Recycle Raw Material Pricing, June 2007

18-Jul-07

Recycled materials, in most cases, are still a bargain, but low demand has kept prices stable for the time being, although some prices rose about 2¢/lb in the last quarter. Most experts believe it will be more of the same in the next quarter. New capacity for some virgin resins coming on stream could push down prices and create overcapacity in recycled product. That happened last fall, when virgin prices fell and processors backed off buying recycled resins. Chinese purchasing of recycled materials for export has a big effect on pricing and availability here, but this market has been in flux for the last few months. Recyclers say the Chinese government imposed a new quota system and higher duties on imports of scrap. Post-consumer collections have increased this year, for the first time in a long time, says one buyer of bales. "We went through a period of four or five years when collections did not increase. We have a lot of catching up to do." Recycled polyethylene prices have gone up about 6¢/lb this year. However, R-LLDPE prices have now started to drop because a lot of big buyers stayed out of the market this past fall, according to one scrap buyer. "LDPE is selling in the 46¢ to 49¢/lb range and LLDPE mixed resins are in the 40¢ to 44¢/lb range. But with prime resins selling at 55¢/lb or higher, people will be looking to buy regrind again," he said. Right now, virgin suppliers are seeking a price increase and they will likely get it because of rising feedstock demands, observers say. Post-consumer green PET prices have gone up while post-consumer clear prices have remained fairly stable. Green pellets are up about 2¢/lb on average. But recyclers are concerned that prices could turn down sharply because of massive new virgin capacity generating excess supply. "There are projections that the bottom is going to fall out of this market," notes one recycler, who adds that some virgin capacity expansions have been slowed down. (Plastics Technology)