Plastics reprocessors report steady progress for many commodity grades of secondary plastics in the first quarter of 2008. Grades such as injection-grade ABS (acrylonitrile butadiene styrene), HIPS (high impact polystyrene) and polypropylene continue to perform well, while PVC (polyvinyl chloride) continues to give many reprocessors problems.
"PVC is always a tough one," a reprocessor based in the Southeast says. While she has had some luck moving PVC at a good price to the Latin American market, she says domestic consumers are not interested in paying much for the material. "It moved for a while and the pricing was good," she says of PVC in 2006. She attributes PVC’s lackluster performance of late to an oversupply of material in the market.
A reprocessor based in the Midwest echoes these sentiments. "Rigid (PVC) has always been challenging," he says, adding that the material is even more difficult to move currently. He also points to an oversupply of flexible PVC on the domestic market, saying a large manufacturer has moved its operations to China, leaving a void in the U.S. market.
Such moves by manufacturers have left the Midwest reprocessor not feeling overly optimistic about secondary plastics markets at the start of the year. "The general trend is that material and jobs are shifting overseas, causing a tightening in the market," he says.
When it comes to the export market, the Midwest reprocessor says, "I am surprised China has sustained pricing as long as it has. It is still a strong buyer."
Of course, containers play a vital role in transporting material to overseas consumers, but suppliers of secondary material say they are finding it more challenging to get containers for overseas shipments.
The reprocessor based in the Southeast says container availability tightened in the few weeks leading up to the Chinese New Year, which began Feb. 7, and remained tight during the following week. She says she has had to wait two to two-and-a-half weeks for containers to be delivered, which is a about a week longer than she is used to waiting.
While container availability has tightened, prices also have increased. The reprocessor based in the Southeast says she’s paying $350 more per container since the beginning of the calendar year.
Despite the increase in transportation costs, the reprocessor says that secondary plastics markets are "right about where they should be," noting that generation has been good.
"I’m surprised that virgin styrene and HIPS are pushing as high as they are," the Midwest reprocessor says. "We are getting pressure from our suppliers to pay more." However, he says, the prices increases have yet to make it to the secondary market.
A potential source of bad news for reprocessors is the problems that Plastech Engineered Products Inc., Dearborn, Mich., is having. The company, which supplies domestic automakers with plastic trim, filed for Chapter 11 Feb. 1 after Chrysler LLC reneged on a deal that would have enabled the company to avoid seeking bankruptcy protection for at least 60 days, according to a report in on CNNMoney.com.
Plastech and Chrysler are in a dispute about production tooling equipment, which Chrysler says it owns, at Plastech’s plants. Chrysler accounts for 15 percent, or $200 million, of Plastech’s annual revenue.
In court documents, Plastech states that if Chrysler is given control of the tooling equipment, it will do "irreparable harm to its operations and restructuring efforts."
Whether Plastech’s misfortunes will harm reprocessors and secondary plastics markets remains to be seen.
(Additional news about plastics recycling markets is available online at www.RecyclingToday.com.)
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