1. PET and HDPE Market Conditions Steve Alexander, President / CEO

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5. APR believes that functional, attractive, and economical plastic products can be designed that are also fully compatible with material recovery and plastics reclamation systems.

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7. What we’ll look at today A snap review of resin market factors. An assessment of some potential impacts of plastics recycling market conditions.

8. PET

9. PET Market Conditions PET bale prices have been on a long slide since the summer of 2011, when bales sold for about 38 cents per pound (FOB supplier’s dock, East Coast). Pricing is under a dime now, as shown in the chart we maintain.

10. PET Bale Prices

11. PET Market Conditions However, this slide reflects the same market movements of prime resin, as shown in the next chart, which looks at bale prices and the value of virgin resin in the past year.

13. PET Market Conditions So what explains these dismal conditions? The primary cause, of course, is the low value of prime feedstocks, as seen in the next graph. The gray area at the bottom is the value of oil. Note that all resins are similarly affected.

14. The value of oil versus recovered plastics (2006-2015)

15. PET Market Conditions There’s more to the story. These conditions also affect the market: Flattening bottle demand. Sales of full-calorie soda have fallen by 25 percent in the past two decades (bottled water is now a larger seller). Though the impact is less dramatic in the past, bottle light weighting continues.

16. PET Market Conditions PCR demand from other sectors is also not stellar (staple fiber, strapping, etc.). Thus, prices are down today due to an over-supply of PET (prime and recycled). This is a market dominated by the end user, not the plastics supplier.

17. Where is PET Headed? The analysts suggest the following: A sizable increase in PET production will come to play in early 2016 when M&G’s new Corpus Christi plant opens. It is said to be the world’s largest at 1.1 million tons per year. Global economic growth is needed to sop up all this new plastic. This is also needed in order to make the petrochemical feedstock market more competitive, thus pushing oil prices upward.

18. HDPE

19. HDPE Market Conditions As one might expect, the value of baled HDPE containers has also been impacted by the low value of oil and natural gas. The earlier slide showed the relationship of PE pricing to oil. The next graph displays HDPE homopolymer bale prices over the past six years (FOB supplier’s dock, East Coast).

20. HDPE Milk Jug Bale Prices

21. HDPE Market Conditions In several ways, current HDPE market factors are similar to those for PET: Flattening generation due to lower milk consumption. Weakness in PCR demand from some converters. Scheduled ethylene cracker shutdowns for maintenance repair pushed up the value of the monomer, and thus virgin and recycled PE pricing moved higher in the past five weeks.

22. Where is HDPE Headed? The analysts suggest the following: Prices will stay low until the oversupply created by new ethylene plants is removed. New PE capacity is also coming on line in 2016. This too is expected to exert downward price pressure.

23. Conclusion The global economy needs to rebound so plastics (virgin and recycled) are more in demand. A key element is getting China back into gear. The greatest fear is the current low value of all recovered materials (plastics, fibers, metals) will lead to a reduction in collections and processing.

24. Conclusion This will lead to a resurgence of anti-recycling sentiment. PET and HDPE reclaimers will be called upon to exert local, state and national pressure to keep programs operating. This will entail the development of ways to handle the economic pressure of weak prices for recyclables (new ways to contract for collection and processing, etc.).

25. PlasticsRecycling.org Steve@PlasticsRecycling.org