With post-consumer plastic resin requirements increasing rapidly, companies throughout plastics value chains face similar challenges in controlling feedstock supply, scaling up supply and managing capital costs. This sentiment was clear during a Plastics Recycling Conference session as well as a recent industry interview.
One particularly important aspect of building capabilities and capacity is establishing long-term contracts that feature price floors and ceilings, as well as allowing for pass-through for raw materials costs, said Crystal Bayliss, director of strategy and engagement at the U.S. Plastics Pact, during the March conference in National Harbor, Maryland.
Spot pricing lends itself to unpredictability, said Shannon Gordon, chief operating officer at online procurement platform Circular.co, during the session. Circular is an AI-enabled sourcing tool to help companies find PCR, aggregating and normalizing disparate data.
Well-established virgin resin markets rely heavily on contract agreements, whereas recycling markets are fragmented, opaque and unpredictable, Gordon said.
In addition, the shift from virgin resin to PCR has been remarkably slow, Gordon added. “There’s a ton of demand there, but it can’t execute.” The supply side can’t find buyers, which contradicts buyer reports of difficulty finding supply, she said: “Fundamentally there’s a transparency problem.”
Buyers often perceive a “hydra of blockers” including low quality, insufficient supply, objections from a downstream converter, unpredictable or high pricing and inconsistent batch quality, she said.
The Circular software mimics the sourcing process – researching quality, pricing and other variables via supplier websites, known databases and relationships with suppliers. In one case study, Circular aggregated a buyer’s supply across multiple converters to create a larger volume, which in turn enabled long-term contracts and lower-than-expected prices.
Pallet maker Orbis stresses reliable demand, supply
“Buying discussions have evolved significantly over the last couple decades for us,” said Lynn Hediger, vice president of product management at Orbis, in a March interview with Plastics Recycling Update. “Supply reliability has become an expectation.”
And while Orbis buys back its pallets, containers and other products as well as industrial scrap from its own customers, it also buys post-consumer material on the open market. “Given the life expectancy of our products and our business growth trajectory, we couldn’t just get the end-of-life product back from our customers,” Hediger said. “It wouldn’t suffice the demand that we have for recycled content.”
Brokers want to work with customers who have consistent, substantial demand, he said. The company can leverage its consistent demand for post-consumer HDPE and PP to establish a mutual trust with several suppliers – trust that the supplier will have consistent supply to meet Orbis’ consistent demand.
“On the flip side of that, we have become more demanding of them” with regards to the quality of the bales and reliable delivery dates, Hediger said. “So really, on both sides of this coin, the best suppliers and the best customers get to pick who they work with.”
Orbis is part of the Menasha Corporation, which has been involved in some sort of recycling operations since its start 175 years ago with wooden pails, he said. Menasha Packaging also recycles paper-based corrugate.
According to the Menasha 2024 corporate social responsibility report, Orbis has recovered and reused 2 billion pounds of recycled resin since 2006. In 2023, Orbis used more than 335,000 pounds of ocean-bound material in its reusable packaging as part of its Ocean in Mind program.
A version of this story appeared in Plastics Recycling Update on Apr. 16.
