Seasonal slowdown

It’s not uncommon to see a reduction in plastic scrap generation as winter weather begins to settle throughout much of the United States. A material recovery facility (MRF) operator in the Midwest says he has seen reductions in generation from polyethylene terephthalate (PET) bottle producers as well from polyethylene (PE) pipe and fencing producers. He attributes the seasonal reductions to the cold weather.

Demand also tends to soften as the year draws to a close, and 2016 has been true to form in that regard as well, the MRF operator says. “Demand for PE and PP (polypropylene) grades are off, but this is typical for December,” he says. However, he adds that PET demand hasn’t suffered from the same decline, adding that that is likely because of reduced generation.

A broker based on the East Coast characterizes PET demand and pricing as being somewhat flat relative to November, adding that export market demand for this material has “dried up almost entirely for us.” He attributes this to the strong U.S. dollar relative to other world currencies.

In the domestic market, he says pricing for PET delivered on the East Coast is averaging 12 cents per pound as of late December.

Natural high-density polyethylene (HDPE) saw a slight increase in pricing in December, the broker says, averaging 28 to 29 cents per pound delivered on the East Coast.

Pricing for colored HDPE is not fairing well, however, with the broker saying it has “collapsed.” He adds, “I hope it has hit the bottom.”

The MRF operator says he also is seeing declines in pricing for HDPE material. “Almost all PE or PP grades are seeing price declines since demand is off due to cooler temps,” he says. “For example, color HDPE bottles are used extensively in making extruded pipe for water distribution and sewer lines. However, cooler weather decreases the amount of pipe that goes into the ground, so pipe making demand is slower.”

Regarding shipping material to domestic buyers, the MRF operator says trucking capacity in the Midwest is currently tight. “Cost increases should follow,” he adds.

While the broker says the end of year slowdown is not surprising, as many operations wind down for the holidays and put off purchasing material until the start of the new year, he adds that this year is somewhat unusual in that there is no export market to back up the domestic market.

Regarding export demand, while the MRF operator describes low-density polyethylene (LDPE) demand from China as “OK,” he expresses concerns related to the presidency of Donald Trump and the impact it could have on exports. “The Trump presidency could have a dramatic effect on our ability to export if trade wars are started with Mexico and China,” he says.