2010 was recovery year for many reprocessors. Most of those interviewed said their customers were back to buying close-to-normal volumes. Unless, of course, their customers were involved in home construction. Commercial pipe and automotive customers recovered well, recyclers said. One recycler commented that plants which usually shut down in December were up and running. As a result, buyers of recycled resins can expect prices to continue upward, at least for the first quarter.
RPET IN HIGH DEMAND
One recycler summed up the general mood around the turn of the year: “The RPET market is absolutely on fire and it has been for the last 90 days.” Clear pellet prices have gone up 15¢ to 16¢/lb since our last report in September, and green post-consumer pellet prices are up 10¢ to 18¢ since in that period.
The explanation is, in a word, demand. “For post-consumer material, the available volume is well short of demand,” said one source. “There has always been something of a supply shortage, but with all of the escalation of recycling capacity and debottlenecking of old plants, coupled with the appetite of China, there is not enough post-consumer PET to go around.” He further explained that as oil prices and virgin prices move up, companies that don’t usually look at post-consumer product are trying to buy it now, adding to the demand crunch.
Reprocessors say end users are still getting a bargain with recycled product. Complained one, “We are paying a lot of money for the raw feedstocks, but it is hard to get prices up on the finished end. We saw more than a dime increase on feedstock in the fourth quarter of 2010, and that equates to a need for 13¢ higher price for recycled pellets. We’re not able to charge our customers 13¢/lb more.”
Prices started to move up in December, but since customers tend to draw down inventories at the the end of the year, there was a seasonal slowdown between Thanksgiving and the first of the year. That kept prices a little lower than they might have been.
The Chinese are hungry for material, resellers say, and as supply tightens on the West Coast, Chinese buyers are beginning to look toward the East Coast for material. On the west coast, PET bale prices were as high as 41¢/lb because of Chinese demand, but sources there say those prices have settled back down around 30¢ to 31¢. However, they expect the prices to inch up again in the first quarter.
Another important factor that will affect supply/demand and ultimately pricing this year will be the new recycling capacity. For post-consumer material, there is new capacity on the West Coast alone that will take 100 million bales a year out of the market. Adding other new capacity in other regions could soak up 200 million bales from the total market.
R-HDPE PRICES STRONGER
Recycled HDPE pricing trends are not so clear-cut. Overall demand is strong, but construction markets are a little weak. That is why some price dips may have happened over the year, but the fourth quarter finished off strongly in terms of demand, which means prices are on their way up.
After dipping somewhat, R-HDPE prices appear to be back up to the midyear level, in most cases, except perhaps for post-industrial product. “We’re seeing strong demand for January,” said one recycler. “Recycled HDPE is following virgin prices, which are inching up. There are just so many factors involved with recycled HDPE pricing, a big part of that is the lower value of the dollar. That factor makes prices look artificially higher.”
Demand for recycled pipe has been strong. A lot of recycled HDPE is going towards agricultural uses and some commercial construction.
R-PP AND R-PS
Recycled polypropylene and polystyrene markets are reported to be strong as well. Recycled PP prices are harder to pin down, one compounder said, because “you can start off with one component and add a modifier that is $1.50/lb and that will send finished prices up.” Good-quality R-PP is in the 65¢/lb range, but inventories are limited. This source expects prices to rise further in the first quarter.
Recyclers are telling much the same story for PS, which they say is stronger now than it has been in years. Demand for recycled PS is always higher in the first quarter of the year, when the horticultural market is running at full tilt.