2011 was a difficult year for recycled plastics, mostly because of the unpredictability of the Chinese market, which soaks up a lot of U.S. material, mainly on the West Coast. “We are so tied to China,” says one broker. “If people think China isn’t going to take a particular material, then prices go down.”
The end of a year can be a little confusing, as well, where pricing is concerned. Manufacturing slows down and recyclers want to dump their inventories. What happens in the month of December may not be the best indicator for the upcoming year. However, most sources say overall prices for recycled plastics have come down in the last quarter, though perhaps not as low as some predicted at midyear. Industry observers also expect stable levels of supply for the near future.
Although some virgin commodity resin prices may start to creep up in coming weeks, those increases won’t affect recycled resin prices right away. Ultimately, recycle prices are not expected to return to the high levels seen last in 2011.
A year ago, R-HDPE prices were 3¢ to 4¢/lb higher than today. Recycled HDPE saw a strong price rollback between July and August. By September, however, prices were starting to climb up again rather quickly. They peaked in November and then dipped down a little in early December, but by mid-month they were already starting to come back up, one source said. Recycle prices are likely to go up in the first quarter if the pending virgin price increases stick.
One recycler said the HDPE market has held up stronger than expected in part because of warm temperatures. Plastic pipe, which consumes a lot of recycle, can still be laid in ground that has not yet frozen. “Companies are still producing pipe, but when the weather gets cold—that’s when there will be a slowdown.”
Recycled PET prices took a hit in the last quarter, but ended up not far from their position at the beginning of 2011. Prices fell over the quarter by an average of 5¢ to 6¢/lb. In mid-December, one recycler predicted that prices would fall another 3¢ to 5¢ before the first of the year. “I think it will level off and then inch up, but I don’t expect prices to be as high as they were in 2011.”
Of course, the end of the year is always a little slow, but there are other factors affecting PET, such as the fact that there was a better cotton crop last year, reducing demand for PET fiber. But the main reason for dropping prices is the slowdown of the Chinese economy.