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March 2005
Scrap tire industry faces numerous hurdles
by Brian R. Hook 
Will 2005 be a good year for the scrap tire recycling industry? Analysts and leaders in the scrap tire industry said it depends on a number of factors currently at play in the marketplace.
There is no single overriding issue in the scrap-tire market said Michael Blumenthal, senior technical director of the Rubber Manufacturers Association, a national trade association for the rubber products industry based in Washington D.C. He said that the scrap tire market is not like steel, for example, where demand from China is a major overriding factor in the market.
Each state has its own separate scrap tire program. “What happens in any given region is going to have more of a local impact than a national impact,” said Blumenthal. “It is not a national industry. It is a regional industry and regional issues have large impact on that region.”
A series of states, including Missouri, Iowa, Tennessee, Oklahoma and Georgia are in the process of reviewing or revising their scrap tire programs. Then, within the regions, there are a number of other issues at play, depending on factors within each segment of the market.
Overall, there are three major segments for scrap tires across the nation, including tire-derived fuel, civil engineering applications and ground or crumb rubber. Tire derived fuel is the largest and oldest segment for scrap tires. Blumenthal said that within this segment there has recently been a trend toward a more refined chip, which has been getting a good price.
Blumenthal cited the increase in energy costs as a driving factor in the market for tire derived fuel. Oil, natural gas and coal prices are all up. “As long as we have elevated prices for energy, we will continue to see these favorable conditions for tire derived fuel,” said Blumenthal.
The market for civil engineering applications is also on the rise. Civil engineering applications use processed scrap tires instead of conventional construction material like rock, sand or dirt for things like lightweight backfill or road embankment fill. Blumenthal said that there are probably more than 30 different ways to use scrap tires in civil engineering applications. This segment is currently the second largest market for scrap tires.
Blumenthal said that the segment for civil engineering applications for scrap tires has grown by 25 percent over the last 4 years. He expects it to grow by 15 to 25 percent this year.
The third and smallest segment for scrap tires is ground or crumb rubber. This segment is usually broken into three sizes. The largest particle size is called course rubber and is usually anywhere from a half to one inch in size. It is used for things like playground cover. This is probably the fastest growing segment in the overall ground rubber market,” said Blumenthal.
Ground rubber is defined in mesh, which is the number of holes per inch linear. The bigger the number, the smaller the particle. For example, 20 mesh is smaller than 10 mesh, because there are more holes on the one-inch line. Blumenthal said that for the last several years there has been an over supply in the marketplace of 20 mesh to 40 mesh.
The third segment is ultra-fine ground rubber, 80 mesh all the way to 400 mesh. “This is like talcum powder,” said Blumenthal. “If you drop it you will never find it. It is dust.” This is a highly specialized marketplace with only two or three companies in the nation able to produce the material. Blumenthal said that the market for ultra-fine is not growing very fast.
With all of these macro-economic conditions at play across the country, Blumenthal said micro-economic conditions at individual companies continue to play a key role. How companies collect the tires and how they handle the tires has an impact on the efficiency of the industry.
“Clearly the management issues are of very significant importance when you look at the overall health of the scrap tire industry.” Even with a strong market, a poorly run operation could go out of business, while a strong operation in a poor market could still survive.
It is also not just about efficiency. “You have to be able to market your product. You have to be able to deal with regulatory change,” said Blumenthal. “You have to be able to predict and prepare for the market. Not every company has a management team capable of that.”
Ohio is working closely with individual companies to boost the market for scrap tires. Chet Chaney, market development manager at the Ohio Department of Natural Resources, said he thinks developments underway in Ohio are a mirror image of what is happening nationally.
The Ohio Department of Natural Resources assists businesses through a grant program. Businesses seeking funding must partner with a local government entity like a city, county or solid waste district in Ohio. Since the Recycling Market Development Grand started in 1994, it has funded 104 projects and provided $12.8 million to underwrite recycling projects. The grant program receives about $1 million annually generated through a retail point of sales tax on tires.
“The goal of our program is to make sure that markets not only exist, but continue to grow year after year, so that they can handle that material,” said Chaney. “It is our wish that instead of exporting tires from the state of Ohio that we actually import scrap tires into the state of Ohio and start to view scrap tires as a commodity and not a waste product.”
Matt Dummitt, market development coordinator at the Ohio Department of Natural Resources, said that it is the responsibility of his department to develop the scrap tire markets in the state. “We want to make sure that once we recycle the scrap tires they actually have a home to go to. We want to make sure there are a number of markets for this material,” said Dummitt.
Many of the projects currently underway use a million or more scrap tires on an annual basis. The more tires that companies use, the more money they are eligible to receive. 2005 grant projects include $150,000 grant to Auglaize County Solid Waste Management District and Midwest Elastomers, Inc. for a $300,000 project to purchase a processing line to expand current production of 40 mesh scrap rubber. It will allow the company to utilize 150,000 scrap tires.
Another $350,000 will go to Ross, Pickaway, Highland, Fayette Joint Solid Waste Management District with Mead Westvaco Custom Papers LLC for a $700,000 project to purchase equipment in order to burn tire derived fuel, utilizing 1.6 million scrap tires.
Plus, a $150,000 grant will go to Lucas County Solid Waste Management District with Seneca Petroleum Company, Inc. for a $300,000 project to purchase equipment to produce ground rubber to be used in asphalt for the paving industry, utilizing 200,000 scrap tires.
Using recycled tires in pavement is still a very small segment of the overall scrap tire industry. But Doug Carlson, executive director of the Rubber Pavements Association, is working to change that trend. His association is a non-profit trade organization based in Tempe, Arizona that represents members companies involved in the asphalt rubber industry.
One of the hurdles in the asphalt rubber segment is the small number of decision-makers in the market, according to Carlson. Each state has only one or two people who make the decision to go with rubber pavement. “Based on that, you could have a 100 percent decrease in your market in your state because a guy changed his mind on the product,” said Carlson.
Plus, some states are still not willing to include rubber in asphalt. Carlson said that many claim that rubberized asphalt does not work in cold climates. To overcome this, he brings people to Flagstaff, Arizona where temperatures range from 20 below zero to over 100 degrees.
Another hurdle is that states often believe that rubber asphalt costs more than traditional asphalt. Per ton of rubberized asphalt usually costs about 60 percent more a ton. But Carlson said that fewer tons are needed to complete a project. For example, instead of using 100,000 tons to pave a couple of miles, it takes only 50,000 tons of rubberized asphalt to pave those same miles.
Even with these hurdles, Carlson said that the rubberized pavement market is growing about 15 percent annually and utilizing about 10 to 12 million scrap tires. To continue this trend, much like in other segments of the scrap tire industry, Carlson said it is important to educate decision-makers. One of the best ways is with engineering analysis. This gives decision-makers the necessary resources to make educated decisions based on science instead of merely emotion.