Most of us don’t think about crude oil or natural gas price fluctuations until we fill the tanks of our automobiles or pay home heating bills. Nor do we ponder the direct link between energy costs and the many plastic resins we use in our daily lives. But the fact is you can’t talk about North America’s polyethylene market without including natural gas since it’s the feedstock for about 70 percent of the ethylene output, including high-density polyethylene (HDPE).
HDPE resin is most familiar in the form of a plastic milk jug or shampoo bottle; these can be re-used to make containers for many household and automotive products. Recycled HDPE (rHDPE) is also increasingly used to make plastic lumber products like marine decking, playgrounds, railroad ties, picnic tables and park benches.
Post-consumer resin prices fare best when virgin resin and feedstock prices are high. Raw plastic resin pricing tends to track the seasonal fuel market. Other market fundamentals such as supply/demand and global economic activities — including the growing demand for plastic inputs for manufactured goods in developing countries — also play important roles.
A recent surge in rHDPE domestic demand (exports fell), primarily in the eastern half of the country, caused prices to rise during what is normally a soft season. How long this trend will continue is difficult to guess. In the meantime, our long-term hope is for the plastic-lumber industry, growing at 40 to 50 per cent annually, to serve as a “pull through” to bring more rHDPE to market.
Contact Damian Bassett at 416-594-3457, ext 3457 or visit www.csr.org (CSR Sheet located under “Publications”)