April 12, 2010
Recyclers optimistic about future opportunities, but bemoan current problems
AUSTIN, TEXAS (April 12, 1:10 p.m. ET) -- The quality of bales, low yields and challenges related to recycled resin prices and demand continue to trouble both PET and high density polyethylene recyclers.
Roughly 75 percent of HDPE reclaimers and roughly two-thirds of PET reclaimers said the quality of the materials they received declined in 2009, with no one saying the quality was better, according to the fourth annual survey conducted by Plastics Recycling Update.
PET reclaimers said their yields were only 73.1 percent in 2009, down 10 percentage points since 2007. Similarly, 51 percent of HDPE reclaimers said the level of contamination they received in 2009 had increased, according to the survey results that were presented at Plastics Recycling 2010 in Austin in March.
But there were also some clear differences between the fortunes of PET and HDPE recyclers in 2009.
While PET capacity utilization was in the low 70s, down from the low 90s in 2007, HDPE capacity utilization was at an all-time high of 87 percent.
And while 50 percent of HDPE reclaimers said it was harder to secure baled bottles in 2009, two-thirds of PET reclaimers said it was easier.
In addition, 40 percent of HDPE reclaimers said their volumes increased in 2009 and another 40 percent said their volumes were down, while 53.8 percent of PET reclaimers said their volumes increased in 2009 and only 15.4 percent said their volumes declined.
In general, recyclers were optimistic about the opportunities to sell recycled resin into the food/beverage, film and sheet and non-food markets, with the fiber and strapping markets also “consistently listed as a strong growth market” — even though the percentage of companies that said they were optimistic about those two markets was slightly lower than the previous year, said Henry Leineweber, associate editor of Resource Recycling Inc., who presented the data.
Not surprisingly, 71.4 percent of PET reclaimers, 60 percent of HDPE reclaimers and 65.2 percent of all other reclaimers said market conditions in 2009 were worse than the year before, which contributed to an across-the-board drop of 10 percent in operating margins for reclaimers, Leineweber said.
Recyclers said the largest barriers to growth were contamination of materials, bale costs and recycled resin prices and demand, the price of virgin material compared to recycled resins and increased competition.
They also said that light-weighting in response to sustainability initiatives had reduced the amount of PET used to make bottles by 5.6 percent and the amount of HDPE used to make bottles by 8.6 percent.
To compensate for the market conditions, 80 percent of PET and HDPE reclaimers said they had made investments to become more efficient, and 55-60 percent said they had sought new end markets. More than 70 percent of PET reclaimers said they had sought new sources of supply, but only 40 percent of HDPE said they had done that.
PET and HDPE reclaimers unanimously agreed that improved collection needs to the top future focus for the industry, followed by consumer education and legislative advocacy.
Some 86 percent of PET reclaimers, 60 percent of HDPE reclaimers and 72 percent of all others said they support container deposit legislation. But there was less agreement on single-stream recycling with 80 percent of HDPE reclaimers, 43 percent of PET reclaimers and 61 percent of all others in support of it.
Nearly 29 percent of PET and HDPE reclaimers said they also recycled polyethylene film and wrap, 28 percent said they recycled non-bottle rigid plastics, 7.1 percent said they recycled e-plastic and 35.7 percent said they recycled plastics with the resin identification codes of 3-7.
More than two dozen PET and HDPE recyclers and more than 90 reclaimers of all types of plastic resins were surveyed for the report, with additional data provided by the Association of Postconsumer Plastic Recyclers and the National Association for PET Container Resources.
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