Unlike bales of postconsumer mixed plastics and film, bales of postconsumer high-density polyethylene (HDPE) bottles produced in North America have been traded largely within the domestic market. Therefore, this material has not been a victim of the disruption that China’s import restrictions and tariffs on U.S. scrap imports has created for other scrap commodities.
Instead, sources say HDPE bottle bales are benefitting from a slight increase in quality related to material recovery facility (MRF) operators slowing down their processing lines and making other investments to increase the quality of their recovered fiber bales to meet China’s quality specifications.
Quality gets a boost
“I think they have begun to get a little better,” says Scott Saunders, general manager of KW Plastics Recycling Division, Troy, Alabama, of the HDPE bales out of the MRFs that supply the company. He adds that KW Plastics’ typical yield on an HDPE bottle bale was 85 percent, but that number declined to 81 or 82 percent in recent years. However, as a result of China’s import restrictions, Saunders says, yield has returned to the 85 percent level.
KW Plastics Recycling Division produces HDPE and polypropylene (PP) postconsumer resins (PCR) for use in personal care, automotive, agriculture, construction, pipe, paint and coatings, recreation and flexible packaging/sheet applications. The company holds a letter of no objection (LNO) from the Center for Food Safety and Applied Nutrition at the U.S. Food and Drug Administration (FDA) for KWR101-150, one of its natural postconsumer HDPE resins.
Saunders says HDPE bale quality “will continue to improve with time” as a result of these efforts on the part of MRFs.
Dennis Denton, chairman of the board for Denton Plastics Inc., Portland, Oregon, also says HDPE bale quality has increased since China first introduced its National Sword policy in 2017.
Denton Plastics produces roughly 12 million pounds of utility-grade recycled HDPE annually. Of that material, the company sells 80 percent into the industrial construction and agricultural markets, he says.
Denton Plastics works directly with the MRFs that supply the company to create a bale that works for its needs. “We absolutely reward higher quality with higher pricing,” Denton says.
Rewarding quality with premium pricing is not an approach that KW Plastics has taken, though the company does work with the MRFs that supply it to improve their bale quality, Saunders says. “That is a service we’ve always offered,” he says, “but it is being more utilized today because of Green Fence and National Sword.”
Regarding the company’s pricing, he says, “We quote prices based on average quality material,” explaining that a single MRF can produce bales of varying quality depending on the processing shift. “You can get 10 loads from a facility, and they all will be different.”
However, Saunders says, KW Plastics does punish the outliers that produce bales of poor quality by billing them down.
The supply situation
Saunders characterizes generation of postconsumer HDPE material as flat.
Regarding postindustrial generation, he says this is dictated by how busy molders are. Saunders says that when the economy is good, generation is good, which has been the case throughout 2018.
Of the HDPE material that KW Plastics processes, Saunders says 98 percent is in the form of bottle bales.
Denton says he has found that more recovered HDPE is available on the market because of China’s actions related to mixed plastics bales. “A lot of people who have had to contend with China not taking mixed bales are separating these materials and properly preparing them for market.”
Commercial generators, he adds, also are doing more segregation at the source since China’s National Sword policy was introduced early last year.
Looking at HDPE recovery in 2016, the most recent year for which data were available as of press time, the amount of HDPE bottles collected for recycling fell by 31.7 million pounds to 1,112.1 million pounds, according to the “2016 United States National Postconsumer Plastic Bottle Recycling Report.” The Plastics Division of the American Chemistry Council (ACC) and the Association of Plastic Recyclers (APR), both based in Washington, released the report late last year. The HDPE bottle recycling collection rate declined to 33.3 percent in 2016 compared with the 2015 rate of 34.4 percent.
Roughly 5 percent of the No. 2 through No. 7 bottles collected for recycling was in the form of commingled bottles bales, according to the study. “For HDPE bottles, the contribution from commingled bottles bales and mixed rigids bales was about 2.3 percent of the total HDPE bottles collected in 2016,” while PP bottles accounted for nearly 70 percent of the commingled bottle bales and mixed rigids bales.
The study also notes that many HDPE bottle applications use product concentrates, leading to a growing number of smaller bottles or fewer bottles made for the total number of uses. “Recycling is denominated by weight, and reduced weight per container adversely affects recycling economics.”
Despite that, the amount of HDPE used to make bottles in 2016 increased by 5 million pounds, or 0.2 percent, from the amount used in 2015, according to the report. HDPE bottles accounted for 34 percent of total bottle production in 2016, the study notes, while they equaled 38 percent of the total amount of bottles recovered for recycling.
While exports of postconsumer HDPE bottles increased in 2016 to 193 million pounds, or roughly 17 percent of the total HDPE bottle material collected in the U.S., 32 percent of that material was shipped to Canada, the ACC-APR report shows.
Within the U.S. market, Saunders says mixed-color bales have been trading in a range of between 14 cents per pound on the low side to 22 cents per pound on the high side this year. He describes natural HDPE bale pricing as being a bit more volatile this year, selling for 28 cents per pound on the low end to 44 cents per pound on the high side. “It is at 40 cents right now,” he says as of mid-September.
Regarding pricing for KW Plastics recycled HDPE pellets, he says, “Our resin price went up because the bale price went up, but bales went up more than resin, which thinned our margins a little.”
Denton also mentions that low-quality recycled HDPE pellets from Canada have been entering the U.S. market in his region. “Canada’s flooding us down here with their program out of Vancouver, British Columbia,” he says. “There seems to be a lot of material coming from up in that direction. That keeps prices down.”
On the demand side
Denton says demand from the construction and agricultural sectors his company serves is increasing. “The economy is better, and when the economy is better, more product is being made.”
He says companies are more interested in using recycled content in their products for the quality and cost savings they offer and not just the sustainability reasons some people think. “The bugaboo used to be that it wasn’t as good as virgin,” Denton says of recycled HDPE. “If you get with a company that knows what they are doing, that is not a problem. We tend to believe that we know what we are doing.”
Denton says his company’s recycled HDPE is “as good or better than virgin but at less price,” noting that the utility-grade HDPE he provides can be 20 to 25 percent less expensive than virgin material.
Vineet Gupta is president of Prime Plastic Products Inc., a Vista, California-based company that reprocesses up to 60 million pounds of plastic scrap per year in forms that include natural and colored low-density polyethylene (LDPE) pellets and natural and colored HDPE pellets.
He says demand from the injection molding sector is a bit weak as of late September as fewer customers are purchasing recycled HPDE because they can get off-spec resin inexpensively.
He expresses concern that once Royal Dutch Shell begins production at its petrochemical plant in Beaver County, Pennsylvania, the U.S. market will be flooded with even more off-spec resin. The facility is not expected to begin production until the early 2020s, though, according to press reports.
The plant will make linear low-density polyethylene (LLDPE) for flexible food packaging and pouches, shrink wrap, stretch film, wire and cable insulation and agricultural films. The plant also will produce HDPE for bottles, toys, crates, drums, buckets and housewares.
The Shell facility will include an ethane cracker with an annual capacity of 3.3 billion pounds of ethylene and three polyethylene units with a combined annual production capacity of 3.5 billion pounds.
As of the current market, Gupta says, “The bright spot is domestic bottle consumption because HDPE milk and detergent bottles are widely used.”
He also mentions the pipe and profile market as being a steady consumer of his company’s recycled HDPE.
According to the “2016 United States National Postconsumer Plastic Bottle Recycling Report,” postconsumer natural HDPE’s primary markets continue to be nonfood-application bottles and film, while the pigmented material is used in pipe, lawn products and nonfood bottles.
The report notes that plastic lumber continues to consume a range of postconsumer resins, including HDPE, LDPE, mixed rigid containers and wide-specification virgin resin.
Regarding his company’s performance in 2018, Saunders says, “We have had a very good year,” adding that demand has been “very good.”
He says the U.S. has an adequate market to support the tonnage of recycled HDPE produced domestically.
Denton takes an optimistic view of the year ahead, predicting good demand “as long as the economy is steady.”
He adds, “Recycled HPDE is a very good material for a lot of products. More capacity is coming on stream, and that will steady the market; we won’t have big swings in price.”