Virgin plastic production is thriving in the US, fueled by the North American shale boom. But the reversal of fortune for the US chemical industry has highlighted a bigger challenge amid widespread concern about plastic waste and sustainability.
The growth of shale activity across the US unearthed ethane feedstock so cheap that a region that had been facing naphtha-fed plant shutdowns and petrochemical imports saw the cost advantage of home-fracked gas shaping its future as a global petrochemical supplier.
As such, the focus has overwhelmingly been on ethane-fed crackers and derivative polyethylene (PE), the resin used to make the most-used plastics in the world, and less on how to deal with the plastics they produce after use.
Companies are stepping up their efforts in recycled plastics, most notably with the Alliance to End Plastic Waste, to which dozens of companies have committed more than $1 billion to find solutions to the plastic waste problem.
While petrochemical giants like Dow, BASF, LyondellBasell, Sabic, Braskem, Sinopec, Sasol and Reliance Industries are among the alliance’s members, most efforts in the US focus on research and funding.
Production is still mainly virgin plastics, with inclusion of recycled resin in new plastic products being pushed by resin buyers. And resin producers face the same key challenge as their counterparts in other regions, of sourcing enough high-quality plastic waste as a feedstock.
New ethylene, PE capacity
Fourteen new ethane crackers that are operational, under construction or planned from 2017 beyond 2020 will add nearly 18.5 million mt/year, or 52%, more US ethylene capacity. In addition, 28 new PE plants starting up or planned in the same span will increase capacity by nearly 60%, or 13.67 million mt/year.
Other derivatives are accompanying some of the new crackers, such as monoethylene glycol or alcohols units, and a new polypropylene plant under construction. The companies that went all in on these projects include the biggest global names in petrochemicals: Dow, ExxonMobil, Chevron Phillips Chemical, LyondellBasell, Formosa Plastics USA, Sasol and Ineos.
US PET imports
The US is a net importer of PET, having received more than 2.2 million mt overall in 2018. Mexico was by far the top source, followed by Canada and Thailand.
This may change, however, as a major PET complex under construction in Corpus Christi, Texas, will sharply reduce that import need. Thailand-based Indorama Ventures owns one-third of the project, which will be the largest such complex in the world with a 1.1 million mt/year PET plant and a 1.3 million mt/year purified terephthalic acid (PTA) unit. The owners of the other two-thirds are Mexico’s Alpek, the largest PET producer in the Americas, and Taiwanese textile conglomerate Far Eastern New Century.
TOP PET IMPORTERS TO THE US
The three companies are not partners, however. They will procure their own feedstock and market their own third of the output. CEO Aloke Lohia has said Indorama expects the PET plant to start up in mid-2020, followed by the PTA plant a year later.
Yet despite the growth in virgin plastic production, Indorama, one of the New Plastics Economy signatories, has been progressing in making recycling a key part of its future business model.
Indorama largely bypassed the cracker/polyethylene rush, except for refurbishing a long-mothballed Louisiana cracker to feed its own operations.
The world’s largest polyethylene terephthalate (PET) company instead doubled down on its forte, increasing its reach with the 100% recyclable and most-recycled plastic in the world used to make beverage bottles, polyester fibers and increasingly other plastics.
“All our customers are in touch with us and demanding that we improve and increase the recycling content in our PET. We’re allocating a budget of $1 billion to recycling so that by 2025, when the brand owners want 25% content in the packaging, [Indorama Ventures] would be able to deliver them,” said CEO Aloke Lohia, during an August conference call with investors.
Go deeper: Read the full S&P Global Platts special report “Plastics recycling: PET and Europe lead the way”
The company has been actively making deals and forging partnerships aimed at increasing its own integrated recycling capabilities to provide recycled PET to customers who use it to make bottles, fibers and other products.
Those include its acquisition of Wellman International in 2011, which had two bottle washing facilities and a fiber plant that used recycled bottles flake as its primary feedstock.
The company has more recently added greenfield bottle washing capacities in Thailand and Mexico and acquired two other PET recycling companies: in 2018, Sorepla in France, and this year Custom Polymers in Alabama.
The Alabama facility processes post-consumer and post-industrial PET by grinding, washing and turning the plastic into pellets so it can be used as a feedstock for food-grade packaging and other end uses.
Closing the loop
Indorama also last year announced a joint venture with Canada’s Loop Industries to manufacture and commercialize sustainable polyester resin for beverage and consumer packaged goods companies.
The venture aims to “perpetually recycle” increasing amounts of PET plastic and polyester fiber, using Loop’s technology, with commercial production of 100% sustainably produced PET resin and polyester fiber targeted for the first quarter of 2020.
Lohia said during the August call that Indorama’s customers want PET to remain their main packaging choice, and the company sees more plastic packaging diverting to PET from other resins because PET is easier to recycle. For example, PET is being used to package more orange juice and make other non-beverage containers, like shampoo bottles, which would traditionally be made with polyethylene.
“That is good news for us. We just have to ensure we can deliver 25% recycled content,” he said.
For all these efforts, however, the US faces the same issue as Europe: collection rates.
Edmund Ingle, CEO of Indorama’s recycling segment, said that about 20 million mt of PET resin is sold into global packaging markets, and about 55% to 57% of that is recycled. In the US, the collection rate is much lower, about 28% to 30%, he said.
Ingle also said that in the next two to three years there will be a shortage of recycled PET due to a lack of extrusion and solid state polycondensation (SSP) capacity to turn PET flakes, which have been sorted, washed and ground from waste bottles, into recycled PET resin suitable for direct contact with food. Extrusion involves melting raw plastic, and SSP of PET flakes increases the weight of and purifies recycled PET so it can be used to make packaging for food and beverages.
Alpek, which owns US PET producer DAK Americas, is also working to increase its recycling capacity, under similar customer pressure to increase recycled PET content in its products. In the first quarter of 2019 Alpek acquired a 45,000 mt/year PET recycling plant in Indiana, adding to its fiber PET recycling operation in North Carolina and a food-grade PET recycling facility in Argentina.
However, Alpek CEO Jose de Jesus Valdez said during the company’s quarterly earnings call in July that the key for a circular economy is to improve the collection rate and ability to sell recycled PET at a price similar to that of virgin PET, which currently is significantly cheaper.
“A lot of bottles are not recovered, particularly in North America… Improving collection is going to be important so that we can increase our offer of recycled products,” he said.
Indorama has such technologies and is working to grow them. Ingle also noted that the cost of recycling remains a challenge, particularly with the poor quality of inputs from curbside collections. When that material is collected, it goes to a material recovery facility (MRF) to be sorted into different commodities, including PET, then baled and sold.
Some items cannot be recycled, such as small plastics like straws and packaging for mascara or toothbrushes that can get caught up in recycling machinery.
Plastic grocery bags can be recycled, as long as they are collected in bulk – a few tossed in a curbside bin can, like smaller plastics, get caught up in recycling equipment. Even PET bales made up of bottles that came from curbside bins can be of poor quality, Ingle said.
“However, the technology has advanced rapidly in the recent years, and allows companies with the latest equipment to sort more PET out of a bale, and thus improve yields and margins,” he said.