*Producer price index is based on December 1980 average prices as 100; source: U.S. Bureau of Labor Statistics

Domestic demand and pricing for a variety of recycled plastics appear to be strong as March approaches.

A Southeast-based reprocessor who specializes in high-molecular-weight (HMW) plastics, such as drums, IBC (intermediate bulk container) totes, sheet and other dunnage materials, and postconsumer plastic bottles, describes domestic demand as “getting stronger each week.” He adds, “We are sold out for February.”

A reprocessor and compounder based in the Midwest says domestic demand for recycled polypropylene (PP) and polyethylene (PE) is strong as of mid-February. “Our injection-grade co-polymer PP is sold out.”

He continues, “Recent increases in prime pricing are pulling repro and regrinds along.”

The Midwest-based reprocessor adds, “People have been predicting a drop in PE pricing with new capacity coming onboard in 2017 and 2018. We just have not seen that yet. Even PET (polyethylene terephthalate) has gone up.”

He refers to the 3 million metric tons of virgin (PE) production capacity that are slated to come online in North America by the end of 2017. Most of the additions will occur on the U.S. Gulf Coast and will include legacy players like ExxonMobil, Dow Chemical and Chevron Phillips Chemical. The additional capacity is being built not only to respond to growing North American demand but also export demand.

“HDPE (high-density polyethylene) HMW is seeing increased demand because of a rebound in the pipe market, [the] resumption of fracking and virgin price increases,” the reprocessor based in the Southeast says.

Export demand, however, remains lackluster, according to both reprocessors. The Midwest-based source says pricing has been flat, though he describes sales to Mexico as being strong.

“Recent increases in prime pricing are pulling repro and regrinds along.” – a reprocessor and compounder based in the Midwest

“Export is depressed except for higher-end scrap,” the Southeast-based reprocessor adds.

Regarding generation, the source based in the Southeast says it has been decreasing in that region as collectors have gone out of business.

Decreased generation could become more widespread in the future, the Midwest-based source says. “I believe scrap generation is holding steady, but there are signs things are slowing down,” he says. “Most people I talk to see a softening already and more to come this summer.”

He describes generation from the construction sector and from food packaging manufacturers as strong but predicts a slowdown in the automotive sector in the near term.

According to an article in The Detroit News, auto sales declined by 1.8 percent in January 2017 relative to January 2016.

The decline in January sales confirmed the expectations of analysts, most of whom expect auto sales to plateau in 2017 for the first time in the last decade, The Detroit News reports.

When it comes to the possible effects of the Trump administration’s policies and rhetoric on the plastics recycling industry, the Midwest-based reprocessor says “threatened border control taxes as well as the attack on trade agreements are causes for concern.” He adds, “At some point there needs to be consistency and a defined policy, or it will slow things down.”