With the continuing drop in crude oil prices and natural gas, virgin plastic prices are also decreasing. While that bodes well for plastics processors, whose customers need 100% virgin materials, it's not such a good thing for the recycled plastics producers. Recycled plastics are in high demand when virgin resin prices are high because adding a certain amount of regrind to the virgin material can help reduce the cost of the parts. And as everyone knows, price is one of the most important factors in this game of manufacturing.
I can remember talking to thermoformers at the SPE Thermoforming Division conference a few years ago when recycled PET (rPET) was in big demand and in short supply, because the price of virgin PET was up there. With the price of virgin PET dropping, thermoformers at this year's SPE Thermoforming conference told me that demand for rPET was down. "What's the point in buying recycled PET when you can get virgin for virtually the same price?" one thermoforming guy told me.
Yet the recycling issue continues to hold a place in the industry and in the mind of the consumer. Pedro Morales, Director of Sales and Marketing, Recycling Div., KW Plastics (Troy, AL), told attendees at the Global Plastics Summit this past October that "we all have to be concerned about public opinion. It's clear that all of our activities are in the public opinion polls."
KW Plastics' five facilities process "millions of pounds of feedstock" from across the United States, which helps extend the life of landfills, and is successfully recycling HDPE (#2) and PP (#5). In 2012, KW processed 1,045,400,000 pounds of HDPE, 31.6% of virgin HDPE consumption. For non-bottle regrind, the company processed 357.4 million pounds. In PP, the company processed 62,000,000 pounds of bottles, or 31.8% of virgin PP consumption. KW processed a total of 1.5 billion pounds annually in 2013 year of postconsumer recyclate.
Morales explained the difference between "reprocessed" plastic and "postconsumer" reclyclate. "Reprocessed thermoplastic material is from scrap or rejected parts within a molding facility and doesn't change ownership," he said. "Postconsumer—the arena in which KW participates—is material that has been used for its intended purpose and is subject to disposal but is diverted from the landfill, and ownership of the material changes."
Morales said that KW has seen record commodity prices over the last six to seven years, and the company has "provided municipalities with recovery funds" for its diversion of postconsumer scrap from landfills. He explained that the cost to separate and bale postconsumer plastic scrap is seven cents a pound and there are 1,000 pounds to a bale. "The waste industry is looking at the least expensive way to collect and sort—a method that reduces yield but results in good material," he said.
There are several factors that affect the price of postconsumer scrap material:
- The price of virgin—scrap pricing usually follows the virgin resin industry;
- The weather—KW lost 24% of material in the first quarter of 2015 because of weather;
- Global markets—China is a big importer of scrap;
- Legislation, politics and consumer