Some plastics recyclers are finding it difficult to remain positive given the current environment, which is characterized by low pricing and slow movement.
“Thank God I am a man of discipline, or I would be drinking a lot,” a plastics broker and reprocessor based on the West Coast says. He adds that the market is “the worst” he has seen since he entered the industry in 1993.
While his company has remained profitable, the broker/reprocessor says market conditions have led to the shuttering of a number of his suppliers. “Parts of the supply chain have completely gone away.”
The reprocessor says uncertainty that has arisen because of the trade war with China is affecting domestic manufacturing, causing it to sputter. He adds that this is affecting demand for postconsumer resin (PCR).
Additionally, the abundant availability of inexpensive virgin and off-spec plastics is reducing any cost benefit that was previously associated with using some recycled plastics, he says. “Recycled material is on par with or higher than the off-spec price.”
Companies that continue to consume recycled plastics are paying more slowly, the source on the West Coast says. He mentions one polyethylene terephthalate (PET) recycler whose payment terms have expanded beyond 60 days. “I get the short-term relief of moving material, but then I cannot collect payment,” the West Coast source says.
He wonders whether the company is tight on cash or if “they think we don’t have anywhere else to go.”
“I get the short-term relief of moving material, but then I cannot collect payment.” – a plastics broker and reprocessor based on the West Coast
Steve Wong of plastics recycling firm Fukutomi Recycling Ltd., Hong Kong, in his September market update email, writes of similar issues. “The raw material prices, both of prime virgin plastics and recycled plastics, have been continuously decreasing since the end of last year without any signs of improvement.”
He adds that the price of polyethylene (PE) film scrap has decreased by 20 percent to 30 percent since May.
Movement also has been challenging. “Factories have been clearing their current stock before they place new orders due to the volatility in the price and market,” Wong writes. “The trade war between the U.S. and China has an impact across all industries. Down trends for prime, recycled and scrap materials prices appears to be a ‘new normal.’”
He says the “global policy trend against transboundary movement of mixed plastic scraps” will make recyclers in developing countries “vulnerable to supply disruption.” Wong adds that while the Basel Convention amendment reclassifying mixed plastic scrap under Annex II, meaning it will be subject to control, does not go into effect until 2021, some countries already have begun adjusting their import procedures to align with the change. “The exporting countries such as Japan and a few EU (European Union) countries are quick to follow and becoming more cautious in the flow of plastic scraps and shipment bookings,” Wong writes.