Pushing Demand

The plastics industry has enjoyed mostly upbeat growth patterns and forecasts for several decades, with new and established polymers competing aggressively in the automotive, packaging, electronics and other industries that consume basic materials.

But as the hyper growth of the 1990s wound down during 2001, even the plastics dynamo felt the strain, as makers of plastic and their suppliers were experiencing a slowdown by the second quarter of last year.

Fortunately, it has not spelled doom for the plastic recycling industry, which was jump-started both by strong demand from Chinese consumers early in 2002 and the beginnings of an industrial comeback in the U.S. to bolster demand and pricing for scrap PET and HDPE.

"The Chinese came in after Chinese New Year and wanted to buy every bottle they could," says Ron Benge regarding demand for baled plastic bottles from the export market this year. Benge, national sales manager for multi-material sales for Smurfit-Stone Recycling Co., St. Louis, says the boost in demand helped revive what had become a sluggish market.

An index maintained by the Corporations Supporting Recycling, Toronto, shows baled PET prices plunging in the second half of 2001, falling from an indexed number of 355 in July of 2001 all the way down to 110 in February of 2002. But the buying from China mentioned by Benge began to be felt by March, with prices climbing steadily since then to an index number of 184 by June. As of mid-June, recyclers in western and eastern Canada were receiving $243 Canadian per metric ton for baled PET.

According to pricing maintained by the trade publication Plastics News, during the same mid-June time period, plastics manufacturers in the U.S. were receiving $840 per ton (42 cents per pound) for clear, post-consumer PET flake or regrind.

"Plastic has not been one of my problem issues," says Steve Sargent, general manager of recycling operations for The Rumpke Co., Cincinnati. "We’ve seen a rather stable market for the past 24 months," Rumpke says of demand for the PET and HDPE containers processed at The Rumpke Co.’s material recovery facilities (MRFs) in Ohio, Indiana and Kentucky.

With curbside recycling programs supplying a steady (if not always adequate, according to some) source of PET and HDPE containers to recycle, the demand side of the equation usually provides the key to any pricing movement that takes place in the recycled plastics market.

Domestically, demand can vary from region to region. Sargent cites Signode Strapping of Florence, Ky., a maker of cargo securement strapping material, as a "tremendous supporter" of mixed color plastic recycling in his region. Another steady buyer of scrap plastic containers is KW Plastics in Troy, Ala., which buys bales to make secondary pellets.

Just a couple of hundred miles away from Sargent, Kevin Little at Lake Erie Recycling, Toledo, Ohio, is less enthused about the markets for mixed plastics in particular. "The movement of natural HDPE and PET is pretty good right now," says Little. "As long as it’s segregated, we can use it. But there is no real market for the commingled PET and HDPE baled together. Just getting rid of it makes me happy."

In a presentation at the Federation of New York Solid Waste Associations (FNYSWA) conference this May, Steve Edelson of Waste Management Inc. touted that company’s facility in Youngsville, N.C., as a destination for shippers of baled mixed plastics.

The facility, purchased from the former P&R Environmental Industries Inc., can sort by color and resin up to 65 million pounds per year of post-consumer containers. An expanded plant that can handle up to 100 million pounds annually is set to open before the end of 2002.

The advantages to MRF operators, according to Edelson, is it allows them to save from investing in their own sorting equipment while also being allowed to ship full loads of mixed plastics out faster—rather than waiting for a full load of any one given plastic commodity.

But the downside, as expressed by Little, is that if there are only a handful of destinations accepting the mixed bales, there will be little chance of a shipper receiving an attractive price for the mixed bales being prepared.

Funded in part by a grant from the State of Ohio, The Rumpke Co. has also been operating a facility that accepts mixed plastic bales for further sorting and processing. The company breaks incoming bales and uses optical sorting equipment supplied by MSS Inc., Nashville, Tenn., to sort and separate the materials into their traditional clear or colored PET or HDPE grades.

"It has worked out well," says Sargent of the system. "In the last 12 months we have put four million pounds of plastic on the market. We’ve been able to sell all that we recover."

"The buying habits of Chinese buyers have changed dramatically," says Benge. "They’ve stabilized their buying and have started forging longer-lasting relationships. It was an unfair accusation anyway, in terms of Asian buyers being accused of jumping in and out of the market. What domestic buyer doesn’t do the same thing, in terms of shifting demand to meet production?" asks Benge.

Most recyclers agree that the added demand from export markets has helped brighten the 2002 plastics recycling scene. "It’s a world market. The Chinese saved a lot of us when they came in strong for PET bottles early this year. They are badly needed," says Benge.

Another looming source of change in demand for PET in particular is tied to the announcement by the two major soft drink companies that they will begin to use more post-consumer recycled material in their new bottles.

"It certainly, over time, should change the demand picture," says Luke Schmidt, president of the National Association for PET Container Resources (NAPCOR), Charlotte, N.C.

"I believe it has got to help," agrees Benge, who also notes that Smurfit-Stone does not take a corporate position on the matter. "There is more and more demand overall for PET packaging. If these recycled content changes are adopted, that boosts the market."

The soft drink companies and their container-making suppliers continue to point to concerns about adequate supplies of post-consumer PET bottles. They wonder if collection is great enough to support an expanded role as a material for new bottles.

"In the past two or three years, demand has outstripped supply of post-consumer PET," says Schmidt. "With the two soft drink companies creating additional demand, the competition over time should get even stronger."

The recycling rate for plastic bottles has been stagnant for several years, which may be attributed to several factors.

Until the recent passage of a bottle bill in Hawaii, no new deposit and return laws have been passed in the U.S. in more than a decade. States that place a return value on plastic containers have a much higher recycling rate than those that don’t. Unlike aluminum cans, which in non-deposit states can be collected by peddlers and non-profit associations for their scrap value, pricing for plastic has not made such efforts worthwhile.

Plastic is also the material of choice for single-serve soft drinks. Such 20-ounce bottles of water, pop and juice consumed in cars, on park benches and basketaball courts or at workplaces are more often than not placed in the trash rather than the recycling bin.

But Schmidt is hopeful that targeted expansions of the recycling infrastructure along with renewed recycling promotion can put the plastic container recycling rate back on the growth trail.

Noting there are some 9,400 curbside programs in the U.S. and some 10,000 drop-off sites for PET bottles, Schmidt says infrastructure may not be the main problem. "From our vantage point, the issue is not increasing the infrastructure; the question is how can we get more bottles collected through it? Communities at one time had been very effective at promoting recycling, but now there is little education or promotion of recycling take place, due to tight budgets."

Even in California, which has a deposit and return system in place, additional promotion has become necessary to make sure Californians take their plastic bottles to container recycling and return centers. "We have been trying social marketing—similar to anti-smoking campaigns—to get people to recycle containers they didn’t know were recyclable," says Darryl Young, director of the California Department of Conservation.

Using the slogan, "It’s good for the bottle, it’s good for the can," the state has allowed agencies in different regional markets to tailor their own ad campaigns. "The average citizen knows it’s good for the environment, but to capture their hearts and minds, we found people have an affinity for the beverage container," says Young. "The subtext is that the bottle or can has been good to the consumer, now be good to it."

In a deposit-and-return state such as his, Young says California should set a lofty goal for container recycling. "Ideally, the goal should be 80 percent. To get there, we first need to stop the drop in recycling."

For their part, recyclers are ready to stay in the plastics game. As one West Coast recycler put it, "As an industry, we need to handle this product. It’s growing as a packaging product, so we need to learn how to process it and market it."

The author is editor of Recycling Today.