Supply chain slowdown could boost demand for recycled materials
By Danielle James
The same supply chain disruptions that slow Michigan manufacturing could help the recycling industry bring in new business.
The opportunity started with pandemic shutdowns, which disrupted manufacturing and moving goods, said Dave Smith, a recycling coordinator at the Michigan State University Recycling Center.
That resulted in shortages of materials for businesses across the state, said Patrick Gagliardi, the chair of the state Liquor Control Commission.
Since 2020, the adult beverage industry has struggled to manufacture and ship glass, aluminum, cardboard and bottle caps, Gagliardi said. And recent spikes in the price of petroleum in response to the war in Ukraine have not helped.
“That was just hard on businesses, especially those who get their goods through some sort of transportation,” he said.
Shortages of raw materials cause price spikes, Smith said. And the price increase for petroleum is making plastic much more expensive.
The cost to make “virgin” or new plastic products is much higher than normal, he said.
The cost of polypropylene, a flexible plastic resin that’s used to make products like reusable water bottles, plastic food containers and car parts, has risen roughly 36% since 2020, according to Statistica, an online data analytics platform.
Its report, which compiles price points from 2017 to 2022, shows that the price jumped to $1,285 per ton in 2021 and was $1,208 per ton as of March..
For plastic producers, the higher cost makes it harder to keep up with demand, Smith said. As oil prices increase, plastic prices do as well.
But recycling centers like Michigan State University’s could benefit when cost-cutting companies look for alternatives.
Selling recycled plastic is one way.
“Generally, as oil prices go up, so does the value of recycled plastic scrap,” Smith said. “I would say that there has been more demand, especially for products associated with shipping.”
According to data from Recycle Ann Arbor, number one and two plastics, which contain polyethylene, have the strongest domestic recycling markets. Polyethylene is used to make the plastic you see in trash bags and film.
This is followed by number five plastics, which contain polypropylene.
And it’s not just plastic.
“Over the last year I have received several calls from companies which recycle cardboard, inquiring if we would be willing to sell them bales of material,” Smith said.
“So there definitely has been an increased demand for cardboard and paper products. We have also seen strong markets for recycled plastic scrap,” Smith said.
The increase in demand for recycled products allows recycling centers to charge higher prices, Smith said.
According to Resource Recycling, an industry business journal, prices for baled recycling center plastic increased substantially in April.
The national average price of PET plastic, a form of polyester, increased by 17% to 39.22 cents per pound, compared to 33.42 cents in March.
Polypropylene sold for an average of 34.56 cents per pound in April, which is also a 17% increase from 29.44 cents per pound in March.
But more demand for recycled plastic also requires more supply. The recycling collected monthly at MSU took a dive in April of 2020. The numbers still haven’t returned to pre-pandemic levels.
December 2019 saw 188,141 pounds of recycling collected on campus and 248,850 pounds from the drop off center. In December of 2021, the last month with data available, the center collected 135,449 pounds on campus and 119,990 pounds from the drop off center.
Michigan State University Recycling Center data. Image: Infogram
Smith said he’s not sure if continuous supply chain disruptions will also lead to less recycling coming into the drop off center in the future.
“If you have been to the grocery store over the last couple of years you will have seen some empty shelves,” Smith said. “If the product isn’t there to buy, then consumers aren’t able to use it and recycle the bottle or tub when they are done consuming the product.
“That being said, most retailers have been able to restock shelves so this has been a fairly short term problem,” he said.
And despite the slow recovery for Michigan State’s center, recycling in Michigan has reached an all-time high, according to the state Department of Environment, Great Lakes and Energy.
The agency found that the overall state rate of recycling increased from 14.25% before 2019 to 19.3% this year, a 35.4% increase.
This is partly due to a state investment to increase the number of households with curbside recycling carts and available drop-off sites, department director Liesl Clark said in a press statement. This has resulted in nearly three quarters of the state with access to recycling services.
“Michiganders are recycling now more than ever before,” Clark said.
The estimate from a three-year analysis that started in 2019 is that over 500,000 more tons of cardboard boxes, milk cartons, plastic bottles and other recyclables have been returned. Recycling centers across the state then process 440,828 tons of material annually, not including the additional 60,000 tons of organic material.
Recycling rates may continue to rise with the recent announcement of state grants to expand recycling centers in Flint, Marquette and Alpena, among others.
Alpena will receive a $1 million grant to construct a $5 million recycling center near the Alpena County Regional Airport.
In Marquette, a $251,000 grant will fund a project of nearly $500,000 to provide 96-gallon curbside recycling carts to 6,100 households and 100 businesses.
A $300,000 Renew Michigan grant would support an $8 million project for ACI Plastics to build a recycling system. The system would process 25 million pounds of plastic film each year when it opens in Flint in 2023.