Reclaimers support initiatives

By Mike Verespej | PLASTICS NEWS STAFF

Recycling logoNEW ORLEANS (March 10, 1:45 p.m. ET)  — Although the plastic recycling industry has only officially put its support the past few years behind expansion of existing bottle deposit laws, more than four out of five plastic reclaimers believe that extended producer responsibility programs — prevalent in Europe and spreading throughout Canada — are beneficial to plastics recycling and should be pursued.

In addition, 76 percent support container deposit legislation and 62 percent support single-stream collection, although the level of support for those two initiatives differs among PET and high density polyethylene reclaimers, according to the fifth annual survey of plastics reclaimers by Plastics Recycling Update, a publication of Resource Recycling Inc.

The survey results were unveiled on the second day of the 2011 Plastics Recycling Conference in New Orleans, held March 1-2.

The high levels of support for initiatives that could increase the amount of supply may reflect the growing concern of reclaimers who continue to see more than half of the recycled PET bottles and almost 25 percent of the HDPE containers exported to China, even as end markets in the U.S. are expanding.

The support for initiatives to expand supply also reflects how capacity for recycled PET resin in the U.S is doubling, as a result of $350 million in investments the past two years, said Mike Schedler, technical director for the National Association for PET Container Resources, based in Sonoma, Calif.

Those investments boosted PET reclamation capacity from 847 million pounds at the end of 2008 to 1.247 billion pounds at the end of 2009, said Schedler at the conference.

PET recycling capacity in the U.S. increased again in 2010 when several plants, including the PET recycling operations of Clear Path Recycling LCC in Fayetteville, N.C., started up and is expected to reach 1.88 billion pounds later this year, Schedler said, when three or four plants now under construction begin operations, adding another 210 million pounds of capacity.

What’s more, he said that capacity would have been even higher except that tight supplies have caused some PET capacity expansions to be cancelled or delayed. The biggest postponement: Clear Path has temporarily shelved plans for another 120 million-pound line that would have boosted its capacity from 160 million to 280 million pounds.

“We could easily absorb 2 billion more pounds” because of the demand, said Schedler. Even with the tight supplies, “there are many companies contemplating spending hard money to get into the business. They have determined that they need access to post-consumer content today and five years from now.”

But right now, with supplies tight and not enough material to fill existing plants, PET recycling capacity utilization has dropped. In 2010, it fell to 69.5 percent compared to 81 percent in 2009 and 88 percent in 2008, according to the Plastics Recycling Update survey.

The survey also underscored how plastic recycling markets bounced back in 2010. And a number of key indicators point to growth in 2011 and 2012 as the economy improves.

“Firms are saying they’ve cut way back on operations waste, streamlined their business and have new equipment coming online,” said Henry Leineweber, managing editor of Plastics Recycling Update. Indeed, 57.7 percent of the more than three dozen reclaimers surveyed said they invested in more efficient equipment in 2010, up from 39.5 percent in 2009.

“There’s also a sense that a lot of the negative trends we saw as a direct result of the economic collapse have stabilized. As demand for consumer goods picks up, plastics should come along for the ride.”

While there was little actual growth in 2010 for reclaimers — the amount of pounds they processed increased by just a little more than eight-tenths of 1 percent — the declines of 2009 largely ended.

About 48 percent of reclaimers surveyed said that conditions were better in 2010 than in 2009, but 36 percent said conditions were worse. Similarly, 40 percent reported improved margins in 2010 and 24 percent said operating margins were worse just one year after there was an across-the-board drop in operating margins.

Reclaimers are most optimistic about the food and beverage, and the film and sheet end markets — as they have been since 2007. But, in addition, the fiber market has re-emerged as a strong end market, they said.

The same issues tended to be the top trouble spots for both PET and HDPE reclaimers in 2010: bale costs, contamination — much of it from labels, resin additives and recycled resin pricing. But reclaimers said that there was a significant year-over-year increase in contamination in 2010, and that bale costs and logistics barriers — historically higher for HDPE reclaimers — were problems for both in 2010.

Obtaining bales and bale yields continue to plague PET reclaimers more than HDPE reclaimers.

Just 20 percent of HDPE reclaimers said the quality of bales declined in 2010, compared to 75 percent in 2009 who said the quality of bales declined. And just 20 percent of HDPE reclaimers said bales were harder to obtain.

By contrast, 30 percent of PET reclaimers said that it was harder to acquire bales in 2010 than in 2009 and only 20 percent said that that task had gotten easier. Those numbers are similar to what they were in 2007 before the economic crashed, which temporarily made it easier to obtain bales.

And although the percentage of PET reclaimers who said bale quality was declining decreased for the fourth straight year, a significant majority — 60 percent — still said bale quality was declining and only 10 percent said it was improving. That compares to 2007 when no one said bale quality was improving and 75 percent said bale quality was declining. Overall, yields from PET bales declined slightly to 71.3 percent in 2010.

Asked what they thought should be the focus of the broader recycling industry, 75 percent of reclaimers cited the tasks of improving collection and consumer education. Just one year ago, only 38 percent had named consumer education a key focus.

In addition, more companies said there is a need to develop markets — 50 percent compared to 31.3 percent in 2009, and 54.2 percent said legislative advocacy should be a focus, up from 43.8 percent in 2009.

That’s reflected by the 82.6 percent who think extended producer responsibility programs are beneficial to the plastics industry and should be pursued, and the support for container deposit programs and single-stream municipal collection.

Overall, 76 percent of reclaimers said they supported container deposit legislation, which had the backing of 80 percent of PET reclaimers, and even more support from HDPE reclaimers — 89 percent compared to 60 percent in 2009.

With regard to single-stream collection, that had the support of 55 percent of the PET reclaimers, up from 43 percent in 2009; 67 percent of HDPE reclaimers, down from 88 percent in 2009; and 62 percent of all reclaimers, the same as in 2009.

The survey also found that in addition to PET and HDPE, a number of reclaimers tend to process other materials. More than 28.6 percent said that they processed PE film and wraps; 28 percent processed non-bottle rigid plastics, 7.1 percent processed e-plastics and 35.7 percent processed bottles and plastics made from resins other than HDPE and PET.

Source: Plastics News

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