Earth Day 2014: U.S. recycled plastic industry booms; some recycled products now more expensive than new, according to PetroChem Wire

NEW YORK, April 22, 2014 /PRNewswire/ -- Recycled polyethylene terephthalate (PET) pellets are now selling at higher prices than new PET produced from scratch at refineries. As of April 15, 2014, bulk virgin PET was selling at 72 cents per pound while recycled PET pellets were fetching as much as 77 cents per pound, according to PetroChem Wire, a chemical industry news and price reporting service that also publishes Repro-Regrind Resin Report, which covers recycled plastics markets.

"When recycled plastic costs more than new production, you know the U.S. has dramatically ramped up its efforts to decrease the amount of plastics heading to the garbage," said Xavier A. Cronin, editor of Repro-Regrind Resin Report.

PET is a plastics-making chemical produced at oil refineries used to make a myriad of food and beverage packaging—from soda and water bottles to peanut butter jars. The PET bottle was patented in 1973. Four years later the first PET bottle was recycled. In the 44 years since the first Earth Day in 1970, the recycling of PET has risen steadily and accelerated over the last decade.

One reason for the virgin-to-recycled-PET price anomaly is an overproduction of virgin PET in the U.S. This is the result of investors being convinced that demand for PET would rise, so they built new PET production plants in recent years.

"A funny thing happened on the way to expansion," Cronin said. "We started recycling our plastic far more than in previous decades and demand for recycled plastics rose with the advent of bills for bottles requiring deposits in some states."

Another factor Cronin cites is that some plastic-bottle makers must include a certain percentage of recycled PET in their new production to meet environmental mandates. This further increases demand for recycled PET pellets.

According to the National Association for PET Container Resources (NAPCOR), in 2012, 31.8% of PET bottles in the U.S. were recycled or 859,000 tons. This is up 6.6% from 2011's 802,000 tons, and up by 53% from 2002's 398,500 tons.

The recycling process has become routine in many areas of the U.S. The highest volume of recyclables comes from people's homes. Bottles, jars and everything else plastic (and metal and paper) are put into recycling bins for curbside collection. The municipality picks it up each week and it gets separated and cleaned.

PET plastics, which form a sub-category, are further separated. They are bundled and secured into bales that are sold to companies that reprocess them into recycled PET "flake," which is then "pelletized." In recent years, advances in plant technology have allowed some recycled PET flake to be used directly in the production of new packaging, bypassing the pellet stage. Companies that buy recycled pellet use it to make new plastic packaging.

The Repro/Regrind Resin Report covers prices on the fast-growing market for recycled plastics. The twice-monthly newsletter contains more than 70 assessments for pellet and flake material and is published by PetroChem Wire, a daily newsletter about U.S. commodity petrochemical markets. It counts every major petrochemical and refining company among its readers, as well as many major manufacturing concerns, global conglomerates, industry consultants, equity analysts and government agencies. It also produces maps of chemical plants and pipeline systems. For more information, visit www.petrochemwire.com.

SOURCE PetroChem Wire