United Resource Recovery Corp. (URRC), Spartanburg, S.C., joined forces with Coca-Cola Co. in 2007 to form NURRC LLC, which they described as the world’s largest PET (polyethylene terephthalate) bottle-to-bottle recycling plant. In April, URRC announced that it had laid off nearly 50 workers at the Spartanburg facility, leading many industry observers to speculate about the future of NURRC.
A statement Coca-Cola released following the announcement reads, “As an investor in NURRC, Coca-Cola is working with URRC, the managing partner, to determine the best next steps. While we cannot discuss specifics, we can assure you this will not impact Coca-Cola’s commitment to recovering, recycling and re-using our packaging and to supporting the recycling industry.”
Gerry Fishbeck, vice president of URRC and a board member of NURRC, told the Spartanburg Herald Journal, “We are not closed. Our efforts right now are focused on bringing in new equipment that will improve the performance of our operation. Coca-Cola is still an investor in the business. Our relationship as partners has been excellent in that respect, and we’re grateful for the support we’ve received from them.”
The announcement, however, has industry observers speculating as to the effect it will have on the recovered PET market. A material recovery facility (MRF) operator based in the Midwest says he believes the news will be felt across the domestic market. However, he adds, “It’s not like 2006 when Wellman closed their PET fiber plant. I believe the market is in better position to handle the possible closure a little better this time around, as there are many more processors up and running that weren’t in existence in ’06.”
He continues, “If pricing for PET dips a little, I will not be shocked. But with the increase in fuel costs, it would hurt middle-of-the-road processors like us while helping out manufacturers on their raw material costs. I do think that the current level of pricing is unsustainable, especially with rising transportation costs. We will soon (if we haven’t already) cross the threshold where it is more expensive to use recycled resin than it is to use virgin.”
A reprocessor based in the Gulf Coast region says the announcement did not come as a surprise to him. He says his company had looked at technology the NURRC facility was using and found it to be unsuitable for dirtier material from Mexico. “From what I hear, their plant in Mexico uses similar technology and has never worked well either,” he says.
“Coke is a giant and they will get their volume one way or another,” the reprocessor says.
“I believe that you will hear news soon on some acquisitions in the U.S. and/or Mexico in order to meet their publicly stated PCR (post-consumer resin) usage goals,” he adds.
While the uncertainty regarding the NURRC plant has industry observers speculating, they seem fairly certain that rising fuel prices are a source of concern, as is the sluggish U.S. economic recovery. “Our economic situation has improved, but the last time gas cost $4 per gallon, it brought our economy to its knees,” the MRF operator says.
Rising gas prices have affected overseas shipments, according to sources. The MRF operator notes, “Export has trailed off a bit with the increase in the fuel surcharges by the container lines and the $5,000-per-container import tariff.”
The typical seasonal slowdown in Chinese PET fiber manufacturing also has affected export orders for PET from the U.S. “This has already led to some softening on the export side,” the MRF operator says.
Export buying for engineering grades remains strong, according to the reprocessor, though interest on the part of domestic consumers also is strong. “Prices have been climbing in the U.S. on PEs (polyethylenes) and PPs (polypropylenes), making domestic buyers more attractive than Chinese buyers.”
It’s not always easy to find trucks to make those domestic shipments this time of year. The reprocessor notes that produce season has increased competition for trucks. “They usually pay more per load than scrap movements, so finding trucks is a little slower right now but manageable.”
The MRF operator says 45-foot shipping containers for export orders have been difficult to obtain in Chicago because of the lack of import activity.
(Additional information about secondary plastics is available at www.RecyclingToday.com.)