Mike Schedler
A PET bottle recycling status report

Correspondingly, U.S. reclaimers produced more clean RPET flake, and converters consumed more RPET, than in any previous year. Was this a fluke, or the beginning of a trend?

The answer lies in looking at two key questions:

• Will collections continue to increase, and if they do,

• are there markets for the finished products?

Six reasons are cited for the increase in collection in NAPCOR’s 2004 Report on Post Consumer PET Container Recycling Activity:

• New York City returning to full-service plastic collection

• The installation of 21 auto-sort units at intermediate processing centers

• The increase in the California Redemption Value

• The incremental increase from additional PET bottle sales

• New commercial volumes

• Previously unreported export volumes that were sold domestically in 2004.

Of these six, only the last will not continue to increase collection volumes as the industry moves forward. Perhaps the two most interesting points are the move toward automatic sortation at MRFs and other intermediate processing centers, and the increase in commercial collection. The former begins to address the increased yield losses at the intermediate processing level as PET became smaller and lighter; the latter is a natural extension of single- stream recycling.

Ironically, in the past, the introduction of single-stream facilities generally meant a reduction in the recovery of PET bottles. The combination of better sorting technologies and recycling companies’ extension of single-stream recycling opportunities to venues such as schools, offices, arenas and factories is beginning to reverse that trend.

Meeting the market demand

If collections continue to increase, or if Chinese buyers become less aggressive, will there be enough market demand to absorb the material domestically? Barring any major economic dislocation, the answer appears to be "yes." While some remaining fiber applications are still vulnerable to foreign competition, the polyester carpet and industrial non-woven applications continue to grow.

Strapping, which is rapidly becoming the RPET market pacesetter as shown in Figure 1, is growing about as fast as the tooling to convert from steel strapping to PET can be manufactured.

There has been a renewed interest in the use of RPET by sheet manufacturers, a combined result of California content legislation, economics and customers’ desire to use a more environmentally friendly material than PVC. This is the fastest growing PET market segment, with consumption in 2005 exceeding one billion pounds; this segment can clearly consume two to three times the amount of RPET purchased in 2004.

Given Coke (Atlanta) and Pepsi’s (Purchase, New York) voluntary commitment to use 10-percent recycled content in their bottles, the bottle-to-bottle category clearly has room for substantial growth. Finally, new non-traditional applications that have the potential to use hundreds of millions of pounds have been making steady progress toward mass commercialization. Some examples of these non-traditional applications include water-resistant coatings and mining bolt adhesives. All totaled, it’s feasible that existing markets are capable of consuming twice the recycled PET purchased in 2004.

Did the increased activity in 2004 continue in 2005? While NAPCOR has not yet compiled hard data, it would appear to have done so. Many of the same market conditions of 2004 also prevailed in 2005. Most reclaimers reported increased production and were able to buy the bales to accommodate this. Chinese exporters continued in many ways to be the price setters, but for the most part curtailed their buying to the west coast. The increased collections in California, as reported by the state Department of Conservation (Sacramento, California), may have facilitated this.

In any event, it appears that there were enough bales for both the domestic reclaimers and exporters at what might be considered only slightly inflated pricing, further supporting the assumption that there was probably another modest increase in the recycling rate. Also, as in 2004, end-market demand remained strong, although there was a distinct weakening in the green RPET market toward the end of the year.

What then for 2006? As is often the case for the PET recycling industry, there are more questions than answers.

Will new virgin PET capacity slated to come on line in 2006 once again swamp the market?
Most industry analysts feel that the impact of these additions will not be felt until the fourth quarter of 2006 and the major price decreases usually associated with oversupply will not be seen until then. A lot depends on the Voridian plant set to open in Columbia, South Carolina, which will employ their new Integrex technology. The company projects that this technology will offer substantially lower production costs than that of existing plants. With this plant ultimately slated to produce one billion pounds per year, its impact could be significant.

What impact will the global markets have on the U.S. PET recycling industry?
Postconsumer PET bottles are a commodity that is collected and traded around the world. What happens in other countries can dramatically impact the U.S. market. Demand from China for recycled PET has been both a blessing and a curse for developed markets like the U.S. and Europe. As shown in Table 2, the Chinese, at times, have sopped up bales that the market may otherwise have not been able to absorb; however, their pricing often prevents local reclaimers from achieving a sustainable return on their investment.

For example, 2005 saw a number of operations close in Japan as bottles were sold to Chinese markets. However, as China begins to use more PET bottles internally, will PET recovery efforts in China begin to lessen the need for imports? Reportedly, the Chinese produced around two billion pounds of PET bottles in 2004 for domestic consumption. In 2005, there were reports of buy-back centers soliciting bottles in most major Chinese cities, but thus far their domestic collections have not appeared to dampen the appetite for imports. This could change if recovery rates reach 35 percent, a level that is probably attainable.

Will energy costs remain high and how will they affect the market?
Most analysts maintain that the correlation between the price of oil and virgin PET is indirect. That does not mean that PET isn’t impacted by energy costs  – it is. The price of energy directly impacts the cost of raw materials, production and transportation but often supply-and-demand fundamentals outweigh their impact. It does appear that the new energy market dynamics ensure that floor prices will be higher than in the past when oversupply occurs; that is good for the recycling industry.

How will new high performance bottles and resins impact the recycling stream?
There is no question that the composition of the RPET stream is getting more complex. As brand owners continue to demand both higher performance packages and packages that differentiate their product, more non-traditional bottles will be produced. (Non-traditional bottles are defined as those other than monolayer clear, transparent green or light blue PET bottles.)

In addition, bottle manufacturers have looked to new, specially formulated virgin resins to increase production. The combination has created a challenging environment for reclaimers producing high quality RPET resins. Thus far, none of these technical advancements has been a show stopper for PET recycling, but there is no question that they bring additional costs to the system.

Are there any market signals being sent by the public sector with respect to PET recycling?
Aside from California, where public policy in terms of recycling is constantly being discussed and amended, very little has been adopted in other parts of the country that impacts PET recycling.

However, discussion and implementation of recycling policy in Canada has sharply increased with shared stake-holder responsibility and stewardship programs being the primary focus. If the Toronto curbside collection program was the forerunner of U.S. curbside efforts in the '90s, then perhaps these Canadian initiatives will be the harbinger of a renewal of interest in recycling in the U.S. RR

Reprinted with permission from Resource Recycling, P.O. Box 42270, Portland, OR 97242-0270; (503) 233-1305, (503) 233-1356 (fax); www.resource-recycling.com

Related topics:

Related links on IP PETrecycling.cz in English only:

• Czech Gateway to the PET bottles Recycling