE pellets. They are either created from scratch by the catalytic reaction of ethylene (in which case they are known as virgin HDPE pellets), or they are created from recycled scrap HDPE. In the former instance, the pellets are made by taking the freshly created liquid HDPE and extruding it through a die, then cutting it into shape and allowing it to cool into its solid form. In the latter instance, scrap HDPE is washed, melted, filtered, and then extruded and cut to length in much the same fashion.
The choice between virgin film grade HDPE pellets and scrap film grade HDPE pellets will largely be influenced by the intended use of the finished product. Virgin HDPE is the only type of HDPE that can be used in food packaging, and has a nice translucent color that takes dyes well, whereas scrap HDPE is more environmentally sound and cheaper, but is generally less structurally sound, more contaminated, and is likely to be tainted with colors from the various dyed forms of HDPE which are recycled.