“I think everybody knew this was going to happen and they prepared accordingly for 2015 to be a difficult year,” APR's Alexander said. “This whole gloom and doom that this is the demise of the recycled plastics industry couldn't be more wrong because there are continued demands for recycled plastics.
“There's always been the demand there. Regardless of the price of oil, demand has always exceeded the supply of recycled resin. That's not changing at all,” he said.
Moore indicated that there is a certain segment of customers who will switch from recycled resin to virgin resin when the price is right.
“The responsible end-users are trying to help the reclaimers get through this difficult time by continuing to buy even though the price of recycled content may temporarily be above or at par with virgin material,” Moore said. “Not all of them, I want to say that, because we know that's not true.”
Corporate sustainability goals, in some markets, do help support recycled plastic resin prices, said Scott Saunders, general manager of KW Plastics Recycling Division in Troy, Ala. But that certainly is not the case universally.
“There's always a caveat that if it costs them money that they really don't go about it wholeheartedly,” he said about some recycled resin buyers.
Managing pricing in the current downturn in pricing is no different than what his company does every day in a business that has tight profit margins, he said.
While prices for what KW pays for raw material and what it can sell its finished product for have both declined, Saunders said demand has remained.
That's a big difference from the trough that started in 2008 when both price and demand cratered for recycled plastics. There's been only one month that his company, which handles both polypropylene and polyethylene, has not been sold out in 2015.
Saunders agreed that more pain is being felt at the MRF level where those operations are not receiving as much money for the baled materials they supply to plastic processors.
With a close eye on incoming costs and outgoing prices, KW does not really have much room beyond those factors to maneuver, Saunders said. That's because the company already runs a tight ship without fat to cut.
“Fortunately, our business is so competitive,” he said, “every day we have to look at our costs.”
Despite the current bumps in the road, Alexander said he wanted to make a key point.
“We're here to stay,” he said. “It's a strong, vibrant industry. It continues to attract more and more investment and capacity and technology and equipment.”
A California law that requires at least 25 percent post-consumer content in rigid plastic packaging containers, Alexander said, is an example of once force beyond economics that helps the recycled plastic market.
“The commitment to recycled plastics is not completely price driven. There are other factors involved,” he said.
Consumer products companies that use such packaging are not going to make different containers just for California, so the law has the net effect of spreading that requirement beyond that state's borders, Alexander said.
“Major companies, they don't just selectively package for California. They essentially look at North America as a region,” he said.
Corporations that have embraced the use of recycled plastic in packaging also see value in continuing with the material even when pricing becomes difficult when compared to virgin resin.
“You've got corporate commitments for sustainability projects and goals. You've got branding that's going on in terms of corporate brand companies that have committed to sustainability. You've got a lot of zero waste activity that's going on out there,” Alexander said.
All of this leaves Alexander and his APR hopeful about the future despite the current bumps in the road.
“I think we're extremely optimistic that 2016 is actually going to be an extremely profitable year for the industry. Because demand continues to rise. You are going to see the price differential mitigated a little bit,” he said.
“You see companies making more and more commitments to utilizing PCR (postconsumer resin) every day. You've got major companies committed to enhancing recycling,” Alexander said. “That's not going away.”