Plastics - China Continues To Dominate

With the onset of spring, plastics recyclers are hoping material will flow more freely, with the worst of the winter weather seemingly behind us.

A material recovery facility (MRF) operator based in the Midwest says post-consumer generation was down in February largely in light of the weather conditions in the Midwest. “The barrage of storms and frigid temperatures has hampered municipal and rural collection of recyclables,” he says.

In contrast, post-industrial scrap generation appears to be holding steady, he adds.

Domestic demand for post-consumer HDPE (high-density polyethylene) and PET (polyethylene terephthalate) remained strong, he says, while domestic buyers were showing increased interest in LDPE (low-density polyethylene) film as the calendar flipped to March.

The export market also remains strong. “Export is still the leader in terms of volumes and variety of material accepted. China/Hong Kong has been the primary destination,” he says. “Exporters seem to be more willing to work with you on contaminated loads and materials that may be a little too contaminated for domestic processors.”

PET remains in demand in light of the increasing production capacity in the Southeast United States and because of the cotton shortage, which has led some manufacturers to move to polyester fiber.

The Midwest-based MRF operator also points to increasing demand for HDPE in light of the ramp-up in seasonal demand for outdoor products and drainage tiles.

Supply concerns will remain the biggest issue affecting recycled PET (r-PET) in the near future, said Chase Willett, director of polyester and polyester raw materials, for CMAI Global, based out of Houston.

Willett spoke in early March at the Plastics Recycling Conference in New Orleans.

Fiber comprises 62 percent, or roughly 30.9 million metric tons, of the total PET market, Willett said, and China accounts for roughly one-third of PET usage. “What happens in Asia is going to drive the rest of the world,” he added.

However, Asia currently has twice the capacity required to meet its own PET needs, Willett said, making it a net exporter of the material.

While rising prices for plastic resins often are attributed to rising crude oil prices, Willett said this was not the only factor exerting its influence. He pointed to price increases throughout the PET supply chain, including rising prices for raw materials such as PTA (purified terephthalic acid), which is used in PET and polyester fiber production.

"Exporters seem to be more willing to work with you on contaminated loads and materials that may be a little too contaminated for domestic processors."
– Midwestern MRF operator

Willett mentioned the consolidation that had been occurring among PET producers in the United States, adding that DAK Americas, based in Charlotte, N.C., accounted for 31 percent of the North American market while Thailand-based Indorama Ventures, with U.S. operations in North Carolina and Alabama, also claimed 31 percent.

Producers in Europe and North America were expected to have the advantage relative to Asian imports when it comes to cost competitiveness through the end of 2011, Willett said.

Fiber demand is helping to push the PET cost structure to record levels, he noted, adding that costs are expected to climb in the short term.

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