The CEO of Trex said the composite lumber company will supplant external resin purchases with pellets from its new Arkansas facility. | Photo Courtesy of Trex
Although the new Trex composite lumber plant in Arkansas will not start production until 2027, the company’s recycling facility will begin processing post-consumer plastic film in early 2025, the CEO said during a quarterly earnings call.
“The substantial production efficiencies that we’ve achieved to date have yielded sufficient capacity at our existing manufacturing plants for us to accommodate the projected demand for Trex products in ’25 and 2026, enabling us to commence decking production at our Arkansas campus in the first half of 2027,” said CEO Bryan Fairbanks.
However, the plant will begin processing post-consumer plastics in the first quarter of 2025, and Trex will use the recycled resin at its Virginia and Nevada facilities instead of buying from external suppliers. Those two plants are expected to run at targeted utilization rates by the third quarter of 2025, Fairbanks said.
“We continue to adopt a modular approach to the development of the Arkansas campus, bringing on production lines in line with demand,” Fairbanks said.
In a February earnings call, Trex executives had said production would start up in 2026.
Looking ahead, the company expects the repair and remodel market will return to low single-digit growth in 2025, supported by lower interest rates, increased home sales and homebuilding activity, which will support overall demand.
In the near term, despite expectations of recovering consumer demand, Fairbanks didn’t rule out further variation in plant utilization rates.
“We’re definitely looking at inventories differently than we did back in 2022,” he said. Trex significantly reduced production in 2022, then brought back “quite a bit” in mid-2023 and subsequently ran at high rates, he added. “So it’s been a bit of an up and down from a production perspective. We want to get away from that.”
Price indices don’t reflect market realities
Fairbanks said Trex has seen “very, very moderate levels of inflation” in feedstock pricing but also implied that recycled plastics markets still lack transparency and that pricing indices do not reflect current procurement trends.
“I’ve never really seen a good index that covers the type of polyethylene that we use, the film (bales) coming from the marketplace,” he said. “It’s usually going to be on pelletized purchases.”
For October, the national average price of Grade A film was 18.13 cents per pound, according to RecyclingMarkets.net, higher by 30% on the year. Trex typically buys A-grade bales, which consist of 95-99% clear film that’s often from pallet wrap.
However, recycled pellet prices may not directly or immediately reflect bale pricing, especially during periods of lower demand.