Drifting Downward

Pricing for recycled plastics remains somewhat soft as of the start of the fourth quarter, despite steady to fair demand, sources say.

“Not only is the scrap price down but so is the wide-spec [price], which tells me that major producers are also carrying too much,” a reprocessor based in the Great Lakes region says of commodity-grade resins. He adds that prices for commodity-grade material have declined more steeply than those for engineering-grade plastics.

A material recovery facility (MRF) operator in the Midwest describes domestic demand for PET (polyethylene terephthalate) bottles as good, though he adds that pricing is off slightly because of a decline in demand for rPET (recycled PET).

The MRF operator points out that domestic rPET capacity exceeds the amount of containers available for processing. “This could mean a robust demand increase with pricing [also increasing] in the future.”

David Bender, CEO of Perpetual Recycling, an rPET producer based in Richmond, Ind., addressed the PET recovery rate at the 2012 Paper Recycling Conference & Trade Show in mid-October. To increase the amount of PET recovered for recycling, Bender said thermoform collection must be encouraged by curbside recycling programs. He added that recycled rPET capacity will exceed supply by early 2013, making the collection of thermoforms and the import of material from Latin America more important for U.S. rPET producers.

Bale quality continues to be a concern among rPET producers. Bender said 10 to 15 percent of a typical bale produced from curbside collection is garbage.

In additon to PET, high-density polyethylene (HDPE) is experiencing downward pressure on pricing. “HDPE grades are trying to drift lower, but there are still good pockets of demand,” the MRF operator says. “As the end of the year draws closer, HDPE should drop off and then perk up again in February. At least this has been the historical trend.”

Regarding the generation of manufacturing scrap, the reprocessor in the Great Lakes Region says, “We are in the final push of the year. With the start of the fourth quarter, manufacturing will continue to generate a steady flow of material.”

He continues, “At the same time, because companies want to reduce inventory, we anticipate an increase in some sectors. This does not necessarily indicate an increase in manufacturing as they are just dumping old stock.”

The MRF operator also says he’s seen an increase in manufacturing scrap generation. “More commercial plastics are available due to summer doldrums having been excited.”

PET generation from residential sources has declined, however, in light of seasonal factors, he adds.

Recyclers are expressing concern about overseas orders, including the crackdown by Chinese customs agents on material deemed to be trash, which in some cases are mixed loads of recyclables. The reprocessor says buyers for consumers in the country are being more selective, which is pulling prices for many recycled plastics lower.

The MRF operator, however, has seen fairly steady buying on the part of Chinese interests. “Typically this will trend lower as we get closer to the end of the year,” he adds.

Also of concern is the potential strike of the International Longshoremen’s Association (ILA) at 14 ports on the East and Gulf coasts. The ILA and the group representing their employers, the U.S. Maritime Alliance, have reached an agreement to extend the current contract through Dec. 29. A possible strike after that date could have a profound effect on exports, the MRF operator says. According to the Maritime Alliance website, the ports covered under the contract handle “95 percent of containerized shipments from Maine to Texas.”

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

Index is based on December 1980 average prices as 100; Source: U.S. Bureau of Labor Statistics