Outwardly, recyclers are more optimistic this year.
Major players such as Image Industries Inc. and KW Plastics Recycling Division are adding large amounts of capacity. And prices for materials like PET have improved.
However, excess virgin resin capacity, an inadequate supply of quality recycled materials and public apathy toward recycling could upset the outlook for some recycled resins.
``There is less interest now for consumers to recycle,'' said Bill Field, president of Ex-Tech Plastics Inc. in Richmond, Ill. ``There are some corporations whose philosophy is to buy post-consumer resin even when it costs more. But overall, there is apathy. People won't put their money where their mouth is.''
One business principle remains: To stay afloat, recycling must make economic sense when compared to other methods of waste management and resource conservation.
``That will always be the conflict,'' said Randy Tess, president of Catenation Inc. in Green Bay, Wis., which recycles PET and high density polyethylene. ``Business will always battle environmentalists,'' who want to mandate recycling regardless of the economics, he said.
This year's outlook for recycled resins includes restrained optimism from recyclers of PET.
``PET is a function of the economy,'' Tess said. ``PET prices will increase this year but that depends on the [virgin resin] plants that come on line. One big opening could put us back where we were.''
Dennis Sabourin, vice president of post-consumer procurement and recycling industry affairs for Wellman Inc. of Shrewsbury, N.J., agrees.
``PET prices are recovering and should remain firm through 1998,'' he said.
Prices today are still as high or higher than they have been historically, said Gary Pratt, president of P&R Environmental Industries Inc. of Youngsville, N.C. His firm recycles all post-consumer plastics. He expects PET prices to increase during the first quarter.
``You can't compare current prices to an anomaly,'' he said, referring to the precipitous drop from 1995-96.
When virgin resin is plentiful and prices drop, it puts pricing pressure on recycling firms and companies that are using post-consumer resin as an alternative.
``Quality is important,'' said Alex Ginieis, president of TechPlast USA Ltd. in Spokane, Wash. ``The recycling process transforms scrap into a new raw material. Contaminated plastics just can't compete with virgin.
``In 1997, the companies that had quality materials survived,'' he added. ``Even some brokers are gone now.'' TechPlast recycles all non-PVC plastics.
``The PET recycling rate will drop slightly or remain the same with 1997,'' said Sabourin. ``[This year,] the number of pounds of material will increase. About 50 million more pounds will be recycled in 1998.''
Public apathy is still a concern, but Sabourin added: ``Sooner or later, something will happen to change the pendulum. It may not be an oil crisis or a garbage barge, but something will get the public's attention.''
HDPE recyclers are mixed on their predictions of where prices are going this year.
One recycler forecasts a downward trend early that will plateau later in the year, another thinks prices will crash because of excess capacity and yet another predicts a feeding frenzy at the end of the first quarter, followed by prices rebounding substantially.
Regardless, many of the larger HDPE recyclers are adding capacity while smaller competitors are going out of business.
``For every one that closed up that processed a million pounds per month, the Goliaths of the industry are adding 50 million pounds per year in capacity and swallowing up the capacity of the little guys,'' Pratt said.
KW Plastics Recycling Division in Troy, Ala., is expanding from 215 million pounds per year of HDPE production to 650 million pounds per year.
``The market conditions are favorable,'' said Arthur Ferguson, KW president. ``We've been with most of our suppliers long enough and get good quality materials.''
Another industry source said the price for post-consumer pellets has a ceiling that is difficult to rise above: the price of inexpensive off-grade virgin PE.
``Why buy post-consumer when offspec is the same price?'' he asked. ``It puts a squeeze on the top end; companies have to sell for less and pay even less for material at a [materials recovery facility].''
This may lead companies to use less-expensive regrind HDPE instead of repelletized material. Firms like Hancor Inc. of Findlay, Ohio, even have stopped using recycled materials because they are is not cost-effective.
On the other hand, Pratt said some recyclers are establishing market share by adding capacity while the supply is declining.
``Entrepreneurs are half-crazy to jump into the recycling market now,'' he said. ``They would have to be well-financed and very committed. Supplier loyalty, those relationships count.''
Firms adding capacity and starting up, like KW Plastics and Fix-Corp International Inc. of Beachwood, Ohio, are banking on a strong market five years down the road. Deep pockets and a willingness to risk those dollars may pay off big in the next millennium.
The PVC recycling industry should start on solid ground this year. Recycled PVC pricing seems to have a seven-year cycle, said Ex-Tech's Field.
``We haven't seen prices fluctuate,'' said Scott Levine, co-owner of International PolyCycle in East Providence, R.I. The company processes rigid PVC for the construction and profile markets. ``Rigid prices should hold through the beginning of 1998.''
``The quality is better and continues to get better,'' Field added.
Ex-Tech, which uses post-consumer and post-industrial flexible PVC, also is adding capacity and expects to see sales grow 25-30 percent this year, Field said.
``The amount of regrind is as plentiful as ever,'' he said. ``The packaging industry is doing well and there is more sheet to be recovered.''
But he added that he thinks prices for reground PVC generally are down. Pacific Rim countries have slowed their purchases because of their economic problems. He conjectured that if virgin price increases would stick, it would help support the regrind market.
``I hope the overseas market comes back,'' Levine said. ``1997 was a horrific year. Exporters had more volume but at lower prices. On the other hand, the construction industry is growing and we want to be along for the ride.''
Meanwhile, PVC bottle recycling has collapsed, and the Washington-based Association of Postconsumer Plastic Recyclers is working to create markets for post-consumer PVC bottles.
``When [Occidental Chemical Corp.] stopped making Ecovinyl [a line of 25 percent post-consumer compounds made from PVC bottle scrap], it had a ripple effect on the industry,'' Levine said.
On the PS front, recyclers continue to struggle to handle post-consumer PS, especially in food-service applications.
National Polystyrene Recycling Co., which shut the doors of one plant last year, has begun charging customers for food-service materials in Chicago and stopped paying for food-service products at the Corona, Calif., plant.
FP International in Redwood City, Calif., may have an edge in PS recovery. With 36 percent of its recycling in post-consumer and 64 percent in post-industrial PS, its business is not diminishing, said Debora Hill, manager of corporate recycling at the firm.
``It's not hard to find the material [foam packaging],'' she said. ``It's hard to find post-consumer clean material. A lot of the stuff out there we can't use.''
FP, which uses PS to make packaging products, has been getting calls from some NPRC suppliers.
``If we didn't have an end market, we could not recycle PS,'' Hill said. ``We've had an end market from day one. It's an integral part of our business plan. We want recycled PS to stay economically viable, but we use it even when the virgin price is down.''
Overseas markets also will affect PS this year. FP has exported billions of pounds of PS in the past. Because of overcapacity, China has closed its doors.
``This will be a very interesting year,'' Hill added. ``I wish I had a crystal ball to look into. It'll be a challenge to meet whatever transpires.''