While prices for mixed-color and natural high-density polyethylene (HDPE) and polypropylene (PP) bales have contracted, polyethylene terephthalate (PET) bottle bales have maintained their value, Bill Keegan of Dem-Con Cos. says. Dem-Con operates a material recovery facility (MRF) in Shakopee, Minnesota, that serves the Minneapolis-St. Paul area as well as greater Minnesota.
Since October of last year, Keegan says, HDPE bales, particularly mixed color, have decreased considerably in price after gaining substantially from January through July of 2021. As of February, he says natural HDPE bale prices have decreased 45 percent from their highest price last year, while mixed-color HDPE bale prices have fallen 60 percent. PP bales prices as of February were 40 percent lower than their high last year.
Keegan says HDPE and PP scrap is “coming back to more historic prices,” adding that their values are still roughly 30 percent greater than they were in 2019.
Bale prices for these polyolefin scrap grades are responding to lower virgin plastic prices. “Underlying demand for recycled content is buffering that,” Keegan says as brand owners recognize that recycled content is a necessity, even if it’s not mandated by law.
The pressure is especially strong when it comes to PET packaging, which is diverting material away from fiber production. According to the “2020 PET Recycling Report” that the National Association for PET Container Resources (NAPCOR), Charlotte, North Carolina, released in late 2021, the amount of recycled PET (rPET) used by end markets in the U.S. and Canada increased by 10 percent in 2020, signaling strong support of postconsumer content in brand packaging. RPET use by the food/beverage and non-food/beverage bottle categories grew by 32 percent, surpassing fiber for the first time as the primary user of postconsumer PET bottles.
A scrap buyer for a company that primarily serves the fiber market says bottle-to-bottle recycling is the “holy grail” in rPET. Unless fiber producers are willing to pay more for material, it will go to the bottle market, where the mandates are at play and the consumer pressure is more acutely felt, he says.
Bottle-to-bottle demand also is increasing the barrier to entry for reclaimers, which have to invest in more sophisticated technology and processes to produce food-grade rPET, the buyer says. “That is the backside to the forward progress,” he adds.
One PET recycler that is investing in additional bottle-to-bottle recycling capacity is Evergreen, based in Clyde, Ohio. The company began recycling to have recycled content for the strapping its parent company produced. Now, roughly 95 percent of its rPET pellet production is sold for use in food-grade packaging, Evergreen General Manager Greg Johnson says.
Evergreen completed the acquisition of UltrePET and Novapet from wTe Corp., Bedford, Massachusetts, in November 2021. The move helped to increase its annual rPET capacity to more than 147 million pounds from 40 million pounds just one year ago. Additionally, Evergreen is adding a 54,000-square-foot building that will house four high-volume, food-grade rPET manufacturing lines at its Clyde site, taking its overall rPET pellet production to 217 million pounds.
“We’ve gone to the market and said, ‘Here’s our capacity. Once we sell it, we’re done,’” Omar Abuaita, president and CEO of Evergreen’s parent company, Greenbridge, says. “So, we are signing up multiyear contracts with a lot of the major CPGs (consumer packaged goods), and, once we’re committing to them, we’re done with everybody else.”
Abuaita says two major factors were behind the company’s purchase of UltrePET and Novapet. “We’re constantly looking for opportunities to expand our reach to our existing customer base as well as new ones,” he says. “And another big play with the Nova acquisition was the security of supply. That was a pretty big factor in our decision-making.”
Purchasing Novapet allows Evergreen to tap into the supply of PET bottles generated in Nova Scotia and the other Atlantic provinces of Canada.