The price of oil may influence how plastic scrap is valued, but public opinion and corporate directives are helping ensure plastic scrap enters the recycling chain, according to presenters at the Institute of Scrap Recycling Industries (ISRI) 2016 Convention & Exposition.
Mark Eramo, a vice president with Houston-based IHS Chemical, said the process chain from energy exploration through chemicals production into plastic commodities and end products involves numerous variables that affect the supply, demand and price of virgin plastics.
Eramo listed more than a half-dozen key variables affecting this chain in 2016, including the price of crude oil, the health of China’s economy, the lifting of sanctions in Iran and the sustainability movement.
Regarding where plastics manufacturers and users rate sustainability as a priority, Eramo said, “I would rate it extremely high.” He said for global petrochemicals producers like Dow Chemical Co., ExxonMobil and BASF, “it is a major issue that the industry has to deal with.”
In conversations with executives at these firms, Eramo said, they have an understanding that “it really is up to the industry to come up with solutions that are meaningful,” or, if not, “policy makers will.”
Considering all the variables together, Eramo says IHS sees crude oil and virgin plastics prices bottoming out in the first half of 2016 before rebounding slowly in the second half of 2016 and into 2017. It could be 2021, however, before oil returns to a sustained $80 per barrel level. “It’s going to be a while before you see $1,600 to $1,800 [per metric ton for virgin plastics] in these markets again,” he remarked.
Recycled plastics markets add another layer of variables, according to Patty Moore and Nina Bellucci Butler of Moore Recycling Associates Inc., Sonoma, California. Moore commented that in 2015 and 2016 pricing for plastic scrap has been “rather bleak,” but added, “I do believe better times are coming.”
Moore noted that recycled-content polyethylene terephthalate (rPET) has at times been selling at higher prices than virgin PET, a situation that she said “makes me nervous” because it could cause users to pull back on purchases. But, pertinent to Eramo’s comments about sustainability, she says the situation has “been going on for a few years.”
Among the problems in the United States rPET market is “pretty serious reclamation overcapacity,” said Moore. “We could easily absorb all the PET bottles generated in the U.S.,” she added.
The nonbottle rigid plastics market has benefited from increased collection volumes but suffers from uneven processing quality and unclear collection instructions, said Moore. She said household recycling program participants remained confused about which plastics to recycle and which to dispose of and urged session attendees to spread the word about education efforts such as the one at www.recycleyourplastics.org.
Moore also said pricing in the mixed rigids grade remains tied to the spot market, which is “not what bankers want to see” when reclaimers try to get financing. She urged recyclers to increase their use of contract pricing.
Bellucci Butler said plastic film recycling in the U.S. has been aided by the growth of composite lumber companies such as Trex and AERT, which themselves benefitted from seed money provided by ExxonMobil and Dow Chemical Co., respectively.
The end markets have helped film recyclers establish a U.S. collection infrastructure with more than 18,000 locations, Bellucci Butler said, and greater “overall acceptance” for film as a recyclable product.
Both pricing and environmental issues affect the film recycling market, with some environmentalists having targeted the plastic film shopping bag as an item they would rather see restricted or banned. Regarding the ability of the plastics industry to stave off more shopping bag bans, Bellucci Butler said, “I think they can turn it around, but don’t take it for granted.”
She remarked that shoppers willing to give plastic bags a second chance as recyclable may include many of the same people who have already switched to reusable cloth shopping bags.
The ISRI 2016 Convention & Exposition was April 2-7 at the Mandalay Bay Convention Center in Las Vegas.