November 16, 2009
DeAnne Toto

HDPE Picks Up

Demand appears to be picking up for post-consumer HDPE (high-density polyethylene), which is helping drive up the price for this material. However, some sources say they are uncertain whether the increase is based on new demand or if it is the result of consumers looking for alternate suppliers because their previous suppliers have closed as a result of the market downturn and the general state of the economy.

“HDPE is really starting to heat up again,” says a recycler based in the Midwest. In the first two weeks of October, he says, the price for a mixed-color bale of HDPE increased from 13.5 cents per pound to as much as 19 cents per pound on the spot market.

“I don’t understand this sudden demand,” the recycler says, adding that HDPE demand tends to be seasonal and typically declines this time of year.

A reprocessor based in North Carolina points to a shortage of post-consumer HDPE material. “There was plenty of it up until the first of October,” he says. “It’s really scarce now.”

While secondary HDPE is increasing in price, the same does not appear to be true for virgin material, sources say, which is unusual, as demand and pricing for virgin and recycled material have a direct relationship.

A reprocessor and broker based in the Great Lakes region says he expects a surge in scrap generation as the year comes to a close and companies look to move aged inventory.

Consumers of secondary plastics have been more selective in terms of material quality since the market downturn in the fall of 2008, the reprocessor based in North Carolina says. “Buyers are a lot pickier. You have to have a good product and good quality control.”

The Great Lakes-based reprocessor says export demand has helped engineering grade resins. “Engineering grade materials are still in high demand due to the near double-digit growth of the Chinese plastics industry this year and is expected to continue through the fourth quarter, mostly driven by ‘stimulus’ money for [the] automobile industry and housing,” he says.

However, some Chinese holidays in October negatively affected overseas demand. “Since the Chinese National Day holiday at the beginning of October, demand for recycled materials is down,” the Great Lakes-based recycler says. “Prices for recycled materials have come down along with demand, despite higher prices for virgin materials mostly due to higher oil prices and manufacturing organizations restocking after the Chinese National Holiday.”
Recyclers who export material say containers remain in tight supply as a result of the number of vessels and containers taken out of service as well as the number of containers tied up in ports in China and India awaiting inspection.

“All plastic scrap in containers entering into China mainland have to go through an X-ray-type inspection, which has slowed materials into the ports,” the Great Lakes-based reprocessor notes. This also led to unexpected detention charges for some companies.  

Recyclers shipping material domestically via truck report few problems. “The trucking business as a whole is pretty hungry right now,” the North Carolina-based reprocessor says. “We feel like we get all the trucks we want, and the rates are reasonable.”

While Chinese demand remains relatively healthy, recyclers express concern that it could slow. “If China shuts down, there is not enough domestic demand to absorb the amount of material being produced,” the recycler based in the Midwest says. He says he fears this could push down pricing, particularly if recycling rates increase.
Sources remain optimistic about markets for recovered plastics going into 2010, however, the North Carolina-based reprocessor says the improvement will be gradual. “The things I’m afraid of are ridiculous oil prices and inflation. If they can keep those things in check, I think it will be a good year.”

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