Recycled plastics rebounds after recession
by Mike Breslin

During the financial crisis of 2008, recycled polyethylene terephthalate (rPET) bottles, the most highly recycled resin, suffered along with all other recycled commodities. In January of 2008, East coast rPET baled prices ranged from $.18 to $.24 per pound, but by December of that year, it plummeted to $.02 to $.04 cents per pound. Current United States prices for baled rPET are in the $.16 to $.19 per pound range. Late this summer, for the first time in European market history rPET hit record high price levels actually reaching parity with virgin PET resin and in some instances, exceeding them.

Matt Coz, vice president of recycling services at Waste Management, Inc. (WM), provided a broad overview of what has been happening in recycled plastics over the past few years. WM and its subsidiaries provide waste collection, transfer, recycling and resource recovery, and disposal services. WM’s sites include 273 landfills, 345 transfer stations, over 120 beneficial-use landfill gas projects and 16 waste-to-energy plants.

WM also operates about 100 recycling facilities in the United States, of which 33 are single stream recycling facilities where the company captures and sorts materials from a commingled stream. In the case of plastics, WM sorts by resin types, typically the two largest volume grades recovered are PET and high density polyethylene (HDPE), the number 2 recycled category, or in a shrinking percentage of its plants it makes mixed bales of plastic. Most all of WM’s recycled plastics production is sold domestically.

“What we saw in plastics moving through our facilities leading up to and going through the economic crisis was very comparable to what we saw in other grades of materials,” said Coz. “Overall, we saw volumes go down on the inbound side of the plastic equation as volumes in general declined. We did not see any drastic relative percentage changes between PET and HDPE running through the plants. We naturally saw some sizeable price swings because of the economic crisis. PET and HDPE trended the way the rest of the commodity world did.”

Coz reported that recently he has seen volumes on the plastic recycling side pick up somewhat, but it has been erratic. “We have seen some gains in volume from the depths of the economic crisis and we are hopeful that as the economy improves we are going to see additional gains.”

For the most part, WM trades in bales of PET and HDPE. “Over the past 6 to 12 months prices have been relatively good. I think one of the interesting things overall has been that commodities coming out of the recession have fared reasonably well in the face of an admittedly slow recovery. So overall we are feeling pretty comfortable about the way the prices have reacted. A lot of what will ultimately drive recycled plastics pricing is predicated upon what’s happening in the petroleum marketplace coupled with the supply demand balance. As it starts to rise we are likely to see increases on bale prices.”

Mike Schedler, director of technology for the National Association for PET Container Resources (NAPCOR), commented on the demand for PET, “Supply has always been tight. Now there’s a demand for more and more content, particularly in packages, water bottles especially. There’s just not enough material to go around and next year we are going to have more rPET processing plants coming on line.”

The demand for PET is high for both dirty product (unprocessed bales) and PET that has been sized reduced and washed into clean flake or pelletized to make food-grade bottles. “There’s neither enough supply of the clean product that converters are buying to make fiber, sheet, bottles and strapping, nor enough supply of bales for the reclaimers to be able to adequately fill up their plants to make the clean product. Historically, the demand for recycled was driven by lower cost, but today demand is higher because it is sought after for green reasons, to make claims and advertise recycled content by major brand consumer products. It’s difficult to compare prices of recycled to virgin plastics because the market is in constant flux. “Currently there are cheaper virgin alternatives to be found in all traditional rPET applications,” said Schedler. “That’s worrisome because we don’t see that as particularly sustainable. You have to have good economics to go along with a good environmental story,” he added.

For 2009, the national recovery rate for PET was 28 percent and about the same rate for HDPE. The increase from the previous year’s rate is in spite of a 4 percent decrease in the total PET bottles and jars available for recycling.

In addition to plastics recovered from the solid waste stream, only 11 states have return deposit bottle laws that include recovery of plastics as well as containers made of other materials like glass, metal and paper. Delaware’s deposit law will be repealed on December 1 of this year and consumers will cease paying deposits. Refunds will stop on February 1, 2011. But there has been recent progress in bottle deposit recovery.

“Last year we did see New York and Connecticut enact expanded deposit laws and that’s had a positive impact. Program expansions in Oregon have really helped and are posting some good numbers,” said Schedler “There’s been a fair amount of new and expanded publicly initiated programs. On a private level we see a lot more collection opportunities installed. A few years ago bottle recycling bins in airports were scarce. Now it’s not unusual to find them at malls, stadiums, events, festivals and convenience stores. Today you can see a recycling bin almost anywhere. There’s certainly been a resurgence of interest by the public to put bottles in bins.”

Because of demand and attractive prices for recycled plastics, greater investments in automation are being made at recycling facilities to recover larger volumes, not only of PET, HDPE and low density polyethylene (LDPE), but also growing interest in the lesser recovered resin codes Numbers 3 to 7.

“We’ve invested a lot in optical sorting technology at our recycling facilities to enable us to do better and faster sorting of plastics,” said Coz about WM. “As few as four or five years ago it was not very widely used at all, Today, I think we would be hard pressed to build a mid or large-scale recycling facility that did not have it built in. It’s been a huge advance, especially since more material has shifted to plastics packaging.” This camera-based technology was introduced in the mid 90s and has since advanced considerably. It uses optical sensors to instantaneously identify and eject materials from conveyor lines and can be configured to discriminate among various resin types and separate them into respective factions.

In view of tight supplies of recycled plastics, high demand and increasingly high prices the plastics manufacturing and packaging industries are trying to do more with less resin.

“Lightweighting has been phenomenal!” said Schedler at NAPCOR. “There’s been a 4 to 6 percent reduction in bottle weight over the past few years. They are continuing to find ways to carve off weight from bottles. It’s a process that continues as we speak and will probably continue to have a substantial impact over the next few years.”

Schedler elaborated, “We had a minus 5 percent in the amount of PET weight that was used in bottles from 2007 to 2008. The 2009 report is not out yet, but I can tell you that weight will go down again. In many cases, you are seeing the weight of the category going down even though the number of units or bottles sold in that category have gone up. That’s the true sense of what the impact lightweighting has meant.”

In addition to PET, HDPE, polyvinyl chloride (PVC) and LDPE, there is an increasing interest in recovering polypropylene (PP) – the kind of plastic stamped No. 5 – widely used for molded yogurt cups and most often thrown in the trash. Today, few municipal recycling programs even collect polypropylene because it lacks a reliable market. But that may change according to Coz at WM, “Customers have been talking to us about recovering yogurt cups.”

GreenTEK Industries, a division of the J.M. Murray Center in Cortland, New York, for example, is using recycled yogurt cups to process materials that are sold to manufacturers of toothbrushes, razors and reusable cutlery, dinnerware and other products made out of recycled polypropylene. This nonprofit agency provides training and jobs to disabled people. Yogurt makers such as The Dannon Company are promoting the recycling of their cups as part of its sustainability program.

“Many customers are looking to drive their own sustainability issues or looking for cost, productivity or competitive advantages. We are not just looking at PET and HDPE, the big components, but those recycled resin codes 3 to 7. Customers are looking to us to see if there are better ways to use those materials and how can we capture more of them,” Coz added.

In May, Waste Management, along with a number of other partners, invested $6.9 million dollars to expand commercial production at MicroGREEN Polymers, Inc., a plastics company that uses its patented Ad-Air technology to reduce the amount of plastic required for the production of consumer products, thereby significantly lowering raw material costs. The technology creates bubbles within plastics to improve its functionality by creating an internal microcellular structure that is lighter in weight, more insulating and stronger.

The process does not involve petrochemical blowing agents or volatile organic compounds and works especially well with recycled PET. According to WM, when applied to making hot beverage cups, it uses the lowest total amount of energy and has the lowest total solid waste as compared to expanded polystyrene and coated paperboard hot beverage cups, the two most commonly used today. “This new technology is now specifically for processing PET, but could be applied to all plastics. It also has the added environmental benefit that it does not involve petrochemical blowing agents or volatile organic compounds in the manufacturing process,” commented Wes Muir, director of communications at WM.

As substitutions increase, such as replacing glass with plastics, and as more and more packaging transitions from aluminum, paper, paperboard and cardboard to plastics, the demand for plastics in all recycling codes will increase – not just for packaging, but also for a wide range of consumer and industrial products.

Today’s petroleum prices are increasing pressures to recover as much material as possible, and if prices continue to rise, the pressure will increase accordingly. While many beat the drum of save-the-landfills, the more correct reason is to access valuable secondary materials so it will have a positive effect on the economy, quality of life, as well as many other environmental benefits beyond conserving landfills.