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12/27/2012 | 2 MINUTE READ

Low Prices Won’t Last

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2012 brought lower prices across the board to buyers of recycled materials. But that was largely a result of lower demand. “Polypropylene, polystyrene, and PET were hit the hardest although there was some reduction in engineering grades like nylon as well,” one source says. Most reprocessors find customers are in no hurry to buy up inventories—partly as a result of economic uncertainty. Overseas economies have slowed, reducing exports of U.S. recycled materials. But some analysts believe that could change once 2013 comes in and the Chinese New Year hiatus is over. They believe prices will rise in the second quarter.



In January 2012, recycled PET pellet prices were 80-85¢/lb, but a year later, those prices are 70-75¢ for clear pellets. Green pellet prices were 71-75¢/lb a year ago and now they are 60-65¢. “The whole global economy is sagging, and things just went stagnant,” says one East Coast reprocessor. “The Chinese had backed off by summertime. As a result, raw material and feedstocks were readily available, though the quality of that material has deteriorated.”

Fourth-quarter 2012 saw some price hikes, but they were really aimed just at stopping further erosion. One reprocessor said January is likely to be slow, and lack of buying now leads most sources to believe prices will be low through March.

While reprocessors are generally optimistic about 2013, they say things will never truly be predictable unless there is a stronger, non-commodity outlook to the business. Said one, “It’s a value-added product, but perception has not changed. Recycled PET is regarded as a commodity resin, and it’s hard to compete with virgin overcapacity and resulting low prices.”



End-of-year pricing for recycled HDPE was about the same as at the end of 2011, with natural post-consumer pellets selling at 58-62¢/lb, down slightly from 61-63¢ a year ago. Mixed-color prices at the end of 2011 were 51-53¢/lb and are in the same range today—49-54¢.

What made recycled HDPE unpredictable in 2012 was the warm winter. Plastics pipe sales were high in the winter as people continued construction projects that normally would have been left until spring. That caused prices to rise with greater demand in the spring. Prices peaked in August/September and retreated in the last quarter, although there was a pickup in mid-December.

Recyclers see market demand supported by growing interest in sustainability—but that does not always mean higher prices. “We have new players keeping the market up,” said one reprocessor. “Some of them had been pellet customers themselves and are now vertically integrated and buying bales and reprocessing. They are not as savvy about what the market value should be. Basically, they are giving away the profits!”