Plastics

Going Up

Prices for secondary plastics are inching upward, with one recycler based in the Southeast predicting a 10 percent increase in the next 30 days across most commodities.

The higher prices for secondary materials are in response to escalating virgin prices, primarily, and to rising freight prices, secondarily, according to sources.

"It appears pricing for polypropylene (PP) and polyethylene (PE) is unpredictable," the recycler in the Southeast says, adding that he knows a price increase is coming, but he’s not sure what the magnitude will be.

"Virgin prices are so high, manufacturers are looking for recycled-content materials, which is driving the price of scrap up," a reprocessor based in the Gulf Coast region says. She notes prices for commodity-grade plastics appear to be increasing more quickly than those for engineering-grade materials.

Despite the increased demand for secondary plastics, generation has fallen off somewhat. "Generation is off even more so than typical for this time of year," the reprocessor based in the Gulf Coast region says. She attributes this to the slower economic growth the United States is experiencing as well as to manufacturers reusing more of their own scrap material.

"The market is changing," the Southeastern reprocessor says. Many manufacturers that used to bale their scrap and ship it off to recyclers are now installing grinding lines, he says.

By grinding their scrap material, generators are able to realize better transportation rates as well as better pricing for their scrap. But this development is cause for alarm for some recyclers who have installed expensive granulating lines and are now having trouble obtaining material to keep them running.

In addition to the increasing prices for secondary PE and PP, high-impact polystyrene (HIPS) is also on something of a tear, according to the reprocessor based in the Gulf Coast region. She attributes the escalating HIPS pricing to a scarcity of supply as well as to Dow’s recent announcement of across-the-board price increases for HIPS materials.

Even PVC (polyvinyl chloride) markets don’t seem quite as grim as they have been, she says, noting that her company has been selling material overseas as well as domestically.

While secondary plastics are enjoying healthy demand, the cash flow of consumers may not be faring as well, according to the recycler based in the Southeast. "I’ve had to spend more time than normal collecting money and worrying about collecting money," he says. "This is a time to be on your toes. Recyclers can make some money in this kind of market it they watch things and are careful. If they do things right, recyclers stand to weather this recession better than a lot of industries."

Among the industries having trouble coping with the current economy are domestic automakers and their suppliers. Plastech Engineered Products is one such supplier, as well as being a consumer of recycled plastics. The Dearborn, Mich.-based company, which specializes in plastic injection molding, painting and metal stamping, declared bankruptcy in February. Milwaukee-based Johnson Controls has formed a joint venture with Plastech to acquire its interior product assets, a report in The Business Journal of Milwaukee states. The venture includes 29 plants in North America that make injection-molded components and assemblies. Johnson Controls has negotiated multi-year production contracts with key automotive customers, the report notes.