Moving at a slower pace

Industrial generation of plastic scrap has slowed as we enter the new year. A reproccessor serving the Midwest, Northeast and export markets says the decline, which he attributes to the holidays, is not affecting the food packaging sector.

In general, however, interest in plastics recycling is growing, says the owner of a firm that provides brokerage services, waste audits and recycling programs for municipal and corporate customers in the South and mid-South. “More communities are moving toward progressive service and are accepting Nos. 1-7 [plastics]. We are seeing communities embrace their services through a steady increase in participation rates.”

She continues, “Buy-in is taking hold from our corporate partners as well. We are seeing streamlined, productive recycling in-house with participation rates high.”

Lack of movement could potentially “throw a wrench into the system,” the broker continues. “If material starts to back up on production floors, it could create an issue. To date, we haven’t dealt with that.”

Declining prime and recycled resin prices arising from the drop in petroleum pricing means that while demand is OK, “processors are only committing to what they need in the very near term,” the reprocessor serving the Midwest, Northeast and export markets says.

“Polyethylene (PE) continues its downward spiral and this has caused a drop in demand,” he adds. “On the polypropylene (PP) side, though, demand is still brisk and pricing [is] not as soft. Rigid PVC (polyvinyl chloride) is picking up from its late fall drop-off.”

The broker based in the South says, “The demand is as good as ever for the plastics we market. That really hasn’t changed.” She adds, “The value is definitely affected though. The drops in petroleum prices have created a domino effect on virgin resin price and the secondary market. The hope is things will settle out and our programs can steady themselves financially to weather the current market climate out there.”

Along with price, export demand appears to have softened. The reprocessor says, “China is slow due to general economic malaise and the coming Chinese New Year,” which is Feb. 19.

He adds that the strength of the U.S. dollar is creating a higher effective cost for overseas consumers as well.

The congestion at ports on the West Coast arising from a work slowdown also is working against export shipments. (Longshore workers there have been without a contract since the end of 2014, and negotiations are still underway.) “Port issues on the West Coast have affected our ability to export from Long Beach in a timely manner,” the reprocessor says.

A material recovery facility operator based in the Midwest also mentions the affect of the work slowdown on the West Coast. “West Coast port congestion and potential fees associated with this are putting a damper on export.”

He adds, “Labor contract negotiations are occurring. If successfully resolved, congestion may miraculously go away.”

While declining petroleum prices generally do not bode well for secondary plastics, it does spell good news for transporting these materials to domestic and overseas customers. “Fuel surcharges are noticeably lower,” the reprocessor says.