Bulk resin deliveries help cut overall cost structure

All processors are making pellets count, whether bulk storage is required or not, says Jim Zinski, VP of applied projects at equipment builder Novatec (Baltimore, MD).

Nevertheless, he says silo storage of materials connected to automated material handling systems is growing in demand, particularly among blowmolders and extruders of packaging and building materials who typically require high throughput of a single product. Such processors, he says, view bulk storage as a means of better handling resin costs, storage space, and reducing logistics charges.

Harald Wilms, technology manager at Zeppelin Silos & Systems (Friedrichshafen, Germany), says silo storage demand has even reached emerging markets such as China, India, and the Middle East, albeit to a smaller extent than in Europe and North America. Indian processors, he says, are investing in silos mainly to ensure sufficient inventory for continuous operations.

Cost advantages, such as making use of spot market pricing and increasing inventory to smooth out the cyclical nature of polymer markets by receiving polymer in bulk, are sufficient motivation for an increasing number of processing operations to install or expand their silo farms. “In some cases the cost advantage resulting from the spot market did pay for the silo in one single filling,” Wilms says.

Doug Scott, conveying product sales manager at equipment builder Conair (Pittsburgh, PA), says processors with well organized purchasing departments are typically the ones trying to capitalize on volume buys of material, and therefore need bulk storage. “Increases in resin prices have increased silo sales and sales of inventory monitoring equipment,” he says.

“The higher the resin prices, the stronger the move into silo and bulk storage solutions,” says Paul Mayer, sales/marketing director at silo producer Braby (Bristol, England). “This is driven by the wastage factor. If you waste 2% of your raw material through [pellets or powder left in bags], the higher the resin price goes, the greater the savings from silo storage and the easier it is to justify [the investment].” He also says reducing costs associated with manual labor resulting from loading and filling processing equipment from 25-kg bags is a key motivation, says.

Health and safety issues are also coming to the forefront, Mayer says, particularly since shopfloor pellet spillages are a work-related hazard underfoot, and loose powder is increasingly an inhalation concern among workers.

Conair’s Scott says most of his customers purchase silos rather than lease, although the latter option is available. Novatec’s Zinski says that previously, leasing agreements were a marketing tool offered by several suppliers as a means to ease capital procurement restrictions, but the idea wasn’t successful at the time and demand never took off.

Zepplelin’s Wilms says although some silo fabricators and polymer producers offer financial incentives for the installation of silos, it is still most common for processors to buy their own silos since auxiliary costs such as conveying systems and foundations are individually designed and cannot be leased due to their being a fixed installation and not moveable to another location.

Conair’s Scott says when very high volumes of resin are converted, often a processor will negotiate with a material supplier to provide the silos while he provides the silo pad. Zinski from Novatec says some material suppliers are expanding such practices, which allow the price of the silo to be built into the bulk resin price, and still provide significant savings over small-container or bagged delivery. Yet because accepting such a deal binds the processor to this particular polymer supplier and its price, some processors forgo such agreements, says Braby’s Mayer.

One innovation of note that Zeppelin’s Wilms has seen is that some clients are installing or considering installation of blending silos to improve homogeneity of their extruder feed when using different suppliers’ material or spot-market polymers. From his experience, automated inventory control via Internet-based supply deliveries has not yet kicked off to its full extent although the potential to improve the supply chain already exists. Scott from Conair says Internet-enabled materials monitoring is in use by only a minority of his customers.

Yet Braby’s Mayer says every other silo his company sells has Internet-based monitoring. It offers processors automated inventory tracking and record keeping, as well as providing trend mapping to warn of low material levels without physically checking individual silos. Scott admits that at Conair, sales of load-cell systems on silos and other continuous-level sensing equipment (ultrasonic and phase-tracker) have indeed increased. Other innovations being seen on the market, says Wilms, are special cushioning or blanketing of silos for some hygroscopic polymers, which reduce humidity absorption from condensation in the silos that results from temperature fluctuations, by supplying dry air to the empty volume above the pellets.