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Year in Review

HDPE natural PCR, rPET FDA pellet end year higher on relentless demand

HOUSTON, January 2, 2018 (PCW)—Not all US recycled resin markets follow the price moves of underlying prime resins.

With this backdrop, two recycled plastic markets stood out last year for rising pricing and higher recycling rates compared with 2017.

rPET price up 18.7%, HDPE natural PCR up 11.7%

Historically, recycled resin pricing has lagged prime prices by one to two months. That’s not the case for HDPE natural/dairy post-consumer resin (PCR) and clear rPET FDA (US Food & Drug Administration approved) pellet (repro)--and their underlying feedstock, curbside post-consumer bales.

“The natural PCR is of high value to end-users because it does not need to be converted into any other form, like with mixed-colors repro,” said a trader with a Chicago-based plastic scrap/regrind/repro supplier. Most MC repro, whether PE, PP or PS, must be processed into a black pellet before use by end users due to chemistry factors in production processes.

HDPE PCR and rPET pellet prices ended the year up sharply. On Dec 27, 2018 HDPE natural PCR was at 74-78 cpp FOB Southeast, up from 67-69 cpp or 11.7% on Jan 4, 2018, according to PetroChem Wire Recycled Resins Report price data. HDPE natural bales on Dec 27 were at 41-43 cpp, FOB east of the Rockies, and at 33-34 cpp on Jan 4, a 25% gain.

rPET pellet was at 72-74 cpp FOB US South, Dec 27, 2018 compared with 61-62 cpp on Jan 4, up almost 19%; the price of curbside PET bales, FOB east of the Rockies, during the same periods was 16-18 cpp and 13.5-14 cpp, up more than 23%.

US recycling rate about 10%

These robust plastic recycling sectors have emerged in recent years as pressure mounts to recycle more plastic (in the US and around the world). With so much plastic waste going to landfills or ending up as trash, there’s pressure on the plastics industry--from environmental groups, government agencies and others—to recycle more.

The recycling rate for post-consumer and post-industrial plastic in the US is about 10% -- depending on whose data you use; the latest US Environmental Protection Agency estimate is 9%. EPA’s spokesperson in an email on Jan 2 said its press office was closed due to the government shutdown and could not respond to inquiries.

210 million milk jugs

Demand was strong from consumer-brand companies, including Nestlé, Coke and Pepsico, and non-food sectors, like the plastic lumber/furniture sector. Tangent USA, a large lumber/furniture maker, buys reams of HDPE natural PCR (in addition to wide-spec HDPE natural resin), made from about 210 million milk jugs/year, according to its estimate.

Bale Price Driver

The main price driver for HDPE natural PCR and rPET clear FDA pellet is the curbside scrap bale—sourced from plastic (and other recyclables) picked up from homes and businesses by municipalities and MRFs (materials recovery facilities), like Waste Management. The most valuable scrap is HDPE natural and non-fiber PET. It is sorted, washed, baled and sold to third parties, including large-volume recyclers Envision Plastics and KW Plastics, and PET “reclaimer” plants, clustered mostly in the Midwest, US South and California. There’s no shortage of suppliers of these bales: One of the largest reclaimers, Clean Tech of Dundee, MI sources HDPE and PET bottles from at least 375 locations, while Custom Polymers in Athens, AL has 220 bale suppliers.

Bales prices are typically driven by old-fashioned supply and demand. In the case of PET, prices typically rise during warm-weather months as consumption of single-use PET bottles rises; this in turn increases demand for rPET pellet (and prime and offgrade PET) and bales.

A few municipal bid offering sales each month also drive bale pricing. The main one, outside of California, is the Solid Waste Authority of Palm Beach County, FL, which typically sells 3-4 truckloads each of HDPE natural and HDPE mixed colors bales and 10-12 truckloads of PET bales each month (about 400,000-480,000 lbs). It’s not much volume given that a reclaimer can use hundreds of truckloads/month. But SWA’s sales are seen as transparent and the deals as reliable price references. At least one plastic bottle/packaging producer uses SWA’s monthly HDPE natural bale price to determine what it pays for HDPE natural PCR.

(The most recent SWA sale, for January 2019, was 12 truckloads of clear and green PET bales to Clean Tech at 17.02 cpp. Clean Tech also took three truckloads of HDPE natural curbside bales at 42.02 cpp.)

On any given week, the price relationship between bales and rPET pellet varies depending on normal logistics factors, like trucking availability. Bad weather, for instance, can make roads impassable and delay deliveries for days or weeks. Another trucking issue in 2018 that affected not just HDPE PCR and rPET pellet but all recycled markets was the “electronic logging device” regulation that kicked in at the start of the year. This has slowed long-haul deliveries in some instances as drivers are limited to time on the road within a given 24-hour period.

Plastic rubbish in oceans

The need to recycle more plastic was underscored in 2018 with media coverage focused on how this trash has poisoned the world’s oceans. This included major outlets like the BBC, PBS, CNN and the New York Times. It’s been an issue for decades, but is now front-and-center with other environmental issues, like climate change, due in large part to the discovery of the Great Pacific Garbage Patch and current efforts to clean it up.

Brands have responded by partnering with groups that are cleaning up oceans and beaches, starting “closed-loop” production/recycling systems and other environmental efforts. Nestlé, whose brands include Gerber, Nescafe and KitKat, in late October 2018 signed The New Plastics Economy Global Commitment (Global Commitment) at the Our Ocean Conference in Bali, Indonesia.

Nestlé’s spokesman on Jan 2 directed PCW to a press release which detailed the company’s “…creation of the Nestlé Institute of Packaging Sciences, dedicated to the discovery and development of functional, safe and environmentally friendly packaging solutions. This is a step further to achieve the Company’s commitment to make 100% of its packaging recyclable or reusable by 2025.”

Coca-Cola’s spokeswoman in an email to PCW on Jan 2 said the company’s recycling goal is “100 percent of the bottles and cans we sell by 2030, to make all of our packages 100 percent recyclable by 2025, and to use 50 percent recycled content by 2030.” She pointed to a Dec 16, 2018 op-ed piece written by company chairman James Quincey, entitled, “Grading our progress toward a world without waste.”

If you can smell it, don’t sell it

Other plastic scrap markets did not fare so well in 2018. A major factor for these bottom-of-the-barrel commodities was a sharp drop in exports to China. This occurred because of China’s ban on many scrap imports that began with implementation of the National Sword anti-pollution campaign in fall 2017. The most recent export data from the US Commerce Department’s USA Trade Online shows unsorted plastic scrap exports totaled 334,524 metric tons in Jan-Oct 2018, down by 82,200 mt, or 35%, from Jan-Oct 2017. Exports to China, the top destination in 2017, totaled 17,758 mt, down by 132,577 mt, or 88%, in the respective periods.

Following a trend seen over the past few years, some plastic scrap literally lost all value and became a liability. This includes dirty PP supersacks, used for food items like guar gum and coffee beans, and Grade C LLDPE poultry plant bags with “smell contamination,” used to carry chopped-up chickens and other poultry products. Sellers had been able to get 3-5 cpp or so for these units in the recent past; today, sellers are lucky to get a penny for these sacks and bags and often must pay to have them landfilled. -- Xavier A. Cronin

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