Market dynamics

Despite the current softness in most recycled plastics markets, speakers during the session “Market Outlook: Plastics” at the 2015 Paper & Plastics Recycling Conference, hosted by the Recycling Today Media Group in Chicago Oct. 14-16, were positive about the industry’s future.

Moderator Kim Holmes of SPI: The Plastics Industry Trade Association, Washington, said, “It’s a dynamic time for plastics right now,” referring to the effect of crude oil and natural gas pricing on that of virgin plastics.

Xavier Cronin of PetroChem Wire, Austin, Texas, said PET (polyethylene terephthalate) offered the most extreme example of this situation, with recycled PET pellets selling for 10 cents more per pound than their virgin counterparts.

He predicted lower plastic scrap prices across the board in response to lower crude oil prices during the fourth quarter of 2015.

Robert Render of Ravago Recycling Group, a division of Belgium-based plastics distributor Ravago, also pointed to the connection between crude oil and plastics prices, noting that polypropylene (PP) declined 30 cents per pound from September 2014 to September 2015, when oil prices reached $45 per barrel.

He said new prime PP and PE resin capacity would be coming online in 2016 and 2017, keeping prices for these resins soft and further squeezing recycling operations.

Despite these trends, Render said recycling is moving forward as demand for recycled content grows among brand owners. He said building and construction markets have strengthened and are increasingly demanding recycled content. Demand for recycled content also is increasing in the automotive and appliance sectors as well as from consumer products companies.

Technology also has led to beneficial changes in the plastics recycling industry, with continuous melt filtration being “one of the most innovative technologies,” Render said. The technology allows reprocessors to be more flexible because it can handle some paper contamination, he added.

To be successful, Render advised focusing on quality. “Consumers have many choices—be the one that delivers quality materials consistently.”

He added, “The hardest part is being selective in what you buy. You must have honest conversations with your suppliers.”

Regarding PET, Lori Carson of Phoenix Technologies, Bowling Green, Ohio, said, “Market economics are the big elephant in the room,” citing the diversity of packaging available today, overcapacity issues and the low yield from curbside bales that affects volume and cost.

In response to these factors, she said Phoenix was establishing longer-term contracts with suppliers, providing feedback to improve bale quality and engaging in value-based purchasing. Phoenix also has added equipment to produce its own PET flake, improving the quality and economics of its infeed material.

Prior to this backward integration, Carson said, “We spent a lot of time blending material from different suppliers to get uniform quality.”

Despite these challenges, she was optimistic about the future of PET recycling, saying applications and demand for recycled PET would grow and advances in processing would improve the quality and volume of material collected for recycling.