Heating Up and Cooling Down

HEATING UP AND COOLING DOWN

Sources on both the West Coast and the Gulf Coast say domestic and overseas buyers are competing to secure PET (polyethylene terephthalate), skewing market fundamentals.

A MRF (material recovery facility) operator based on the West Coast says prices for PET have him confused. “They are stronger than the fundamentals will support.”

Driven to keep China’s GDP (gross domestic product) growth above 8 percent, he says, consumers of recycled PET are willing to buy material, even if the price exceeds that of virgin.

The MRF operator says one large buyer of recovered PET in particular has inflated the market to secure multiple loads for Chinese consumers. “This has had the result of driving the price up beyond where the [domestic] market would support it,” he says.

“PET has been hard to come by,” a reprocessor based in the Gulf Coast region says. “Domestic buyers have been fighting for the volume with Chinese buyers.”

He adds, “This should settle down as soon as demand drops from China. There are some rumors on the horizon of a big cool down happening right now in Hong Kong [and] China.”

The MRF operator also predicts declining prices for PET and HDPE (high-density polyethylene) in June. He adds that, currently, pricing for natural HDPE is driven by the export market, while the domestic market affects that of colored HDPE.

While a reprocessor based in the Southeast noted in April that the price differential between colored and natural HDPE did not warrant separating the material, the situation is different on the West Coast, according to the MRF operator.

“At the MRF level, we have a very good labor pool here,” he says, adding that the Hispanic workforce in the region is willing to do the work to separate natural from colored material. “That labor is hard to secure on the East Coast,” he says.

“Demand is strong,” a reprocessor based in the Great Lakes region notes of recycled plastics in general, “but Asian import regulations are going to be a factor with pricing in June.”

In addition to the decline in recycled PET pricing expected for June, there are also rumors that PP (polypropylene) and PE (polyethylene) pricing will decrease, according to sources.

“Engineering grades are strong, but PP and PE are going to fall in the next 30 to 60 days,” the reprocessor based in the Great Lakes region says.

The MRF operator refers to China as the “market of first resort” for films, adding  that a large U.S. consumer of the material has changed its strategy. This company, he says, is purchasing a lower-value mixed grade of LDPE (low-density polyethylene) and upgrading it to avoid paying the prices commanded by higher quality material.

Rates for overseas shipments continue to escalate. “Container prices went up also most 2 cents per pound” in May, the Gulf Coast-based reprocessor says.

Recyclers also must deal with the politics of the steamship lines. The Great Lakes-based reprocessor says, “Because prices go up every month, at the end of the month, containers are hard to come by. If they can delay shipment, they can charge more money.”

(Additional information about secondary plastics is available at www.RecyclingToday.com.)