Summer Meltdown

Secondary plastics markets are having something of a meltdown as temperatures rise.

Much of the softening seen in secondary plastics lies with the continued enforcement of China’s scrap import regulations and quotas, sources say. Operation Green Fence has led to an oversupply of some grades of secondary plastics within the U.S. market, which has forced prices for some materials downward, a reprocessor based in the Great Lakes region says.

He adds that as far as his company knows, only one buyer in the U.S. is purchasing Super Sacks, which China is no longer accepting; therefore, that buyer can set the price for the material.

Not only is Operation Green Fence restricting the type of material that can be shipped into China, the reprocessor says, the country also is enforcing import quotas, affecting the volume of material that is flowing into China.

The reprocessor says he also has heard from two exporters that four of China’s major ports will be restricting the number of containers they process per day to fewer than 25. “That’s not even one container ship,” he adds. “Why would they restrict the amount of scrap material coming into the country if the material is of good quality?”

The reprocessor based in the Great Lakes region adds that he has heard that this situation will continue through September.

While the Institute of Scrap Recycling Industries Inc. (ISRI) reported that China may dismantle its green fence earlier than the month of November, as previously noted, few reprocessors say they believe that will be the case. “I’m not seeing any indication that the Green Fence will be dismantled before November,” the Great Lakes region-based reprocessor says. “Not at all.”

Pricing for export orders to China also has declined in light of delays at the ports, which increase demurrage charges and erode profitability.

Operation Green Fence has made shipping secondary plastics to China so tenuous, the reprocessor says, it has caused reprocessors and material recovery facility (MRF) operators in the U.S. to look for alternative export markets, with only marginal success. “We’ve had limited luck—nothing great—building export markets outside of China,” he says of his company. “It’s one of the ways China is a perfect market,” he continues. “Not only are they a producer, they are a consumer. We can send stuff to Vietnam, but the pricing is going to be low because that material has to be shipped elsewhere ultimately.”

While the reprocessor in the Great Lakes region describes domestic generation as fine, a reprocessor based in the Southeast says shutdowns at manufacturing plants for the Fourth of July have decreased generation in her region.

She describes demand for secondary plastics as “soft,” adding, “We are getting orders, but it is taking some persistence.”

The reprocessor based in the Great Lakes region says the domestic market reflects a typical summer in terms of demand.

He predicts that demand and pricing for polystyrene (PS) will increase and that polypropylene will remain steady. “Ethylene demand is steady, but the price is less than firm,” he adds. “Demand for PET (polyethylene terephthalate) is not great, but you can still sell it overseas.”