After weakening at the start of the year, the market for polypropylene (PP) scrap has “turned around and gotten tight,” says Scott Saunders, general manager of KW Plastics, Troy, Alabama.
KW Plastics reprocesses high-density polyethylene (HDPE) and PP. The company began operating a new wash line for PP late last year that increased its processing capacity by 100 million pounds per year. Saunders says that line already is running at capacity, so KW has plans to install another wash line that should be up and running in January of next year.
“We’re running at 98 percent capacity,” he says as of mid-April. That’s after adding an extruder earlier this year. Before that addition, Saunders says KW was running at “102 percent capacity.”
Rather than making substantial gains in capacity with the new equipment, he says it instead is allowing the company to bring some of its other equipment down for maintenance as it’s been running full-bore for the last two years.
“We had a little depression there for a while, but now we are shipping at COVID-level volumes.” – Scott Saunders of KW Plastics
Saunders attributes the softening in PP markets in late 2021 and the start of 2022 to pandemic-related manufacturing slowdowns and a buildup of inventories. Since then, prices have increased as has demand for PP and for mixed-color and natural HDPE, Saunders says.
While bale prices have come off the highs they reached earlier in the pandemic, PP and HDPE scrap pricing is still high in historical terms, Saunders says. Bales of PP tubs and lids are trading for nearly 40 cents per pound, down from 60 cents as of April of last year.
When pricing for natural HDPE bales rose to near $1.20 per pound last year, he says a few brand owners pulled back on their commitments. However, others were “waiting on the sidelines and stepped in.”
Saunders continues, “We had a little depression there for a while, but now we are shipping at COVID-level volumes.”
He says he hopes the situation doesn’t overheat, adding, “We expect to see good, firm pricing through the end of the year unless something dramatically changes.”
Regarding postindustrial scrap, Scott Melton, president of ACI Plastics, headquartered in Flint, Michigan, says, “Automotive scrap generation is still slower than normal due to the chip shortage and reduced production. The medical scrap generation is continuing at the same pace as 2021.”
He continues, “We see signs of a slight uptick in automotive demand for recycled material, but it is still much slower than normal.”
Melton says ACI’s recycled pellets are “essentially sold out,” adding, “Our core group of customers have been very good about taking materials as soon as they are available and at prevailing market prices.” Black and natural PP are seeing especially strong demand.