A SLOWER PACE
The holiday season usually signals a slowdown in manufacturing, which means fewer orders for recovered plastics as well as less material coming into recyclers’ and reprocessors’ facilities.
Even with this factor at play, one reprocessor based in the Great Lakes region says he witnessed more scrap generated in the second half of 2009 than in the first half. “Production is up for most of our customers, with the exception of housing and some consumer products,” he says. “Most of our customer base is running hard up to Christmas, taking a week or so off and then going back full bore in January.”
He continues, “The economy is trickling back into existence and many of the industries are making up now for lost production requirements earlier in the year.”
A broker based in Eastern Canada says generation of post-consumer material is down more so than usual for this time of the year, largely because of the recession. He adds that generation has declined by one-third compared with previous years.
“Considering the economy, I’m not really complaining,” he says.
Demand and pricing for ethylenes remain strong, he says. However, when it comes to some plastics, demand is being driven by domestic consumption. The broker says Chinese buyers may stock up on material in January before the Chinese New Year, creating a blip in export demand for some secondary plastics. “They are still buying PET (polyethylene terephthalate),” he says of Chinese consumers. “It’s the lower grades, like grocery bags, that slowed up quite a bit. Export duties might be affecting that; if they are going to pay high duties, they might as well buy the good stuff,” he adds.
The reprocessor based in the Great Lakes says export to China remains slow for his company, as well. “They are taking some materials but are not taking as broad of a scrap stream as they were a year ago.”
He notes that, generally, demand for PP (polypropylene) and HDPE (high-density polyethylene) has been increasing steadily over the second half of 2009. “I don’t see the demand shrinking through Q1 2010,” the reprocessor adds. “I attribute the demand and price increase to the limited production of the virgin manufacturers and the switch over the past two years to more PP and HDPE recycled use.”
Secondary plastics are being transported at better rates over the road in North America, according to sources. The broker based in Eastern Canada notes that truck rates have been going down, as fewer goods have been shipped in the last year. “They are looking to maintain their [business volume] and will negotiate great deals, particularly on long-haul jobs,” he says of trucking companies.
(Additional news on secondary plastics markets is available online at www.RecyclingToday.com.)