Plastics recycling sector reacts to coronavirus pandemic

The global escalation of COVID-19 is leading reclaimers to enact new safety regulations, while on a wider scale it impacts some collection programs, reduces Asian scrap plastics demand, constrains global shipping, dents stock prices and threatens an economic recession.

The coronavirus, which last week was deemed a pandemic by the World Health Organization (WHO), has grown steadily in scale since the first outbreak in China late last year. It is now in 159 countries, areas and territories. As of Wednesday, March 18, there have been more than 193,000 confirmed novel coronavirus disease (COVID-19) cases globally and more than 7,800 deaths, according to WHO.

The U.S. government last week declared a national emergency, and the impacts are filtering down into daily life across the nation.

Reclaimers get proactive

The plastics recycling sector is not yet reporting substantial changes in operations or demand. Instead, companies are enacting procedures within their day-to-day workflow that will limit the potential of coronavirus spread.

Denton Plastics in Gresham, Ore. is implementing additional cleaning procedures, social distancing and schedule adjustments, according to company President Nicole Janssen.

The company has heard from a couple of its customers that are anticipating a 10% to 15% decline in business in the next couple months, she added.

KW Plastics of Troy, Ala. on March 12 wrote to its suppliers and customers that the company does not currently anticipate interruptions to operations “unless demand or legal intervention dictates.”

KW outlined the steps the company has taken to protect employees, including maintaining a distance between employees in the workplace, increasing the level and frequency of cleaning, limiting in-person meetings as much as possible, and postponing business travel.

Roplast, a recycled plastic bag manufacturer, published a plan detailing the proactive steps it has taken to reduce coronavirus impacts.

“Currently, all recycling and production operations remain running normally with no supply chain disruptions,” wrote Roxanne Spiekerman, general manager and executive vice president.

The company noted most of its products are made at its facility in Oroville, Calif., which is outside the state’s high-risk regions for coronavirus transmission as outlined by the CDC.

Still, Roplast is encouraging sick employees to stay home and maintaining a “non-punitive leave policy,” regularly cleaning and sanitizing the facility, increasing education on hygiene and safety, soliciting information on recent and planned travel from employees, and more.

Roplast also asked that its customers have a “contingency supply plan strategy consistently reviewed to ensure a steady material stream and no production interruptions.”

The Western Plastics Association told members this week that its processors so far continue to operate as usual. Their primary concern is with ensuring employee safety to limit potential exposure.

The U.S. Occupational Safety and Health Administration (OSHA) published a website with a variety of information and guidance for workplaces in light of COVID-19.

The situation in Spain, where far more stringent policies have been enacted than in most of the U.S., may give North American recycling operations an idea of what to expect in the coming weeks.

Pablo Leon, CEO for Asia Pacific Region at Spain-headquartered plastics recycling firm Fosimpe SL, said that with the situation shifting every day, his company is “in a kind of ‘permanent alert status.'”

“Measures implemented in Spain are very restrictive, although industrial production is still allowed to go on in safe working environments,” Leon said. “Workers are allowed to come to work at our processing facility, provided that they haven’t had any relationship with any potential case.”

So far, Fosimpe has fared well, but Leon noted some of the company’s suppliers and customers have been affected. In some cases, workers came into contact with people with COVID-19 “and they were forced to shut down their operations,” he explained.

Domestic logistics have continued as usual, and although many European countries have closed their borders, trucks with goods are generally allowed to pass, Leon said. But he added it’s impossible to forecast what the situation will be because of the fast pace of change.

Cities and companies react

Even as the vast majority of municipalities have not made changes to recycling service, the coronavirus impact has been felt in programs around the country.

Dalton, Ga. has paused collection service for two weeks beginning March 16.

“Because curbside recycling pickup requires sorting by hand and there are many unknowns about how the virus spreads from surface to surface, this service is being suspended to avoid chances of community spread,” the city stated in a release.

In Washington state, the city of Tacoma announced on March 13 its solid waste division was “experiencing some COVID-19 impacts, which may result in collection schedule changes for both residential and commercial customers.”

The city added that, in the case of collection delays, it would prioritize garbage collection above recycling, yard waste and other services. The release added the city will strive to collect materials within one week of the scheduled collection day. The Tacoma News Tribune reported the potential delays followed a higher number of employees taking sick time or precautionary time off.

In California, the Humboldt Waste Management Authority (HWMA) in Eureka temporarily closed its recycling center to comply with social distancing recommendations from local and federal officials. The closure means residents will not be able to redeem containers for their deposit value at that location.

“Because this virus can spread from person-to-person contact, HWMA is suspending [California Redemption Value] Buy Back activities in an effort to decrease person-to-person interactions while directly handling used aluminum, plastic or glass CRV materials at the Eureka Recycling Center,” the organization stated in a release.

Lambertville, Pa. suspended its drop-off film recycling program that sends material to composite lumber manufacturer Trex.

A recycling center in Ashland County, Ohio is suspending drop-off recycling due to concerns over workers coming into contact with contaminated medical waste. The Times-Gazette newspaper reported a local recycling center is pausing the service because it sometimes receives bags with used tissues, hygiene products, medical waste and more. The bins will be temporarily removed.

“There are concerns that reusable shopping bags can sustain COVID-19 and contribute to the spread of the coronavirus,” the news outlet reported. A local mayor also called for a ban on the use of reusable bags, describing it as a temporary public safety measure.

Impacts to shipping

According to shipping giant CMA CGM, freight strife in China has begun to lessen as the coronavirus spread has slowed within that country.

“Manufacturing activities are gradually picking up, more port workers and truck drivers are returning to their posts, and cargo flow is easing up at the major coastal ports,” the company wrote in early March. “In short, business operations have now entered the recovery phase.”

The China Scrap Plastics Association (CSPA) reports that factories are slowly resuming production. But “factory operation efficiency is still far from a desirable level in the absence of a full workforce to engage in regular production activities,” wrote Steve Wong, executive director of CSPA.

Logistics within China is heavily impacted, he added, with freight employees concerned about returning to work for fear of infections. This, Wong stated, is impacting the supply chain.

The coronavirus pandemic has massively disrupted ocean freight.

“Due to the coronavirus and less vessels operating, we have seen huge increases in ocean freight rates by double or even triple times the previous rate within the last two months,” Wong stated. As an example, he noted the freight rate for shipping from the U.K. to Hong Kong nearly tripled in the last three months, skyrocketing from $700 to $2,000 per container.

And despite the “unbelievably high rates,” Wong reported some shipping lines are fully booked through the end of this month.

Leon of Fosimpe said export logistics are getting difficult, “because we are starting to feel the lack of containers shipped from China and Asia two months ago, when the coronavirus started there.”

He echoed the rate increases and surcharges being levied by shipping companies, costs that have caused “great losses” for Fosimpe.

Wong wrote that for the Asian plastics recycling industry, which remains the largest market for U.S. scrap plastics, the shipping situation has caused “an upset to the normal moving of plastic scraps to user countries in Southeast Asia and a short-supply situation is seen.”

During the first quarter of this year, shipping lines reduced the numbers of sailings across the Pacific Ocean. According to The Wall Street Journal, containership operators as of early March had cancelled over 110 sailings bound for North American ports; normally, there are about 200 containership sailings across the Pacific a month.

The reduction came as Chinese factories produced fewer goods and the Chinese logistics industry has struggled to move products to and from ports. Because of the production slowdown, fewer ships are needed to bring goods to North America. As a result, fewer ships and containers have been arriving on U.S. shores, meaning fewer were available to make the return trip to Asia.

The Wall Street Journal reported U.S. railroads and truckers serving ports are also being affected, with drivers struggling to pick up and drop off containers because of reduced gate capacity at ports. The Los Angeles Times wrote about the disruptions hurting truckers and dockworkers at the ports of Los Angeles and Long Beach, the busiest ports in the Western Hemisphere.

Hitting stock values and the economy

Pandemic concerns sent global financial markets into wild fluctuation and spawned fears of an economic downturn. Financial institutions Goldman Sachs and JPMorgan in recent days predicted a recession will hit the U.S. economy this year as a result of the coronavirus.

Waste management companies have seen significant stock value declines during the past week. Waste Management, Republic Services and Waste Connections essentially lost all stock-value gains they’d seen since early 2019.

Still, credit rating firm Moody’s on March 17 published a report showing the waste management and packaging sectors as “largely resilient to coronavirus-related issues” under models employed by Moody’s. Global shipping, however, was classified as having “high exposure” to coronavirus fallout.

Experts disagree about how long it will take for the U.S. economy to rebound from the turbulence. But a disruption in the U.S. economy, whether short-term or long-term, would certainly affect the scrap sector.

Adina Renee Adler of the Institute of Scrap Recycling Industries noted that scrap companies are the “first step in a supply chain,” so any time the manufacturing industries talk about supply chain disruptions, that includes scrap processors.

“Manufacturers curtailing production means they’re demanding less material, and we could have a supply glut again,” Adler said.

Meanwhile, a development separate from the coronavirus posed further problems for the scrap plastic market outlook. Oil prices plummeted last week after a disagreement between OPEC and Russia over oil production cuts. These tanking oil prices represent “one of the worst ripple effects seen by the plastic scrap market,” wrote Wong of the CSPA.

“While most of the recyclers have been in a dire liquidity situation due to very slow moving inventories arising from effects of the coronavirus, a buy-cheap-tomorrow sentiment is now looming in the market and has deterred buying interest all around,” he stated.

A version of this story appeared in Resource Recycling on March 17.

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