Up and down

Recyclers report wide variations in scrap generation because of the COVID-19 outbreak.

“Production in this market [is] either down severely or very hot,” a Midwest-based contact with a reprocessor that operates multiple facilities globally says. “Packaging and medical businesses are still strong, and appliance and automotive [are] down.”

He says high unemployment and late or uneven delivery of stimulus checks have dampened consumer spending on anything other than necessities.

“Production in this market [is] either down severely or very hot.” – a Midwest-based contact with a reprocessor that operates multiple facilities

The Midwest-based source says the amount of plastic scrap also has been reduced because of fears that the material could be contaminated with the coronavirus. Some material is being landfilled as a result.

However, he says demand for postconsumer resin (PCR) remains “very strong,” particularly for polyethylene terephthalate (PET). His company is reducing PCR production that would be destined for the automotive, appliance and construction sectors in light of reduced demand in these markets.

A broker based in the Northeast says he has not seen many material recovery facilities shut down as a result of the outbreak; however, he says the same cannot be said of reprocessors of specific grades. This has led to declining scrap demand in some cases, the broker says.

“With no demand, it creates a big issue because supply increases and either gets landfilled or put into storage,” he says. “If put into storage, it creates a glut of supply that can drive down prices when end users come back online.”

In the Brussels-based Bureau of International Recycling’s (BIR’s) “World Mirror: Plastics” for April/May, Sally Houghton of The Plastic Recycling Corp. of California, Sonoma, says, plastic reclaimers in the U.S. are struggling with reduced volumes. She says they have had to halt production temporarily because employees have fallen ill with COVID-19 and/or volume limitations.

Houghton writes, “Low volumes caused by the lockdown have seen bale prices rise while, in contrast, virgin PET is at a historic low.”

Also writing in the “World Mirror,” Henk Alssema of Netherlands-based Vita Plastics and chairman of the BIR Plastics Committee, says, “The low oil price has pushed prime virgin material values to historically low levels; the gap between virgin and recycled material has melted away. Coupled with weak demand, this has resulted in very low prices for all types of recycled plastics, including LDPE (low-density polyethylene), HDPE (high-density polyethylene), PP (polypropylene) and HIPS (high-impact polystyrene).”

The low-price environment also has affected virgin plastics producers.

Dow Chemical Co., headquartered in Midland, Michigan, announced at the end of April that it was idling three polyethylene (PE) plants and two elastomers units on the U.S. Gulf Coast and in Argentina for at least 30 days. The move is intended to balance reductions in demand arising from the COVID-19 pandemic.

The plants have 2 billion pounds of aggregate annualized capacity and will reduce Dow’s global production capacity by 10 percent.