Maintaining strength

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As the summer fades into fall, secondary plastics continue to enjoy healthy generation and demand, both from domestic markets and abroad, according to industry sources.

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September 3, 2014

As the summer fades into fall, secondary plastics continue to enjoy healthy generation and demand, both from domestic markets and abroad, according to industry sources.

“Normally, plastic pricing drops in June, July and early August, but not this year,” a material recovery facility (MRF) operator serving the Midwest says.

He characterizes demand from domestic sources as “very strong,” especially for rigid and bottle PE (polyethylene) and PP (polypropylene) and for LDPE (low-density polyethylene).

“Virgin PE and PP are in strong demand, and pricing has been following, which has rippled into secondary plastics,” he continues. “There are three large manufacturers of virgin PE and PP that have had plant issues, reducing [the] supply of virgin,” he says, referring to unplanned outages at plants operated by Dow Chemical Co., LyondellBasell Industries and Chevron Phillips Chemical Co.

According to Platts Global Petrochemical Index (PGPI) for July, ethylene prices hit 27-month highs, which contributed to the escalation in virgin PE pricing. The average price of virgin PE globally was $1,711 per metric tons in July, an increase of 3 percent from June, according to PGPI.

Propylene prices also increased in July, increasing virgin PP pricing by 2 percent to $1,658 per metric ton, PGPI reports.
 


A reprocessor headquartered on the West Coast with operations throughout the U.S. adds that tight supplies have led to price increases in PE and PS (polystyrene.)

While engineering grades also appear to be trading well, according to the MRF operator, PET (polyethylene terephthalate) is showing weakness. He notes that an oversupply of material is a contributing factor.

Export markets appear to be holding their own, with the MRF operator noting that he has had no problem moving mixed grades overseas. “Vietnam, Indonesia and Malaysia are taking a lot of the mixed grades for sorting,” he says, adding, “China is still the big buyer for clean, homogeneous materials.”

Transporting material to consumers remains an issue. “OTR (over-the-road) prices are increasing and availability is tight,” he says.

The reprocessor based on the West Coast says shipping costs are becoming “unsustainable.” He claims trucks are charging $2 to $2.50 per mile.