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Plastic scrap markets remain lofty

A number of postconsumer plastics are enjoying robust demand, which is helping to keep prices trending upward.

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September 17, 2021

A number of postconsumer plastics are enjoying robust demand, which is helping to keep prices trending upward. High-density polyethylene (HDPE) and polypropylene (PP) bales and repro, particularly, have benefited from tightness in virgin supply.

There have been record-high prices for natural and mixed-color HDPE bales this year. However, the tightness in the virgin market likely will be alleviated starting in the first quarter of next year. One reprocessor also says he has seen brand owners start to push back on rising prices for recycled material.

Joel Morales, executive director of Polyolefins Americas at IHS Markit, who is based in Houston, says that since the winter storms in February of this year, planned and unplanned outages have continued to keep virgin HDPE supply tight, particularly for blow molding grades. Morales says more planned outages are coming in the fourth quarter.

However, new virgin HDPE capacity targeting the blow molding sector will come online in the next year that should improve the supply of this material and bring down pricing as well, he says. Morales mentions LyondellBasell’s La Porte, Texas, expansion, which started up in early 2020 but still is in the process of optimizing blow molding production. That plant should be able to support the market in 2022 with its 1.1 billion-pound-per-year capacity expansion. The Shell Pennsylvania Petrochemicals Complex in Monaca, Pennsylvania, also is due to come online in mid-2022, producing 1 million metric tons of HDPE resins with an emphasis on blow molding applications.

Scott Saunders, general manager of KW Plastics, Troy, Alabama, an HDPE and PP reprocessor, says HDPE pricing was showing signs of weakness prior to Hurricane Ida, which made landfall in late August, as more wide-spec virgin HDPE became available. He says the availability of that material was “threatening to bring down the price of mixed color” bales.

“Domestic demand is spectacular for traditional grades and developing for nontraditional. If it is a polyolefin, markets can be found. Even some mixed material grades are seeing some investigation due to their low pricing compared to more traditional materials. Demand is being driven by more and more companies wanting to show they have postconsumer content in their products.” -- a material recovery facility operator based in the Midwest

Saunders adds, “That seems to have dried up a little bit or at least been postponed into October.”

Despite that reprieve, he says, “We do see that high density has hit a top and should start coming down, which will affect the colored market. We don’t know yet how that will affect the natural market.”

Saunders continues, “We are hearing some comments from brand owners unhappy with the price premium on PCR (postconsumer recycled) versus virgin material as they have been getting cost pressures from all their other chemical and commodities suppliers.”

Availability of PP scrap is increasing, he says, and bale pricing has contracted a bit in response, but virgin supplies of this material still seem to be tight.

A contact with a reprocessor of postindustrial scrap that is based in the Southeast says, “Although we’ve seen a steady stream [of scrap], with a few shutdowns in the automotive industry due to lack of components, labor issues, etc., I would expect a slight decrease of incoming material through September with a bounce-back in October.”

She adds that demand has been strong for her company’s recycled PP, HDPE, polyvinyl chloride, acrylonitrile butadiene styrene (ABS) and polycarbonate/ABS grades. “The demand for consumer goods as well as expansion of recycled-content commitments have remained high and strong all year. Every end-use customer we have can use more than we produce.”

The reprocessor adds that demand is at least 15 percent to 20 percent higher than her company’s production capabilities allow.

“The trend for 2021 is upward,” she says. “I think the corporations who have made commitments to use a percentage of recycled [content] by 2025 are getting their processes and feedstock in place for that. I think that pricing and demand will both remain strong through 2021.”

A contact with a material recovery facility in the Midwest that handles postconsumer and postindustrial material says that in addition to high natural and mixed-color HDPE bale prices, pricing for bales of expanded polystyrene, polyethylene terephthalate, low-density polyethylene, polycarbonate and ABS also is strong.

“Domestic demand is spectacular for traditional grades and developing for nontraditional,” he says. “If it is a polyolefin, markets can be found. Even some mixed material grades are seeing some investigation due to their low pricing compared to more traditional materials. Demand is being driven by more and more companies wanting to show they have postconsumer content in their products.”