Compression Forces

C onsumers of recycled polyethylene terephthalate (PET) and high-density polyethylene (HDPE) plastics have bemoaned their supply deficiencies for quite some time. While plastic bottles continue to gain market share in the beverage industry, collection of these bottles has not grown proportionally. In 2002, the PET recycling rate stood at 19.8 percent, while HDPE boasted a higher rate of 24.2 percent.

"The rate of bottles reclaimed is not keeping up with the amount of bottles sold to consumers," Robin Cotchan, executive director of the Association of Postconsumer Plastic Recyclers (APR), Arlington, Va., says. "Consumer apathy plays a part as well as ‘single-serve’ bottles that are consumed away from home and discarded away from home, away from recycling bins."

Recently, the APR issued a press release announcing an "urgent campaign to generate awareness, committed action and noteworthy results in reversing the waning North American plastic container recycling rate." The association has retained Kinghorn, Hilbert & Associates, a government relations firm based in Washington, D.C., to assist in its efforts.

"We are dangerously close to irreversibly losing significant amounts of recycling capacity," Cotchan says in the release. "Many, including the largest plastic reclaimers, are at risk. Business as usual cannot continue."

STAGNANT SUPPLY. According to the APR, exports to China exceed 35 percent of the PET bottles collected in the U.S., aggravating the supply shortage in this country and increasing domestic market prices. "To meet the suppressed demand of the plastics recycling industry in North America and the expected ongoing exports to China, the collection of recyclable HDPE and PET plastic bottles needs to double to a level of 2.5 to 3 billion pounds within the next 24 months," the release reads.

Overcoming Barriers

Jean Bina of Phoenix Technologies, Bowling Green, Ohio, says that barrier bottles, or bottles that incorporate thin layers of polymers with low gas permeability between two PET layers, are increasing as a percentage of the bottle stream. This trend could spell potential problems for recyclers of PET.   "Barrier bottles, or the advanced technology containers, continue to multiply, and critical mass is becoming more significant, which means that it does impact the quality and the consistency of the material that is out there," she says.   These barrier bottles have not become a problem for Mohawk Industries, Summerville, Ga. yet. "We go through about 4 million pounds of bottles per week. I’m sure there are a few strange bottles in the mix, but they are blended over such a large amount of PET that, so far, we really have not had any problems with barriers," says the company’s Phil Cavin.   He explains that one of the issues related to barriers is clarity of the finished product. "We have an end product here where clarity is not an issue. But if you are making sheeting or film or a bottle, there are certain things that might turn the material brown or make it hazy."   While bottles with barriers are still a small percentage of the total PET stream, Cavin says they could become a problem if their percentages grow. "If they go from 1 [percent] or 2 percent in the stream to about 5 [percent], 6 [percent] or 10 percent, sure, we could have problems down the road," he says.

The dwindling recycling rate can be attributed to a number of factors, including difficulty in capturing single-serve containers, lack of consumer education and local governments’ focus on other issues.

Jean Bina of Phoenix Technologies, a bottle-to-bottle recycler of PET based in Bowling Green, Ohio, says markets that consume recycled PET and HDPE have become very sophisticated, with markets for bottles, strapping, fiber and engineering resins being "healthy in terms of consumer product sales and industrial sales." However, the difficultly in obtaining material has caused some plants to shut down their lines temporarily.

"I know of a number of plants that have been shut down—this is not just domestically, this is globally—for one, two, three weeks and that are expecting more shutdowns this summer because of lack of supply," she says. "They just cannot get enough material to keep the plant running, because it’s just not out there, it’s just not being recovered. Or it is, but it’s going to export markets."

A collector and processor of plastic bottles says that he has been able to secure enough material, though he adds that his customers might maintain that they cannot get enough bottles for their needs.

"In a lot of cases, I suspect that they would like the supply to be so high that the unit price per pound would be low," he says. "Certainly, those people are a little fearful that if the beverage people come on-board, there may not be enough supply for them."

Of course, the stagnant supply of recycled PET and HDPE coupled with the increase in export demand has served to raise prices for domestic consumers.

"Strong demand from exporters, specifically [to] China, is making it difficult for domestic reclaimers to find sufficient material at a price at which they can make money," Patty Moore, executive director of Plastic Recycling Corp. of California (PRCC), Sonoma, says. PRCC is a private non-profit organization that purchases PET bottles for resale to reclaimers in the U.S. and Asia.

Prices currently stand in the neighborhood of 17 cents per pound for baled PET, 22 cents for natural HDPE and 12 cents for pigmented HDPE on the East Coast. This is down somewhat from earlier this year.

"What you find is that because East Coast bales and sources tend to be closer to a larger volume of process capability, the pressure on pricing in the East Coast is much greater," Bina says. While bales on the West Coast may be less expensive because there are few processors west of the Mississippi, the freight costs often negate any savings, she adds. The lack of local processors also makes export a desirable option on the West Coast.

Phil Cavin of Mohawk Industries, Summerville, Ga., says the ease in pricing is a function of two factors: an ease in demand and an increase in supply. "The Chinese have backed off momentarily, though we are starting to see some indication that they are coming back," he says. Cavin adds that the supply of recovered bottles should also increase in light of the warmer summer months. "Most people say that there is about a 20 percent increase in bottle availability in the summer because of [increased] consumption of soft drinks."

The collector/processor also says export is less of a factor currently. "China has stopped taking whole bottles for a couple of months now. Most of the West Coast PET has flowed back domestically." However, he acknowledges that people are likely to find ways to comply with the Chinese restrictions by grinding the material.

He also adds that pricing for HDPE has reduced marginally in price. "You don’t reduce the price if there is a shortage, you raise the price. I would say that that is an indication that they have a full belly."

While the overall plastics recycling infrastructure is feeling the impact of supply shortages, some individual companies are faring well.

QUALITY QUESTIONS. Mike Vatuna, director of bulk materials for wood composite manufacturer Trex Co., Winchester, Va., says that Trex has not been impacted by supply shortages. "We have read of shortages of post-consumer bottles and also the fact that plastic recycling has diminished within the United States. This has had little impact on our volumes, as we are able to change with the materials as they become available," he says.

Trex purchases approximately 300 million pounds of used PET and an equal amount of hardwood sawdust yearly for use in its decking products.

"We’ve been able to meet the growth demands of the product, but are continuously seeking to secure new and broader sources of supply to sustain the future growth of the Trex line," Vatuna continues. "We are constantly evolving, modifying and adapting to the many changes in the availability of raw material. Flexibility and determination have been and will continue to be paramount to our business."

Currently, Mohawk is able to secure enough material for its needs. Cavin says it has not been easy, however. While the company is able to secure enough PET bottles to create polyester fiber for its carpeting and fiberfill applications, he describes it as "a mad scramble" that involves importing bales from Mexico and Canada in addition to the bottles it sources domestically.

Some within the industry claim that China’s demand also serves to lower the quality of material available.

"Certainly, the export market lowers the quality standards for bales, as they will pay top dollar without discriminating quality, and the domestic market must compete for those same bales," Cotchan says. "Projects are on hold that could increase the markets for post-consumer resin (PCR), and lines for processing are running at less than capacity. There is a cost associated with bale yields, which could be as much as 30 percent contaminated," she adds.

Mohawk Industries recycles 200 million pounds of PET bottles yearly. "We have a very forgiving application here, so the quality does not have to be as high as in some other applications," Cavin says. "We work with our suppliers on our bale specifications, on what we want and what we don’t want. Very seldom do we reject a load."

That’s not to say that Mohawk doesn’t encounter problems with other resins infiltrating a load of PET. "PVC, for example, is our biggest nemesis," Cavin says. "It looks just like PET and it sinks when you put it into the wash line, so it is almost impossible to get out after it has been flaked."

Bale quality could be just one of the problems that the industry faces down the road, however.

SHAKY STRUCTURE. Cavin is apprehensive about the ongoing viability of the plastics recycling industry in light of supply concerns. "We are an industry that is sliding," he says. "I know for a fact that there are other folks who would consider expanding and opening up other applications and businesses if the bottles were there. But no one is going to invest in an operation if they can’t get the raw materials to run the plant," he says.

"I would say the infrastructure could be somewhat in danger from the standpoint that a number of people are reluctant to reinvest capital if their systems are getting older," the collector/processor says. "They are going to have a higher conversion cost per pound if they don’t reinvest."

PRCC’s Moore agrees on the tenuous nature of the PET reclamation industry. "Very few of the reclaimers are making enough money to keep them in business, and I expect we will see some go out of business this year," she says.

Bina stresses that in order for the plastics recycling infrastructure to be viable and sustainable, "we really need some serious commitments from some concerted, concerned parties. Most of the reclaimers, most of the recycling community continues to be privately owned with limited resources, so it is always important to have a strategic alliance of a big brand owner," she adds in reference to Coke and Pepsi in particular. Bina adds that these companies have the capabilities to facilitate supply sourcing because of their size.

Cotchan also expresses concerns for the industry’s future viability. "North America runs the risk of creating a non-competitive infrastructure that relies on the export market that comes and goes," she says. "When that export market comes to a halt, collectors will be scrambling for a domestic market that may not exist."

Vatuna is optimistic that the increased domestic and export demand will ultimately help the industry. "As the demand for recycled plastics grow, so will the infrastructure for collecting and processing these materials. Volume will make the economics improve and more plastic will be diverted from the waste steam," Ventuna says.

"As we see it today, infrastructures continue to evolve, and recycling is a large part of this country’s future," he adds.

The author is associate editor of Recycling Today and can be contacted at dtoto@gie.net.