Steadily increasing prices in the last year for both plastic scrap feedstocks and semifinished materials, such as flake and pellets, indicate increased interest in recycling plastic worldwide. Complicating the picture for recyclers has been increasing demand for post-consumer and post-industrial feedstocks from large overseas recyclers. This overseas demand, especially from Asia and the Pacific Rim in the summer and fall of 1994, has resulted in what amounts to a bidding war between domestic and offshore recyclers for what they all agree are critically needed raw materials.
The Department of Commerce reported that 10.9 million pounds of plastic scrap was shipped overseas from the United States in 1994, a 52.1 percent increase over 1993. Commerce estimates for 1995 so far show scrap up 57.3 percent over the 1993 levels.
``The crisis in obtaining feedstock bottles for recycling which we saw last year has eased somewhat,'' said William O'Grady, general manager for post-consumer products of Talco Inc., a huge plastics recycler in Long Beach, Calif.
The cost of shipping PET and high density polyethylene bottles to Asia is now prohibitively high for many buyers, he said.
During the summer and fall of 1994, however, West Coast recyclers estimated as much as 80 percent of the available PET soda bottle stock, and something more than 50 percent of the HDPE milk jug supply, was going to recyclers in Korea, China and India, as well as to brokers based in Singapore and Hong Kong.
Countering the view that the export market has cooled off, Floyd Flexon, recycling director for Johnson Controls Inc. in Manchester, Mich., said overseas demand for PET is still staggering.
Flexon, who is also president of the Plastics Recycling Co. of California, which directs that state's bottle-deposit program, said, ``I would say that more than 90 percent of the 70 million pounds of PET we have recycled in the past year has been shipped overseas. The Asian buyers, who are willing to pay cash, have driven the post-consumer PET prices up to the high 20 cent-per-pound area for baled bottles.''
He attributed the Pacific Rim's demand for raw bottles to a number of factors, including increased demand for polyester for fibers to replace cotton textile production. Widespread cotton crop failures last year forced Asian textile makers to shift to polyester to keep their plants running, and increased demand beyond the region's ability to supply it.
Nor was the reach of the Pacific Rim demand confined to the West Coast. Recyclers east of the Mississippi, who asked not to be identified, said at times Asian buyers have contracted for loads of material and been willing to pay shipping costs. These cash deals, coupled with competition among domestic recyclers for a finite number of feedstocks, has aggravated shortages and costs.
Jorge Zapata, general director of RPN Plasticos Del Norte SA de CV, a recycler and molder in Monterrey, Mexico, has a completely different set of problems involving the import and export of plastics.
``For three years now I have been bringing in scrap plastic,'' Zapata said in a telephone interview. ``Until the peso crisis, it was less expensive for me to get scrap PET, acetate, polystyrene,everything, in the [United] States, than to get it here.''
Zapata cleans and grinds the material, and then sells it to both Mexican and U.S. firms. He said the PET he buys in the United States has a good market in Mexico, but that he gets much better prices for his flake in the United States, where he sells it directly and through brokers.
A plastics broker and importer based in New Jersey who requested anonymity said he frequently imports large quantities of plastic scrap from processors in South and Central America and the Caribbean. He declined to say how much scrap he imports, but said that the processors overseas have nowhere to send their trim and scrap.
``I bring the material in, find a company to grind it and clean it and then send it back to the companies in Latin America, or sell it to whomever will buy it,'' he said.
For Tony Moucachen, president of Merlin Plastics Ltd. of Victoria, British Columbia, the market for plastic scrap is truly global. A flake and pellet maker who specializes in HDPE and PET, Moucachen buys scrap in Canada and the United States and sells it wherever he can.
``I get about 40 percent of the material in the [United] States,'' he said. ``And I sell about 80 percent of what I make there, although I also deal with Pacific Rim countries and others.''
Two years ago he sold more to the Pacific Rim, but demand has increased so dramatically in North America that now feedstocks are in rare supply without being removed from the market to offshore destinations, he said.
Moucachen said the addition of recycling capacity by U.S. recyclers has intensified the demand for feedstocks to recycle, and that Asian reprocessors are no longer taking the majority of plastic scrap from the West Coast, due to the currency fluctuations, the increases in recycled flake and pellet prices, and in shipping costs.
He said recyclers must recognize they are competing in a global market, and that the dynamics are very volatile.
``The market swings back and forth all the time, and you just have to be ready to take advantage of it,'' he said.