Plastic scrap markets to benefit from growing demand

Plastic scrap generation has slowed as is typical in the early part of each year, which is serving to increase or maintain pricing.

“Availability is tight and pricing for scrap is steady to increasing,” a Midwest-based reprocessor of rigid polyolefin scrap says.

A contact with a material recovery facility (MRF) based in the Midwest says, “Supplies are going through their normal winter slowdown. For example, we ship 400,000 pounds of PET (polyethylene terephthalate) in the summer months, and [in January] we will ship 290,000 pounds.”

He says postconsumer high-density polyethylene (HDPE) scrap generation also is lower in the fall, winter and spring compared with the summer months because children are back in school.

The reprocessor says, “Generation always falls off, some grades dramatically, in the winter months.”

Regarding domestic demand as of mid-January, the MRF operator says, “PET seems to be perky, and it normally isn’t until March before summer buying trends start to develop.”

He adds that the company’s normal PET buyer came up 2 cents per pound from its December 2021 price for material it purchased in January.

“We expect this market to take off this year,” he adds of PET.

While PET bale pricing increased in January, natural and mixed-color HDPE scrap maintained its pricing month over month. “This could change by March when processors are starting to build volumes for furniture and pipe manufacturing,” the MRF operator says.

He adds that more HDPE reprocessing capacity is coming online in North America this year, which should help to maintain or increase prices for HDPE bales.

Austria-based packaging producer Alpla Group is among the companies adding HDPE recycling capacity. In late 2021, the company opened its $22.9 million plant in Toluca, Mexico, which is designed to produce more than 16,000 tons annually of recycled-content HDPE (rHDPE) in pellet form. A planned expansion could increase that capacity to more than 33,000 tons annually starting in the second half of 2022.

The plant’s rHDPE will be used to produce nonfood packaging, such as for personal care and household cleaning products.

“The demand for recycling material is so high in Mexico and Central America that the majority of the output will be used regionally,” Alpla says in a news release about the plant’s opening.

While virgin HDPE and rHDPE prices have declined from highs seen in 2021, they remain high historically, the reprocessor and MRF operator say.

The reprocessor adds, “Virgin pricing is still high, so wide-spec is not an attractive option for a lot of customers who are using regrind and repro.”

The MRF operator says he expected natural HDPE bale pricing to fall more than it did late in 2021. “Even at their low price point over the last 12 months, we are still above their highest value preceding 2021.”

Low-density polyethylene (LDPE) film scrap also is in strong demand, the MRF operator says. “Sustainability is driving this.”

Even MRF film is of interest, he adds. “You couldn’t give this away two years ago, but now it has decent demand with generous pricing. Beyond sustainability, processors have learned how to clean this material, making for better yields.”

Sunil Bagaria, president of GDB International, New Brunswick, New Jersey, is expanding his company’s film recycling capacity with the addition of three lines later this year. The company went from solely brokering this material to also reprocessing it in 2018. Bagaria says he expects to be able to produce 80 million tons of LDPE and linear-LDPE postconsumer resin (PCR) as of the first quarter of 2023.

“There is growing demand for PCR” because of voluntary commitments and legislative mandates, he says, such as the one recently signed into law in New Jersey.

New Jersey Gov. Phil Murphy signed S2515/A4676 into law in mid-January, establishing PCR requirements for rigid plastic containers, glass containers, paper and plastic carryout bags and plastic trash bags. Beginning five years after the effective date and every three years thereafter, the percentage of PCR required for rigid plastic containers will increase by 5 percent, until reaching 50 percent. Plastic carryout bags will be required to contain at least 20 percent PCR beginning two years after the bill’s effective date and 40 percent PCR after five years. Beginning two years after the bill’s effective date, all plastic trash bags must contain at least 10 percent PCR, increasing to 20 percent in five years.  

When GDB began producing PCR, Bagaria said the biggest issue would be limited demand for recycled plastics. Now he says securing sufficient supply to feed his lines will be his foremost concern.

David Hudson, founder of Houston-based Circulus, a new reprocessor of LDPE and LLDPE film with a plant in Riverbank, California, that can produce more than 40 million pounds of PCR annually, says scrap is generally available as of early 2021.

“For the most part, pricing is up year over year,” he says. “When prices rise, volumes typically are a little healthier because more people are collecting.”

He adds that demand for the company’s PCR is good. “We produce a higher quality resin than most,” Hudson says, adding that much of the company’s PCR is being used in packaging.

Circulus has two additional plants under construction in Oklahoma and Alabama that Hudson says will be operational this year.