One of the nation's largest plastic recyclers claims demand is slipping for post-consumer high density polyethylene. As a result, KW Plastics Inc. in Troy, Ala., is notifying its suppliers that it is reducing the price it will pay for baled bottles. Until recently, recyclers had said they could not buy enough bottles to keep up with demand from plastics processors.
Arthur Ferguson, KW's recycling division manager, attributed a softening of the market to the decision by some house-hold-products firms to cut the amount of recycled content in their packaging. KW has capacity to handle about 125 million pounds of HDPE per year.
Procter & Gamble Co., based in Cincinnati, and Clorox Co. of Pleasanton, Calif., among other companies, announced recently that they were reducing their demand for post-consumer material. P&G and Clorox were using more than 25 percent post-consumer HDPE in their containers, but scaled back to the 25 percent level required by some state laws.
Heavy demand and shortages of baled bottles have helped prices for post-consumer HDPE natural flake and pellets keep pace with the rapidly risingprices for virgin HDPE.
``The whole market is driven by economics,'' Ferguson said. ``We have seen prices for feedstocks increase about 400 percent, and decided to initiate this change because of a softening in the markets for natural [post-consumer recycled] pellets.''
Ferguson declined to say whether KW would pass along its reduced feedstock prices to its plastics processor customers.
``We believe we will have to make more changes,'' he said. ``And we would like to see the price [for natural post-consumer pellets] be at parity or below virgin prices. We don't really know what will happen. We don't tie our prices to virgin prices.''
Mike Kopulsky, vice president of Envirothene Inc., a large HDPE recycler in Chino, Calif., said demand for natural post-consumer HDPE has softened, but that the demand for recycled HDPE in general has not.
``I think that as the price of natural HDPE rose to the virgin level, a lot of people who said they couldn't use mixed-color HDPE in their core-layer containers, or who said they couldn't use anything but bag- and bottle-grade HDPE, suddenly found that they could. It was more a case of that they wouldn't use it as long as the price of natural was low.''
Kopulsky thinks prices for natural HDPE will drop, but not as low as they were 18 months ago.
``I think that for every 2 cents the price of feedstock drops, the flake and pellet price will drop 1 cent,'' he said. ``But I would not expect it to drop drastically.''
Ferguson said he has no idea how long the latest trend will last. He said KW's reductions for baled material will be phased in with contract customers as their contracts come due.