Plastics

While prices have remained fairly steady for polypropylene (PP), high-density polyethylene (HDPE) and acrylonitrile butadiene styrene (ABS) throughout the last few months, a reprocessor based in the Southeast says she has heard rumors that November will bring a 3-cent drop in price for PP as well as a decline in pricing for PET. With declining oil prices as of late (pricing for a barrel of oil dipped below $70 in October for the first time in 14 months), prices for virgin plastics have followed, and it’s just a matter of time before secondary markets feel the effects.

While she says she feared a slowdown in generation and consumption from the auto sector, the industry has held steady into the autumn months. However, relative to the same period in 2007, demand from the auto industry has weakened, she adds.

It’s no wonder automakers are struggling, with higher gas prices taking their toll on U.S.-based automotive manufacturers, in particular, and the gloomy general economic environment, with talk of recession growing louder each day.

The reprocessor says generators are becoming more aware of the value of their scrap material, which is putting pressure on reprocessors’ margins. More generators are trying to reuse their own material, she says, in an effort to better control escalating resin and freight costs. "They are willing to go after whatever they can to lower their costs."

For some recyclers, this interest in reuse on the part of consumers has led to an increase in tolling services.

A recycler based in the Midwest says generation has remained steady heading into autumn. "Plants are still producing parts for year-end inventory," he says. However, he forecasts a drop-off in generation at the start of 2009. "I anticipate production declining at the beginning of the year."

Despite his forecast for a decline in automotive production in 2009, he says he thinks demand for secondary plastics will increase in the coming year.

The recycler based in the Midwest says demand for PP and PE (polyethylene) is increasing. "More people have been looking for recycled PP due to the price increases [for virgin material]," he says. "Even though virgin pricing has declined, molders now believe they can produce quality parts with dependable recycled materials."

Export buying has remained constant, according to the Midwest recycler, who notes that China, Vietnam and India are still buying material.

However, finding containers to ship secondary plastics to overseas consumers remains challenging. "The cost of freight is still almost double from the same time last year," the Midwest recycler says, adding that overseas shipping containers remain difficult to find.

Additionally, with letters of credit becoming harder to obtain because of the global banking crisis, export sales could be negatively affected in the near term.