Higher U.S. PET recycling numbers mask some problems

MYRTLE BEACH, S.C. (Oct. 23, 11:55 a.m. ET) -- The amount of PET bottles recycled increased for the sixth straight year in 2008 to more than 1.45 billion pounds, catapulting the PET recycling rate to 27 percent, its highest level since 1997.

The PET recycling report, unveiled at the Association of Postconsumer Plastic Recyclers meeting in Myrtle Beach, was released Oct. 22 by the National Association of PET Container Resources (NAPCOR), APR and the PET Resin Association (PETRA).

Recycling data for high density polyethylene and other containers are scheduled to be released next week. The report is expected to show an increase in the HDPE recycling rate driven largely by a decline in virgin HDPE resins used to make bottles in 2008.

The otherwise strong PET recycling numbers mask several similar, troubling trends.

For starters, the actual increase of 55 more million pounds of recycled PET was lower than the 124-million-pound increase the previous year.

Second, much of the 2.2 percentage point increase in the PET recycling rate can be attributed to a drop in virgin PET resin production. PET resin production dropped by 317 million pounds in 2008, or 5.6 percent below 2007 levels.

“The bloom came off the rose in growth [for PET resin] because of the continued light-weighting of bottles” and environmental concerns, said Mike Schedler, technical director of Sonoma, Calif.-based NAPCOR, who helped prepare the report. “The only growth categories were teas and vitamin waters.”

In addition, domestic PET recyclers used only 42.4 percent of the PET collected in the U.S, with the rest going to export markets, mostly China. For the third straight year, China purchased more than half the PET bottles collected in the U.S. — 53 percent, or 766 million pounds, mostly in PET bales.

What’s more, the 615 million pounds that U.S. PET recyclers purchased from domestic sources in 2008 was lower than the 641 million pounds they purchased in 2007, and the 619 million pounds they purchased in 2006.

Schedler said the U.S. PET recycling sector’s 80 percent capacity utilization is “not terribly healthy.” NAPCOR estimated U.S. PET reclamation capacity at 847 million pounds, with another 182 million pounds of capacity from some plants that were operating either sporadically or in start-up mode.

That means that if Chinese recyclers had stopped buying PET in 2008, the U.S. would have been short some 400 million pounds of capacity to process all the PET recycled in the United States. That situation that has changed somewhat since then, because a number of PET recycling plants that are planned or currently under construction.

* ORPET, which includes Dennis Denton of Denton Plastics and the Oregon Beverage Recycling Cooperative as investors, announced Oct. 21, that it will built a 50 million pound-per-year plant near St. Helens, Ore., that will start up operations in the second quarter of 2010.

* Clear Path Recycling LLC began construction this summer of a planned 280 million-pound-capacity plant in Fayetteville, N.C., with the first line scheduled to launch in the first quarter of 2010. Clear Path is a joint venture of PET and polyester staple-fiber producer DAK Americas LLC and carpet manufacturer Shaw Industries Group Inc. When the second line launches, in fall 2011, the plant’s annual use of recycled PET bottles will be equal to about 58 percent of the PET bottles that are collected and stay in the U.S.

* Peninsula Packaging Co. in Exeter, Calif., is building a $6 million food-grade recycled PET plant in Turlock, Calif., with an annual capacity of 60 million pounds.

* Earlier this year, Custom Polymers PET LLC in Athens, Ala., and New United Resource Recovery Corp. in Spartanburg, S.C., opened food-grade recycled PET plants and Phoenix Technologies International LLC of Bowling Green, Ohio, started a new line to make its second generation of food-grade pellets.

* In addition, Global P.E.T. Inc. in Perris, Calif., added a second PET wash line with annual capacity of between 20 million and 25 million pounds, and packaging thermoformer PWP Industries of Vernon, Calif., opened an 80,000-square-foot PET recycling facility in Davisville, W.Va.,

Both Schedler and Dennis Sabourin, executive director of NAPCOR, are encouraged by collection trends. They attributed the modest increase in pounds collected in 2008 to the economic downturn and freefall in recycled PET prices that occurred in the last quarter of 2008.

“There has been aggressive activity by the state of California and an increase in auto-sorting at material resource facilities,” that improve the quality and quantity of PET recycled, Schedler said. He said there has been an average of 32 installation of autosort equipment per year at MRFs since 2006.

“We have had a resurgence of interest in the environment, so there is increased implementation of projects,” Schedler said. “I expect the PET recycling rate will continue to go up.”

Demand for recycled PET actually shrunk slightly in 2008 in strapping, non-food bottles and engineering resin markets. But the growing use of recycled PET in film and sheet applications, which has more than doubled since 2006, continues to fuel the overall market. Some 153 million pounds of recycled PET were used for sheet and film applications in 2008 compared to 128 million in 2007 and just 74 million in 2006.

More than 42.7 percent of the recycled PET still goes into fiber applications, the largest end-market for recycled PET.

Bill O’Grady, past chairman of Washington-based APR and vice president of Talco Plastics Inc. in Corona, Calif., said in a news release that APR sees the increasing PET recycling rate as an encouraging trend.

“This healthy rate increase is a real reminder of the ongoing viability of recycling and the country’s commitment to it,” he said.

This is the fourth year that NAPCOR, APR and PETRA have partnered to produce the annual recycling report, and the 14th year that NAPCOR has issued the report in its current format.

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