Stronger markets ahead?

Pricing and demand for secondary plastics has been holding steady, but at least one recycler predicts that markets will strengthen in the next month.

"There was a big drop on the post-consumer side about three months ago," a recycler based in the Gulf Coast Region says. "Since then, it has pretty much remained the same."

A Midwest broker of PET agrees that markets have been stable for the last three months. However, he adds, "I've been hearing from other people that it's been going down. I guess I've been lucky to keep our pricing the same."

A recycler based in the Midwest reports that demand has been steady, saying, "Markets are still pretty good."

The Gulf Coast recycler reports that PET is selling for 16 cents per pound, delivered, while HDPE is selling for 17 cents, down from highs of 22 cents and 28 cents, respectively, in the last year. However, the Gulf Coast recycler adds that he expects fewer PET bottles to be generated for recycling as we enter the fall, helping to increase pricing for that grade.

The biggest factor currently affecting plastics export markets is the duty China is placing on plastic scrap imports. The Midwest recycler says export markets have fallen slightly in light of the extra expenses associated with the import duty and freight charges. "Computer scrap, depending on who you talk to, has come down 20 percent," he says. "We've had to drop our prices by a penny across the board to make up for the duty."

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The Gulf Coat recycler says that exports of post-consumer PET to China have fallen off, but he doesn't think the duty is to blame, but a question of whether the U.S. will allow polyester fiber produced from the material into the country.

While China's duties are increasing, India and Taiwan have reached reciprocity with their import duties, the Midwest recycler reports, allowing material to flow more cheaply into India.

In other global plastics news, Israel Petrochemical Enterprises Ltd. announced in mid-July that it was temporarily shutting down its Carmel Olefins Ltd. plant in Haifa, Israel, because of fighting between Hezbollah and Israel. The company produces LDPE (low density polyethylene) and roughly 200,000 tons of polypropylene per year from virgin material.

The Midwest recycler says pricing for polypropylene has been affected by this move. "They are taking off of the supply end, so markets are going to go up."

When it comes to industrial resins, the Gulf Coast recycler says it's a seller's market. "Domestic demand remains strong," he says.

The Midwest recycler expects markets to strengthen further in the next month, citing the corrosion of the BP oil pipeline in Prudhoe Bay, Alaska, as an indirect contributing factor. However, rather than close the field, BP declined production from 400,000 barrels per day to 150,000 barrels. This, coupled with a ceasefire between Israel and Hezbollah, should positively affect oil production, easing pricing somewhat.

According to Bloomberg, "Crude oil for September delivery fell 82 cents, or 1.1 percent, to $73.53 a barrel on the New York Mercantile Exchange, the lowest closing price since July 28." However, as the Bloomberg report notes, oil prices are still 10 percent higher than they were a year ago.