Picking up the pace

Departments - Plastics

Domestic plastic scrap generation remains healthy.

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April 10, 2018

While China’s actions related to its scrap import policies and their effect on plastics recycling markets have been dominating the news recently, manufacturers continue to generate plastic scrap here in the U.S.

“Scrap rates are higher with robust business activities,” a source based in the Midwest who works for a global company that processes postindustrial scrap says in late March. However, he adds, “Companies are always looking to improve performance and reduce scrap.”

Reclaimers are only interested in the most desirable grades of plastic scrap that are being generated and find themselves competing for this material, the source in the Midwest adds.

A reprocessor based in the Southeast says generation from the automotive sector has slowed somewhat as production schedules have been scaled back. However, scrap generation from the consumer goods sector appears to be increasing, she says.

*Producer price index is based on December 1980 average prices as 100; source: U.S. Bureau of Labor Statistics

She has noticed reduced availability of postindustrial low-density polyethylene (LDPE) scrap, which she says is growing scarcer because of consolidation in the packing industry and vertical integration of companies that had previously collected and brokered this material.

Strong demand for scrap material only applies to high-end material, with the source in the Midwest saying, “Low-end materials once exported are clogging U.S. markets until capacity catches up.”

Both sources describe domestic demand for recycled plastics as strong. The source in the Southeast says demand for polypropylene (PP) has been steady, while polyethylene (PE) demand has been “spotty.” She adds, “I assume that when PE showed signs of increases [in price], companies bought ahead, which has decreased their demand for [March].” She is referring to increases in price for virgin PE that producers wanted to implement for their February contracts.

“I assume that when PE showed signs of increases [in price], companies bought ahead, which has decreased their demand for [March].” – a reprocessor based in the Southeast

Demand for PP has been so strong that supply has been unable to keep up in some instances, the source in the Midwest says. He adds that recycled polycarbonate (PC) and acrylonitrile butadiene styrene (ABS) also have been enjoying strong demand.

The reprocessor in the Southeast says the onset of spring has led to increased demand for high-density polyethylene (HDPE) fractional-melt material from the construction and agricultural industries.

While the ramp up of the agricultural sector is good for stimulating recycled HDPE demand, it could further stress trucking availability and increase already high rates.

“Trucking has been bad enough with the new logging regulations,” the source in the Southeast says, referring to government requirements to electronically log drivers’ hours. “Pretty soon we will also have to deal with produce season. Prices are jacked up and, on top of that, carriers are very unreliable. Delayed shipments inbound and outbound have required some nimbleness on our part.”

While the growing season has yet to start in the Midwest, the reprocessor there describes trucking as “the wild west” right now. “Rates are up 30 percent, and some lanes are underserved with delays.”