The High Party

Secondary plastics continue to make gains in pricing, according to sources. A reprocessor in the Midwest describes pricing for engineering grades as firm to increasing. He says commodity grade secondary plastics also are rising in price.

“Markets are shooting up,” a reprocessor based in the East says of commodity grade plastics. “Polypropylene (PP) was up 10 cents last week,” he says, referencing the second week of February. “There is more room to run through March.”

The reprocessor based in the East attributes rising prices to consumers’ efforts to build inventories. “A lot of companies skimmed down their inventories at the end of the year.”

He adds, “We are close to capacity for prime material,” citing offline production in the South. This scenario also is helping to drive demand for secondary material.

While the reprocessor claims that PVC (polyvinyl chloride) typically “takes a nosedive in October,” he says that was not the case in 2011. He predicts a strong year ahead for the material.

The Midwest-based reprocessor characterizes domestic and export demand as strong, adding that Chinese officials may still refuse containers of recovered plastics if they appear to contain post-consumer or medical material.

“There was a lot of talk about the export market slipping in the fall and the Chinese economy slowing down,” the reprocessor based in the East says. “We didn’t experience that.” He also claims that his export business was not affected by the Chinese New Year holiday, adding that his company did not see a reduction in the price or volume of material destined for export.

He predicts continued growth in export markets in the next six months. “The big tell that that market is heating up is when we get calls out of the blue looking for material,” the reprocessor based in the East says. “We are seeing that now, and it is a good predictor for the next six months of activity.”

In terms of the domestic market, he says his biggest concern is freight rates. “Trucking companies are doing a good job of managing capacity,” the reprocessor says, “but it is causing freight rates to creep up—maybe a little more than creep.”

Also doing more than creeping up is the rate of nonbottle rigid plastics collected for recycling in 2010. According to a report prepared by Moore Recycling Associates Inc., Sonoma, Calif., a minimum of 826 million pounds of post-consumer nonbottle rigid plastics were recovered in 2010, an increase of 72 percent from 2009 figures.

Of the material recovered, the report notes that 58 percent was procured by U.S. and Canadian consumers, while 42 percent was shipped offshore. Pricing and demand for these materials are said to have been consistent throughout 2010.

The report notes that reclaimers find it difficult to get quality material from mixed bales of nonbottle rigid plastics and cite a lack of clear terminology and reclaimer-generated bale specifications; incentives for material recovery facilities to divert material as inexpensively as possible, combined with their ability to export mixed resin bales of low quality; and a lack of consistent and clear education to consumers about recycling nonbottle rigid plastics.

(Additional information about secondary plastics, including breaking news and consuming industry reports, is available at www.RecyclingToday.com.)