PET Pricing Plunges

U.S. recyclers continue to be affected by a slowdown in orders from China that began late this summer, when China's government began to enforce a new regulation directed at solid waste imports at its Guangzhou port, which also is affecting mixed loads of recyclables.

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

The new regulations, which were announced by the The Department of Environmental Protection, Ministry of Commerce, National Development and Reform Commission, General Administration of Customs and the State Administration of Quality Supervision, are known as the "Import Regulations for Solid Waste." The regulations apply to import shipments, pre-shipping inspections, acceptance of these materials into China, in-port inspection, customs supervision, import permits and the supervision of companies using the material.

"Export is getting very sloppy right now, especially in China," a material recovery facility (MRF) operator based in the Midwest says. "[It] seems like the PET (polyethylene terephthalate) market there has basically crashed. This has put many more tons back on the domestic market, and prices have come down by as much as 40 percent since Nov. 1."

In addition, this MRF operator is having difficulty securing containers in his region. "Container availability is still very tight at the Chicago rail yard," he says.

While the situation with Chinese imports is dragging down the price of recycled PET, demand remains strong in the U.S., the MRF operator says.

The outlook for secondary HDPE (high-density polyethylene), which largely remains in the domestic market, is much brighter. "HDPE is still strong and should remain that way throughout 2012, the MRF operator says.

The U.S. is feeling the effects of China's import restrictions most directly, as the country is the largest supplier of plastic scrap to China, according to Wade Schuetzeberg, executive marketing director of America Chung Nam (ACN), Los Angeles, who addressed attendees of the 2011 Paper Recycling Conference, held Oct. 23-25 in Chicago. He said the U.S. represents 24 percent of the world's recovered plastics shipments to China. Japan is the second largest exporter of plastics to China at 19 percent, followed by Germany at 15 percent, the United Kingdom at 9 percent and Belgium at 4 percent.

Quality remains a concern for recovered plastics imports to China. Schuetzeberg said ACN works with its suppliers to establish an inspection and education process that allows the company to not only meet AQSIQ (General Administration of Quality Supervision, Inspection and Quarantine) standards in China but to be competitive in the marketplace.

Schuetzeberg emphasized the continued growth in demand for plastic scrap in China. In 2004, he said, China imported 5.5 billion pounds of plastic. By 2008, the amount of scrap plastic China imported increased to 9.7 billion pounds. In 2009, an estimated 45 percent of the recovered plastics consumed in China were imported, Schuetzeberg said.

Chinese import duties had risen by as much as 40 percent compared with this summer, he added.

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