Three consecutive years of an improved recycling rate for PET bottles are encouraging to recyclers, but that has not translated into an expansion of capacity in the United States. That's because, for the first time, more than half of the PET collected ended up overseas, mostly in China.
In 2006, the PET recycling rate improved to 23.5 percent - just two-tenths of a percentage point below where it stood in 1999 - and a record 1.27 million pounds of PET were collected, according to the 2006 PET recycling report issued Oct. 29 by the National Association for PET Container Resources in Sonoma, Calif., and the Association of Postconsumer Plastic Recyclers in Washington.
But amount of pounds purchased by offshore markets jumped nearly 38 percent - from 448 million to 618 million pounds, and offshore purchases were nearly identical to the 619 million pounds purchased by U.S. recyclers.
Add in the 35 million pounds of PET that went offshore as part of mixed bales, and the data indicates that 51.4 percent of the PET collected in the United States headed overseas.
Unlike previous reports, there was no volume breakdown, by country, of the exported PET. However, in 2005, China purchased 91.1 percent of the PET exported from the United States, as buyers there are willing to pay as much as 25 percent more than U.S buyers.
As a result, even though the pounds of PET material collected has virtually doubled to nearly 1.3 billion from 691 million in 1997, the amount available to U.S. recyclers has only increased to 619 pounds from 580 million in that same nine-year time frame.
That is causing U.S. companies to import an average of 104 million pounds each of the past three years, including 97 million in 2006.
``We are importing 25-30 percent more material than we did five years ago - which amounts to 25-30 percent of our needs,'' said one PET reclaiming executive.
While the cost of the material is competitive, there are added logistics costs, and companies in Mexico and South America often sell only on a cash basis, with down payments required, adding greater risk for recyclers.
``The amount of material going overseas is a concern,'' said Steve Alexander, APR executive director. ``From a reclaimer's standpoint, it exacerbates a tight supply. If we could get more of that material, it would encourage more reclaimers to put in new technology and possibly add capacity.''
Instead, capacity in the U.S. market in 2006 shrank by about 100 million pounds to 817 million pounds, as Wellman Inc. closed its plant in Johnsonville, S.C., and Southeastern PET Resin Recyclers closed its plant in Polkton, N.C.
About two-thirds of the U.S. capacity to recycle PET is at companies that reprocess the material for their own consumption, leaving only about 276 million pounds of recycled PET capacity for commercial markets.
``Only one-third of the material is available to merchant markets, and that isn't good for these people,'' said Dennis Sabourin, NAPCOR executive director. ``Reclaimers are unwilling to put money into capital assets if there is a degree of uncertainty,'' he said, adding: ``Unless we are careful, the recycling industry will not grow in the U.S.''
Fiber continues to account for almost half of the end market for recycled PET, followed by food and beverage bottles at 16.3 percent and strapping at 15.4 percent.
The amount of PET used in the U.S. and not recycled continues to increase. In 2006, according to the NAPCOR-APR report, 4.25 billion pounds of PET - or more than 76 percent of the amount used - was not recycled. That's up from the 3.9 billion pounds of PET that did not get recycled in 2005.
The report said the movement toward packaging sustainability - which it called the ``Wal-Mart effect,'' after that company's packaging score card - could begin to help U.S. PET recyclers.