Export Markets Soften

While domestic demand for secondary plastics remains strong, export demand, particularly to China, has softened, according to sources. A reprocessor based in the Midwest attributes the softening in the export market in part to new import duties the Chinese government has imposed. As a result of the higher import duties, he adds, buyers for Chinese consumers are offering less for secondary plastics. 

“If duties continue to be imposed, factories could begin to close in China because of the higher costs.”

The Midwest-based reprocessor also says the wage increases in China are affecting the types of plastics being imported. While Chinese consumers used to purchase material that required hand sorting to improve the quality, the rising labor costs have made this material less desirable, he adds.
 
Containers for overseas shipments also have proven difficult to get, though the reprocessor says this factor has less bearing on the decline in export orders than the higher import duties.

An Ohio-based reprocessor says he has heard the Indian market for secondary plastics also has experienced some softening, though he says he has yet to see it have an effect on price or demand for secondary plastics in his business.

He also says his company has not had trouble moving lower-end grades that have been out of favor since before 2008. “After the market crash [in late 2008], so much good material was available,” he says. “That backstop has been cleared out, and end users are sucking wind for material and have made some changes in terms of what they are willing to take,” he continues, adding that some consumers are now paying higher prices for lower-value material. “That won’t last forever.”

Domestic demand remains healthy, according to sources. A reprocessor based in the South says, “I continue to see increased demand. I think as more companies try and realize recycled material does offer many advantages, demand will at least be stable as more people enter the market.

“The last recession eliminated some recycling companies, and those supply bases have been quickly absorbed,” she adds.
Generation of post-industrial material typically slows in the summer months, as automotive plants retool for the new model year. The reprocessor in the South characterizes generation as slow, particularly from automotive suppliers. “Consumer goods have been steady, however,” she says.

The reprocessor based in the Midwest describes domestic generation as “sustained,” in line with the tepid economic recovery. However, he says less secondary material is on the market than he would expect, as more manufacturers try to re-use their manufacturing scrap within their plants.