India, China and Mexico continue to demand recovered plastics.
A session at Recycling Today’s Plastics Recycling Conference 2009 examined how export markets have changed since the downturn in the plastics recycling market in the fourth quarter of 2008. Speakers addressed how trade with China, India and Mexico has been affected by the industry downturn.
Mark Matza of the Fortune Group, who served as moderator for the session, began by stressing the importance of knowing the firms with which a recycler is doing business. “Know where your scrap is ending up and who you’re dealing with.” He also reminded session attendees that it sometimes took a long time to get access to some markets.
“Since the market crash in the fall of ’08, the plastic recycling market has tilted towards Asia,” said Kathy Xuan, president and CEO of Parc Corp., Romeoville, Ill. In addition to its Romeoville location, Parc Corp. operates a processing facility in China’s Qingdao City where it compounds and pelletizes plastics. Xuan said more than 300 million pounds of recycled plastics are exported to China, Hong Kong and Taiwan every month. Pricing has dropped from May of 2008 to early June of 2009, with Xuan noting a decline from 24 cents per pound to 17 cents per pound.
While China continues to consume secondary plastics, recyclers in the U.S. could face some obstacles when trying to ship material to China, including a shortage of export containers and the relatively low priority steamship lines give to shipments of secondary plastics; declining volumes of post-industrial scrap generated in North America because of declining manufacturing; and plastic scrap import restrictions at certain Chinese ports.
Sunil Bagaria of GDB International, Edison Park, N.J., warned session attendees that the Indian government was considering imposing an anti-dumping import duty to control plastic imports of all kinds. Exporters of plastic scrap also are more cautious about who they deal with in the importing country in light of events in the fourth quarter of 2008, when some importers in India and China reneged on contracts. “Securing the timely payment of the shipments now consumes considerable energies of the exporter from this country,” he added.
Bagaria also said the recovery in plastic scrap pricing would not be “V” shaped but instead would resemble a “W.” He added, “Exporters experienced a sizable increase in demand and healthy increase in pricing since the beginning of February 2009 ‘till the middle of May 2009. However, since then the prices in overseas markets have dipped by almost 20 percent, even though the crude prices keep rising.”
India traditionally has been a strong buyer of polyethylene scrap in the form of LDPE and LLDPE. “Almost 80 percent of all the plastic scrap that gets exported from U.S.A. to India consists of this grade,” Bagaria said. The remaining 20 percent of Indian plastics imports consisted of PP (polypropylene), PS (polystyrene), PET (polyethylene terephthalate) and some other engineering grades. “This is in stark difference to China, where LDPE grades may consist of only 20 percent of the volume that gets exported from U.S.A.,” he noted in his presentation.
Bagaria also noted that India cannot import “washing grades” of LDPE scrap, or greenhouse film, agriculture film, hospital linen film, dirty grocery bags, etc., because of the environmental concerns expressed by the Indian Environmental Ministry. “However, as always, rules are always flouted, and some containers do end up in India of these grades,” he added.
Additionally, plastics imports are restricted to special economic zones or export processing zones, industrial parks created by Indian government to boost exports from India, Bagaria said. “Unlike imports of other types of scrap, plastic scrap is closely watched and controlled by the Commerce Ministry,” he added.
Matza also warned of some difficulties associated with exporting plastics to Mexico. He said that it could be difficult to get companies to do COD orders in Mexico because there are a variety of exporters they can work with these days.
Matza also suggested that recyclers “beware the broker,” whose only qualification at times can be that he or she speaks the language. Instead, he suggested dealing with direct connections. “The best is to take time to go and visit and see how it’s done,” Matza said.
Recycling Today’s Paper, Plastics and Electronics Recycling Conferences were June 7-9 at the Hyatt Regency in downtown Atlanta. Information on the 2010 conferences will be available at www.RecyclingTodayEvents.com.