Recycled tire market approaches equilibrium
Consumers are demanding more rubber products
derived from recycled tires and that is helping companies
like Lancaster, Pennsylvania-based Dodge-Regupol Inc.
“The market for green products in
general is on the rise,” said Kathleen Keller, director
of marketing at Dodge-Regupol. She said the growing awareness
of the negative footprint that building products have on the
environment is helping boost demand.
Dodge-Regupol manufactures cork, cork/rubber
and recycled rubber products for commercial, fitness and industrial
applications. It converts more than 2.75 million tires annually
into original equipment manufacturer, industrial and architectural
Keller said that the growing awareness of
the negative footprint that building products can have on
environment is helping boost demand in the commercial sector.
She said that government mandates that certain buildings use
green products also helps.
Since Dodge-Regupol is privately held, Keller
would not release revenue numbers. But she characterized business
as good. She expects sales to continue to grow next year.
She said higher costs are impacting margins. Plus, global
competition is having some impact. But she said the biggest
impact now is the demand for green products.
“Supply and demand is at a very good
state at this point in time,” said Michael Blumenthal,
senior technical director at the Rubber Manufacturers Association.
The Washington DC – based association represents more
than 100 rubber manufacturers.
“There is almost a point of equilibrium
between supply and demand, which is a vast improvement over
past years when supply exceeded demand,” Blumenthal
Blumenthal said demand for ground rubber
from tires has increased over the last couple of years. “As
demand goes up, supply is keeping up with demand,” he
Blumenthal said that he expects the current supply dynamic
to remain in concert with demand. But he said there are some
companies that want to start processing ground rubber without
having any markets to sell product to. “This would upset
this near-equilibrium state that we currently have,”
he said. “We have been rather fortunate in the last
year or so that we have not seen a lot of new entrants into
this market arena.”
There are at least 275 million scrap tires in stockpiles
in the United States, according to the Environmental Protection
Agency (EPA). Approximately 290 million scrap tires are generated
annually. The EPA estimates that markets exist for about 80
percent of scrap tires, up from 17 percent in 1990. Scrap
tires may be recycled by cutting, punching, or stamping them
into various rubber products, after removal of the steel from
include floor mats, belts, gaskets, shoe soles, dock bumpers,
seals, muffler hangers, shims, and washers. Whole tires may
be recycled or reused as highway crash barriers, and for boat
bumpers at marine docks, according to the EPA.
Blumenthal said the number one use for ground rubber is
molded and extruded rubber products, accounting for 25 percent
of the market. “Over time the markets that consume the
most ground rubber have changed. Years ago asphalt was the
largest single market. Now, it is the third largest market.
So, it’s a changing dynamic,” he said.
The recycled tire market remains mostly a domestic market.
“I’m not aware that we export very much if any
ground rubber,” Blumenthal said. “Certainly none
goes into Canada. The Canadians have their own program. And
I don’t know of any that goes offshore because Europe
makes their own and Japan makes their own,” he said.
“I don’t think we’re importing very much
ground rubber either. Will this change? That’s always
a possibility. The key here is that the cost of transportation
is still relatively high and the value of the ground rubber
may not be able to cover or justify the cost.”
The current environment is helping margins at GreenMan Technologies
Inc. in Savage, Minnesota. It collects and processes scrap
tires in whole, shredded and granular form. Its end products
are used as tire-derived fuel and as substitute for crushed
stone in civil engineering applications. It also provides
crumb rubber for surface applications.
GreenMan recycles approximately 14 million scrap tires per
year. It operates facilities in Iowa and Minnesota. It sold
its California facility as part of a turnaround effort to
focus on its Midwest operations in July. It also restructured
a credit facility.
“During the quarter ended June 30, 2006 we realized
a 50 percent improvement in our gross profit percentage as
well as 46 percent decrease in our net loss as compared to
last year,” Lyle Jensen, chief executive officer at
GreenMan told investors in August.
Net sales for the quarter totaled $5.4 million compared
$5.7 million during the same quarter last year. The company
recorded a net loss of $982,000 or 5 cents a share compared
to a net loss of $1.8 million or 9 cents a share during the
same quarter last year.
During the quarter the company processed 3.9 million tires
compared to 4.1 million tires during the same period last
The company attributed the lower inbound volume to the completion
of an Iowa scrap tire cleanup project completed in 2005.
In September GreenMan announced a $950,000 equipment update
to its Des Moines, Iowa crumb rubber processing capacity.
The capital investment was funded through long term debt provided
by the state of Iowa and a senior secured lender.
“The installation of a new system in Iowa will allow
us to process almost five times more of our existing crumb
rubber products into smaller particle sizes with higher margins
used in safety playground tiles, running tracks, football
fields, soccer fields, equestrian arenas and public walkways.
These higher value markets represent several of the fastest
growing segments of the crumb rubber market today,”