Generation of post-industrial plastics remains lower than usual in light of reduced manufacturing volumes in North America. A material recovery facility (MRF) operator based in the Midwest notes that post-industrial generation is down by 15 to 20 percent in his region, though he says declines vary by industry sector.
A reprocessor in the Great Lakes region also notes reduced generation. “We are seeing less scrap availability in PP (polypropylene), TPO (thermoplastic olefin) and HDPE (high-density polyethylene),” he says. “We attribute this to the lower volumes being produced from the shrinking economy.”
The relative lack of generation coupled with good demand could be helping to stabilize prices for many secondary plastics, according to sources.
“Markets seem to have rebounded to stable levels on plastic,” says the MRF operator. However, he adds, “The tonnage is not there to capitalize on the market upswing.”
A reprocessor based in the Gulf Coast region speculates that some generators may be stockpiling their manufacturing scrap in anticipation of better prices to come.
While markets for secondary plastics are currently stable, a reprocessor based in the Southeast predicts a difficult six months to come for the secondary plastics industry, brought on by lower economic activity, reduced demand and lower crude oil prices.
Currently, however, pricing is holding steady for many secondary plastics. The Midwestern MRF operator says HDPE and PET (polyethylene terephthalate) prices are at levels that are beneficial for everyone in the chain: generators, processors and end users. “You don’t want the cost of collection and processing to eclipse the market price.”
The MRF operator says PET is selling for 14 to 16 cents per pound, while natural HDPE is selling for 30 cents per pound and colored HDPE is selling for 18.5 cents per pound.
The Midwestern operator characterizes demand for secondary plastics as “fairly strong.” He says, “I am able to move every pound of material I’m producing.”
He continues, “Plastic is not priced off of an index, it is purely supply and demand based. An upturn in pricing means that there is some demand behind it.”
Prices for PP are increasing in light of rising virgin material prices, which have been driven by the increasing cost of the monomer feedstock that goes into that material, the Southeastern reprocessor says. He notes a 3-cent increase on PP scrap pricing from the first of the year through mid-February, nearly one-third less than the 10-cent increase for virgin PP during the same period.
The reprocessor also says the price of PP and PE (polyethylene) pellets and regrind have increased by 3 cents since the start of 2010.
The export market also influences pricing in the domestic market, as consumers near and far compete for needed material. China’s interest in engineering grades is helping to boost prices for these materials domestically, according to sources.
“January is kind of a funky month because no one wants to build inventory,” the reprocesor based in the Gulf Coast region says. “But we had good sales in January.”
She adds that she thinks consumers of secondary plastics are currently in a holding pattern, waiting to see where prices will settle. “People are still being conservative.”
Despite this hesitation, she says demand for secondary plastics remains good. “Everyone is looking to cut costs. Recycled material is a good way to do that.”
The reprocessor based in the Great Lakes region notes that demand for recycled PP, TPO and HDPE is increasing as more companies see the cost savings that these recycled materials provide.
She adds that she is hoping to see an increase in supply and demand in the second quarter.
(Additional information about secondary plastics, including breaking news and consuming industry reports, is available at www.RecyclingToday.com.)