RAMPING UP INSPECTIONS
North American plastics recyclers shipping material to China are facing more stringent inspections from CCIC North America Inc. (CCICNA), the entity that inspects shipments headed to that country on behalf of China Certification and Inspection Group Co. (CCIC). As a result, shipments are lingering at U.S. ports, according to sources.
"Plastics inspections have increased," a reprocessor and broker based in the Chicago area says, adding that CCICNA has increased the number of inspectors in the field as well as the number of containers inspected prior to shipment. Plastics have been targeted, he says, because a number of shipments were found to be mischaracterized upon delivery.
A reprocessor based in the Gulf Coast region adds that CCICNA inspectors now have to be in the warehouse at the time of loading in order to issue a certificate for the shipment.
In addition to ramping up plastics inspections, the Chinese government has pulled the reins on lending. "There is concern over whether that will hamper growth," the broker says.
While in the past Chinese buyers typically purchased lower-value plastic scrap, such as floor sweepings and mixed printed trim, they have been buying more engineering grades as of late, such as PC/ABS (polycarbonate/acrylonitrile butadiene styrene) and nylon, according to a number of sources. "They want consistent grades and are willing to pay for them," the Chicago-area broker says. "Demand for engineering grade material is very high in China. They are getting more sophisticated in the products they are looking to manufacture and want more engineering grades as a result."
As of late January, Chinese buyers were still purchasing material, but many recyclers were waiting for the dip in demand that is typically associated with the Chinese New Year, Feb. 14, which marks the beginning of the Year of the Tiger. This factor currently lends a sense of instability to secondary plastics markets.
"We’ve had a steady flow of containers available to us through our exporter despite Chinese New Year approaching," says a reprocessor based in the Southeast.
"For us, export buying has been steady and prices are going up a bit to help offset higher freight costs on containers," the Gulf Coast-based reprocessor says.
While export orders are still coming in, finding room for containers on outbound ships remains problematic, according to sources.
"Ships are pretty well booked," says the Chicago-area broker. He adds that his company has had to negotiate with shipping lines to get containers and bookings. "We had a tough time in early January," he says, "but things have opened up in the last week or so."
Domestically, costs for over-the-road shipments are increasing, largely because of increasing fuel costs. "The price of trucking has steadily gone up in the last couple of months," the Chicago-area broker says.
In terms of domestic demand, he says it’s too early to tell what 2010 will bring, though he says he expects increasing demand for commodity grade materials, particularly PET (polyethylene terephthalate), as a number of facilities ramp up production, including the Wellman Engineering Resins South Carolina plant that came back on line in late 2009 after shutting down in 2006.
"I think a lot of it is wait and see," the broker adds.
The reprocessor based in the Southeast has a more upbeat tone, noting that new molders have set up operations in the region. "Now that markets have stabilized with price and movement, recycling’s importance has increased within business. Also, with the cutbacks companies made last year, more are reusing their own scrap, which we toll process for them."
(Additional news on secondary plastics markets is available at www.RecyclingToday.com.)