Several recent recycled PET capacity expansions and planned expansions underscore the changing market and tight supply, particularly for food-grade resin.
Companies looking for set amounts of PET are having a hard time finding good-quality supply and enough quantities of supply because there are not enough merchant reclaimers out there, said one industry source.
But that is slowly changing.
In the first three months of 2009, Custom Polymers PET LLC in Athens, Ala., and New United Resource Recovery Corp. in Spartanburg, S.C., have opened food-grade recycled PET plants.
In addition, three other companies have recycled PET plant expansions scheduled to come online in the next two quarters, while executives from two other plastics reclaimers are weighing whether to build a food-grade recycled PET resin plant in California.
* Phoenix Technologies International LLC of Bowling Green, Ohio, expects to start its new line, with an annual capacity to make 10 million pounds of its second generation of food-grade pellets, sometime in the second quarter of 2009.
* Global P.E.T. Inc. in Perris, Calif., is adding a second PET wash line, scheduled to come online in September, with annual capacity of between 20 million and 25 million pounds. Global P.E.T. also is adding thermoforming equipment so it can make food packaging from 100 percent PET flake.
* Packaging thermoformer PWP Industries of Vernon, Calif., has announced it will open an 80,000-square-foot recycling facility in Davisville, W.Va., in the second quarter of the year. The plant will initially produce 40 million pounds annually of food-grade PET. Most of the material will be used at its plant 10 miles away in Mineral Wells, which makes bakery and fresh-produce packaging such as trays, clamshells and bowls. Long range, the plant's annual capacity will be 60 million pounds or more.
* Ed Byrne, general manager of Peninsula Packaging Co. in Exeter, Calif., and Tony Mouchachen, resin buyer for Merlin Plastics Alberta Inc. in Alberta, Canada, are considering whether to invest in and build a $6 million food-grade recycled PET plant in Modesto, Calif., with an annual capacity of 60 million pounds. If built, the plant would supply Peninsula, which expects to make all of its food packaging from 100 percent recycled-content materials within three years.
Byrne said there still is a possibility the Modesto plan will not move forward. One reason is the state's budget crunch the California Department of Conservation has placed a stop-work order on grants for recycling projects as of April 1.
Still, if that project proceeds, it may help bring down prices for recycled PET, at least in California.
Right now there is upward pressure on prices for food-grade recycled PET.
'The market is changing rapidly because more companies are asking for recycled content for bottles, and because you have a whole category of thermoformers needing it for their food-packaging products such as clamshells, trays and cups, said one industry executive. Coca-Cola Co. recently pushed for a price hike for its deposit material, and PepsiCo Inc. is pushing its bottle suppliers to use more recycled content, industry sources said.
A large portion of the new PET recycling capacity will be used internally by the companies making the expansions.
For example, more than 60 percent of the initial 42 million-pound-per-year output of the NURCC plant in Spartanburg will be used by Coca-Cola. The plant, which began operations in January, is a joint venture of Coke and United Resource Recovery Corp. of Spartanburg.
Likewise, PWP plans to use virtually all the recycled PET from its facility in West Virginia. President and Chief Operating Officer Ira Maroofian said PWP will offer a wider range of products with recycled content.
Likewise, Global P.E.T. plans to use roughly one-third of its output to make its own food-packaging products.
The PET recycling sector industry also lost 15 million pounds of capacity when Riggins Mills in Dry Branch, Ga., shuttered its operations earlier this year. That means the new capacity aimed at the commercial markets centers on a portion of the Global P.E.T. expansion, and the new PET recycling additions at Phoenix Technology and Custom Polymers PET.
The new line at Phoenix will increase the company's annual production of food-grade PET from 80 million pounds to 90 million pounds.
The $10 million recycled PET resin plant of Custom Polymers PET in Athens started in January, but did not began operating at full capacity until April.
We can produce 25 million pounds of PET resin annually in the 50,000-square-foot expansion, said John Calhoun II, a partner in Custom Polymers Inc. of Charlotte, N.C., the parent company of Custom Polymers PET. The company has two wash lines in an existing facility that can wash 50 million pounds of PET regrind.
Custom Polymers PET, with $15 million in annual sales, was formed from the operations of Spenaco Inc., which Customer Polymers Inc. acquired in 2005. Customer Polymers had $60 million in sales in 2008 and processed 240 million pounds of recycled plastic.
The new plant will make food-grade pellets, said Calhoun. It opens up some new markets for us. We are just trying to capitalize on the green initiatives that are out there.
Calhoun said Custom Polymers PET initially is selling resins for use in packaging applications such as strawberry containers and egg cartons.
The expansion gives the company a three-building, 200,000-square-foot complex in the city. The company also has a 70,000-square-foot warehouse.
Calhoun said the expansion will increase the company's workforce to 65, up from 25 before the pellet plant began operating.
The 120,000-square-foot expansion at Global P.E.T. will increase the total PET washing capacity in Perris to 55 million pounds, said President Nadim Bahou. The new plant will be a few miles from an existing 55,000-square-foot location. When completed, one line will wash green PET and the other one clear, Bahou said.
Global P.E.T. is using equipment from Amut North America Inc. in Woodbridge, Ontario.
In September, Global P.E.T. is adding a 2,000-pound-per-hour sheet extrusion line to pair with two existing lines that have a combined capacity of 3,100 pounds per hour. The company also is adding its first two high-speed thermoforming lines, each with 1,000-pound-per-hour capacity, to make food-grade packaging from the recycled PET.
The expansions will boost the size of the company's workforce from 130 to 200 by the end of the year, Bahou said.
PET bottles-to-direct-food-content packaging is huge in California, Bahou said. We are already sold out in the packaging line.
Bahou expects to sell one-third of his output as flake, one-third as recycled sheet for food-packaging applications and convert one-third of the output into food-grade packaging. This diversification is the sustainability of the business. We are unique. There are not many people doing it from A to Z.
The new Phoenix Technologies line in Bowling Green will usher in the company's second-generation flake, trademarked LNOc, which is a compact version of its LNO flake, said President and CEO Robert Deardurff.
The LNOc bottle-to-bottle process, he said, offers a lower conversion cost and uses less energy than traditional recycled PET pellet production. In addition, as a sintered pellet, LNOc is formed without melting.
This line for bottle-to-bottle food-grade flake is compact and modular in design so we can build them anywhere near sources of supply, said Deardurff, speaking at a conference earlier this year.
He added that the technology can be used with any wash technology and could also be used to reprocess polycarbonate and plant-based resins, such as polylactic acid.
Long-term, he envisions as many as 20 of the 10 million-pound-per-year plants across the U.S. and plans to license the technology outside the U.S.
But Phoenix is not the only company expecting to expand. NURRC, which already has announced that a second line will go on stream at Spartanburg in the first quarter of 2010, is eyeing expansion.