Wait and see

As a result of market fluctuations, some buyers of recycled plastic resins are taking a “wait-and-see” attitude, a reprocessor based in the Southeast says. “It seems people check off-spec availability and price first more often, then come to us,” she adds.

The reprocessor characterizes demand from the housing and automotive industries as “good,” though she says that is not the case for demand from consumer goods companies.

With U.S. sales of new automobiles poised to reach 17 million vehicles by year end—a level that was last reached in 2001, according to the Wall Street Journal—it’s no surprise that demand for lighter weight plastics would be high from this sector as the industry continues to shed weight from vehicles to meet fuel economy standards.

The housing market also is a source of good news for the U.S., as privately owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of approximately 1.28 million, or 11.8 percent above the revised April rate of 1.14 million and 25.4 percent above the May 2014 estimate of 1.02 million, the U.S. Census Bureau reports.

Manufacturers of vinyl siding also received good news this month in the form of the passage of Senate Bill 25 in North Carolina. The bill, which the legislature ratified the week of June 8, prevents local governments in the state from mandating design features of homes, such as specifying that 50 percent or less of the building can contain vinyl siding.

The reprocessor says industrial scrap generation remains steady relative to May, adding, “Automotive seems very active.”

This seems likely to remain the case throughout the summer, as some automakers have announced that they will forgo or modify their typical summer production shutdowns.
 

According to the Detroit Free Press, FCA US, the automaker formerly known as Chrysler, will continue to operate four of its assembly plants, all of its engine plants and some transmission plants “so the automaker can continue to make as many cars and trucks as possible.”

The Motley Fool reports that Ford will shorten its summer shutdown from two weeks to one week for the majority of its North American assembly plants. “By slashing the closure from two weeks to one week, units produced—among multiple models—should increase by about 40,000,” according to the Motley Fool.

While the auto industry in the U.S. appears to be cruising along to the benefit of plastics recyclers, the trucking industry is presenting roadblocks.

The reprocessor says, “Produce season is making trucking both difficult and expensive in our region.”

While this is a seasonal disruption, the outlook for trucking availability and price may not be brighter in the long term.

According to an article in the Commercial Carrier Journal, which cites Donald Broughton, trucking industry economist and managing director of Nashville, Tennessee-based Avondale Partners, “drivers in the coming years will remain hard to come by, but truckload rates could climb as much as 9 percent for some carriers in the next 18 or so months.”