During the past 20 years, the end use markets for scrap tires have continued to evolve. Some of today's more dynamic markets for scrap tires did not exist 10 years ago.
The scrap tire processing industry also has changed dramatically. More than 90 percent of the companies that were in the scrap tires business 20 years ago do not exist today.
A Changing Landscape
Until 1992, the only major market for scrap tires in the United States was as a supplemental industrial fuel, commonly referred to as tire-derived fuel (TDF). In 1991, 24 million scrap passenger tire equivalents (PTEs) were consumed as TDF, which was 11 percent of all the scrap tires generated that year.
In 1992, scrap tires were first used as an aggregate material in civil engineering applications (referred to as tire-derived aggregate or TDA) and as a feedstock for ground rubber markets, which had been supplied solely by retread buffings in the past. Today, these two markets, in addition to TDF, are the three largest markets for scrap tires in the United States.
For the last 20 years, the number of scrap tires generated annually has increased, as has the number of scrap tires going to end markets. The percentages of tire-derived material going to the three most significant consuming markets have continued to change as well.
TDF has always been the largest single end market for scrap tires, but the percentage of tires going into TDF has decreased over time as other markets have expanded. TDA quickly became the second largest market for scrap tires, reaching 50 million PTEs in 1995. Around that same time, the demand for ground rubber and high-quality TDF chips (1-inch nominal size, with most metal removed) began to increase. High-quality TDF, typically a 1-inch nominally sized chip with the majority of metal removed, is used in pulp and paper mill boilers. Coincidentally, almost all of the demand for high-quality TDF chips and ground rubber was in the same geographical areas where TDA was being used.
The marketplace worked. The limited supply of scrap tires went to those end markets that offered a higher return on investment, which caused the usage of TDA to plummet.
|Scrap Tires at a Glance
During the economic slowdown of
2008, demand for TDF declined. Some of the excess supply went into ground rubber products, but the recession
affected this market as well.
Major End Markets
TDF has been the largest single end user market for scrap tires, but the percentage of tires going into TDF
has been decreasing over time as
other markets have expanded.
For the past 18 months, the
volume of scrap tires exported
to Asia has increased to
approximately 6 million PTEs
Supply & Demand Factors
The RMA estimates 83 percent
of the scrap tires generated in 2009 went to an end use market, while almost 96 percent of the scrap tires generated were managed.
Tire-Derived Fuel Markets
Until the 2008-2009 recession, demand for high quality TDF had increased to historic levels, especially in the South Atlantic region (Virginia, Carolinas, Georgia and Florida), where many pulp and paper mills are located. This high demand for high-value TDF, in combination with the demand for ground rubber, plus the tires going to the cement industry, caused dramatic changes in the flow of scrap tires, resulting in a sold-out condition for scrap tires east of the Mississippi River. Scrap tires also were being shipped eastward from several states on the western side of the Mississippi to meet that demand.
When the economy slowed down, so did the overall demand for TDF, as both high-value TDF chips and for use in cement kilns. Some of the excess supply went into ground rubber products, but the recession soon affected this market as well. Several of the older, less efficient cement kilns using TDF were closed, and many others have scaled back their use of TDF to pre-2007 or 2008 levels.
Overall, the volume of scrap tires going to end use markets remains impressive: 83 percent of the scrap tires generated in 2009 went to an end use market, while almost 96 percent of the scrap tires generated were managed. The remaining 4 percent are either in scrap tire processors' inventories or their whereabouts are unknown (the euphemism for being dumped). This is a decrease from the 2007 figures, which showed 87 percent of all scrap tires going to end use markets.
The U.S. Environmental Protection Agency (EPA) recognized the vital role TDF plays in the overall scrap tire marketplace in its final regulation promulgated March 21, 2011. In the regulation, EPA treats scrap tires collected through an "established tire collection system" as non-hazardous secondary materials instead of waste, provided they meet established legitimacy criteria when combusted. The legitimacy criteria include whether the material is handled as a valuable commodity, has meaningful fuel value and has contaminants comparable with those in a traditional fuel that the unit is designed to burn.
Some concerns remain about whether TDF will meet the contaminants criterion when compared with some traditional fuels, such as clean biomass. This rule, along with the companion air regulations governing hazardous air pollutants from industrial boilers, are being litigated currently, so uncertainty remains.
While the long-term future of TDF markets remains unclear, ground rubber markets continue to provide opportunities for the industry, particularly rubber-modified asphalt, playground cover, mulch and infill for synthetic surfaces.
Rubber modified asphalt is a term that is used to describe all the various technologies that incorporate tire rubber in asphalt. Hot mix asphalt (HMA), the oldest use of tire rubber in asphalt, has become a stable, though possibly stagnant, market arena. HMA is used frequently in California, Arizona and Texas. New Jersey and Nebraska use HMA on a smaller scale but regularly. The total amount of HMA used has been relatively stable throughout the years. One of the obstacles faced by HMA is that it does have a higher up-front cost than other modified asphalts. Although the life cycle cost analysis of HMA is highly favorable, the recession has forced states to reduce spending across many areas, including highway and infrastructure projects. These fiscal pressures are not currently favorable to advocacy for life-cycle cost-benefit analysis.
HMA is not the only technology that has the ability to incorporate tire rubber into asphalt binders. Terminal-blended asphalt also uses tire rubber, albeit at a lesser percentage than HMA. Terminal blending uses about one-third of the volume of tire rubber than HMA does but the material is still at a sufficient level that the properties of tire rubber are useful. This modified asphalt still has enhanced elasticity and improved resilience, but with a lower cost than HMA.
Moreover the use of terminal-blended asphalt modified with tire rubber is being used in parts of the county where HMA has not been used. During the last five years, an increasing amount of rubber modified terminal-blended asphalt has been used, providing a relatively new market for ground rubber, one which is expanding at an impressive rate.
Until 2010, the demand for rubber infill was increasing. Given the finite number of sport fields, market saturation and the economy, this market, though strong, is showing signs of slowing down. The same is true for the mulch and playground cover markets, which enjoyed 10 to 15 percent annual sales increases until 2009, when sales decreased 10 to 15 percent. Both markets continue to contract. The mulch market was particularly hard hit because of the decline in sales to the home horticultural market. The loose fill playground cover had been in the nascent stages of penetrating the home playground market, but the economic downturn has halted that progress.
Additionally, a significant portion of the sales of both loose fill playground cover and mulch were dependent on state grant programs, which are funded by fees generated from the sale of tires. When new tire and automobile sales declined steeply in 2008 and 2009, there was a domino effect that resulted in less revenue to state scrap tire funds, meaning less money was available for grants and sales of mulch and playground cover in those states decreased. In several states, the entire scrap tire fund was swept into the general fund, which caused bigger problems than just product sales losses.
Fortunately, tire and vehicle sales are rebounding, and state scrap funds are being replenished. A key lesson is it is risky to rely on state grant programs as a company's main sales strategy. Although the scrap tire industry has lost a number of companies that over-relied on government subsidies, the attraction to this "easy money" continues despite the risk.
The China Syndrome
The most recent change in the industry has been the dramatic increase in the number of scrap tires being exported to Asia, particularly China. For the past 18 months, the volume of scrap tires exported to Asia has increased to approximately 6 million annually. These numbers are not reflected in the table available online at www.Recycling-Today.com/rt1011-dow- sustainability-interview.aspx because the dramatic increase began after RMA finalized its data.
This new market is having remarkable affects in many coastal areas of the U.S. While still localized, the cost to remove scrap tires from some retailers has been reduced, and tire supply is shifting from existing markets to this new market.
This export craze also has several notable downsides. Most concerning is that many of the participants do not have the proper permits to transport or store scrap tires. How much longer this market and its current pricing structure will last is impossible to predict. Of concern is a potential sudden halt to this outlet. States like California and Florida would have an untold number of warehouses filled with abandoned scrap tires.
A Changing Industry
In 1991, more than 500 companies were engaged in the scrap tire industry. Most scrap tire collection companies were small-scale and localized, as were the processors of scrap tires. Considering the limited number of end use markets at that time, scrap tire processors were generally specialized in one market. During the next 10 years, the scrap tire marketplace became more regionalized. Scrap tire collection and processing companies expanded and began to diversify their products offerings.
During the past five years, the marketplace has gone through another dramatic change brought on by mergers and acquisitions. Today, only six companies control some 80 percent of the scrap tires generated in the United States. While most tire processing remains regional, albeit a larger regional sphere, one company's collection and processing facilities take tires from about 60 percent of the nation. What was once a mom-and-pop, back-of-the-envelope business has morphed into a more sophisticated, consumer-oriented industry with relatively larger, but fewer, companies.
Liberty Tire Recycling Highlights Rubber Mulch at Greenbuild 2011
Liberty Tire Recycling, Pittsburgh, used the Greenbuild International Conference and Expo to inform conference attendees about its Pinnacle Rubber Mulch and other products. The event took place Oct. 4-7, 2011, at the Metro Toronto Convention Centre in Toronto.
At Liberty's booth, show attendees were able to learn more about how crumb rubber from recycled tires is being transformed into stadium turf infill and rubber mulch for playgrounds and landscaping.
Pinnacle Rubber Mulch is designed for parks and recreation officials as an alternative to traditional wood mulch that can save money over time. Compared with the expense of annually applying wood mulch, the up-front purchase of rubber mulch can cost up to 65 percent less during a nominal five-year period, according to Liberty. Rubber mulch also is hypoallergenic, non-toxic and harmless to plants, pets and children, the company says. Liberty also says that, as a playground safety surface, a 6-inch layer of Pinnacle Rubber Mulch is designed to cushion a child's fall from as high as 16 feet, providing up to 50 percent more fall-height protection than wood mulch while using half of the material by volume.
Jeffrey Kendall, Liberty Tire Recycling CEO, says, "When used as an additive to a traditional asphalt mix, crumb rubber creates rubberized asphalt. It's a high-performance alternative to traditional paving material because rubberized asphalt resists cracking and rutting, improves skid resistance and makes for a quieter ride. It also lowers road maintenance costs." – Kelley Stoklosa
While scrap tires have several major end markets, they are not evenly spread across the U.S. in part because of the lack of industry in any given region.
High-quality tire-derived fuel (TDF) has a strong market in the Northeast, Southeast and Mid-South regions because of the presence of the pulp and paper industry. In the West, demand for TDF is lower because the cement kilns are widely dispersed and the pulp and paper mills in the Northwest do not use TDF in light of attractive pricing of competitive fuels.
Rubber modified asphalt is widely used in Texas, Arizona and California, more so than in any other region in the country.
Tire mulch is not common in the western U.S., perhaps because of the climate or the available supply of wood mulch from the Northwest. It also could be a function of the type of rubber products produced by the scrap tire processors there. Demand is high for tire mulch in the Southeast, though.
Consequently, no one market can use all the scrap tires generated.
Slides with data on U.S. scrap tire market trends, including tire-derived fuel and ground rubber market statistics
This author is vice president of the Rubber Manufacturers Association (RMA), Washington, D.C. He can be contacted at email@example.com.