Unbending plastics: surging demand from China further hampers U.S. reclaimers of post-consumer PET and HDPE plastics

Recycling Today, March, 2004 by Deanne Toto

The recycling rates for post-consumer PET (polyethylene) and HDPE (high-density polyethylene) containers continue to lag behind that for aluminum cans. In 2002, the recycling rate for PET containers stood at 19.8 percent, while HDPE was at 24.2 percent, according to figures from the 2002 National Post-Consumer Plastics Recycling Report, a cooperative study by the American Plastics Council (APC), the National Association of PET Container Resources (NAPCOR), the Association of Postconsumer Plastics Recyclers (APR) and the National Soft Drink Association (NSDA) conducted by R.W. Beck Inc. In contrast, the Aluminum Association reports a 53.4 percent recycling rate for aluminum cans in 2002.

While some credit the inherent value of the aluminum can for its higher recycling rate, PET and HDPE plastics battle a number of factors that contribute to their lagging recycling rates. In addition to problems collecting single-serve PET beverage containers, some industry observers claim inefficiencies at material recovery facilities (MRFs) and changes in the container stream are inhibiting plastic container recycling.

The modest recycling rates for PET and HDPE have left U.S. reclaimers in a supply crisis, with capacity exceeding supply in both industry segments. Jean Bina, director of commercial operations for Phoenix Technologies L.P., Bowling Green, Ohio, says declining recycling rates are negatively affecting the domestic markets that haw been successfully developed for these materials. Unusually high export demand from China has exacerbated the supply situation.

YEAR OF THE MONKEY. Asia's demand for post-consumer plastics has not only affected the availability and price of material, it has also affected its quality, some sources say.

"The Chinese in particular have stepped up their activities to source post-consumer PET bottles in the U.S.," Luke Schmidt, president of NAPCOR, Charlotte, N.C., says. "Historically, they have always been a major player on the West Coast, but now they are making their way across the country to the East Coast and have been very aggressive in their efforts to source bottles."

According to NAPCOR, the amount of PET shipped to export markets in 2002 grew 17.5 percent from the previous year. Floyd Flexon, vice president of environmental affairs for Amcor PET Packaging, a PET recycler processing roughly 30 million pounds annually at its facility in Novi, Mich., says that 2003 numbers will likely show that from 30 percent to 35 percent of the PEF collected in the U.S. went to China.

"Too many bales of plastic bottles are being shipped overseas from the West Coast to foreign markets," Judith Dunbar, Technical Assistance Program manager for the APC, Arlington, Va., says. "Foreign markets are not discriminating buyers...thus they take a higher percentage of contamination in with their plastic bottle bales. This is resulting in dire consequences for the domestic plastics recycling industry, both in terms of material quality and quantity."

Flexon agrees that China's demand has affected the quality of material available. "They will take just about anything and never say a word," he says. Therefore, suppliers of PET and HDPE have little incentive to improve quality.

Bina also notes the effects of China's demand. She says China has been buying everything available, inflating prices and negatively impacting quality. "Good quality and good pricing are hard to come by."

Phoenix Technologies uses technology developed by its managing partner Plastic Technologies Inc. to pelletize and crystallize recycled post-consumer PET for reuse in consumer and food-grade packaging applications.

While Flexon says China's demand has elevated the price of PET bales to a nine-year high, the domestic finished product market hasn't moved. "The domestic recyclers are under a terrible squeeze," he says. "I expect a number of PET recyclers to cease operations in the next 18 months if this market continues."

Arthur Ferguson, general manager of HDPE recycler KW Plastics, Troy, Ala., says markets for H DPE are strong and the applications for the material, including non-food-grade bottles, automotive components, piping, nursery containers, composite lumber and trash containers, are numerous. He says exports of HDPE are spotty, but serve to "confuse the market" with cash-on-the-spot purchases and seasonal buying.

Schmidt says post-consumer bales of PET are selling at 17 to 18 cents per pound. "That is a very strong price. The historical average has been in the neighborhood of seven, eight or nine cents a pound." He attributes the price increase to China's demand.

Flexon says the current 17-cents-perpound rate is a decrease from a high o f21.5 cents at the end of January. The decrease in price could reflect Chinese New Year, he says, though he claims the timing is not quite right. He suggests the price increase might instead signify a paradigm shift in the market.

"The biggest challenge now, in the recent past and in the foreseeable future is meeting the demand of the domestic plastic recycling industry for plastic bottles," Dunbar says.