Plastics

PLASTICS COOLING OFF

As the weather heats up, demand and pricing for secondary plastics appears to be cooling off. However, some recyclers who handle the material note that this is typical for plastic markets.

"Generally speaking, most [grades] are going down," a plastics reclaimer based in the Midwest says. "We are optimistic that some [grades] will bounce back when the weather gets cooler. The markets generally decrease in the summer."

The outlook appears a bit sunnier for engineering resins than for PET and HDPE material. "Engineering resins are staying the same or inching up a little bit," the Midwest reclaimer says. Pricing for clear polycarbonate is inching upward, however pricing for the colored material is moving in the opposite direction, he says. "It’s weird."

Pricing for PET film is dropping, while polypropylene, both colored and natural, is staying firm, the Midwest reclaimer adds.

"Markets seem to be dropping off some," a Midwest-based dealer of commodity and industrial resins says. "Production is off with some of the big consumers. Supply is there, but demand is not there right now, causing markets to take a downturn." While he says the downturn has been slight, he admits that it has him concerned about where prices could end up. He’s not too worried, however, because he says he doesn’t see oil prices falling any time soon. "Plastics are going to stay pretty positive." In general, he says the markets for industrial and bottle-grade resins are "good and stable."

The Midwest reclaimer, however, says supply is tight. He says one of the factors contributing to this tightness is the health of the market. "The end user market is there. Everyone gets into this business when the markets are good."

National statistics back up that claim, as the plastics industry is outperforming the overall economy despite the rise in oil prices.

A report from the Federal Reserve Bank shows production of plastic and rubber products was up 5.7 percent in April 2006 vs. the same month in 2005. This exceeds overall growth in manufacturing of 5.5 percent.

The Bureau of Labor Statistics sees employment in the plastics sector growing by about 16 percent between 2002 and 2012, again exceeding an overall job growth forecast of less than 15 percent.

The Midwest reclaimer adds, "We can sell anything. It is just a matter of buying it right—not paying too much for it and making sure you are aware of what the market is doing."

A thermoplastics reclaimer based in the Southeast says that commodity grade recycled plastics have been more volatile than the engineering grades. "There is more of it out there," she says of the commodity grade plastics. "There is more room for buyers to put the pressure on."

She adds that polypropylene pricing has fallen "a little bit," despite being in short supply. This is inline with the forecast for virgin polypropylene pricing, which, according to Purchasing magazine many experts suggest has peaked following a surge related to the 2005 hurricanes and a subsequent softening in demand.

Moving material continues to be a problem. "The availability of transportation is tight and the prices are ridiculous," the Midwest reclaimer says. He says he’s been asked to pay fuel charges of 25 percent or more.

(Additional news about plastics recycling markets is available online at www.RecyclingToday.com.)