CalRecycle Posts Market Report

The California Department of Resources, Recovery and Recycling (CalRecycle) has posted the 2011 California Waste Tire Market Report to its website.

The Market Report discusses key trends in California’s tire recycling market based on information gathered early in 2012. CalRecycle held a workshop on the preliminary findings in April focusing mostly on the export of tires to China and other countries which was the predominant trend in 2011.

CM Shredders

Overall the report showed there were more ups than downs in the market starting with the waste tire diversion rate which increased significantly from 81.0 percent in 2010 to 87.8 percent in 2011. This increase was largely a result of the continued, unprecedented rapid growth in the export of waste tires to Pacific Rim nations, largely for use as tire-derived fuel (TDF), which is now the largest single end-use destination for California waste tires.

In addition the domestic reuse markets for both truck tire retreads and used passenger tires were up in 2011. Ground rubber markets increased slightly, while civil engineering (CE) applications declined significantly, as did use of TDF. Given sustained export increases and generally stable to growing domestic recycling markets, it appears likely that CalRecycle will achieve its 90 percent diversion goal in 2012.

If waste tire export (but not used tire export), alternative daily cover (ADC), and TDF were excluded, the 2011 diversion rate would be only 44.4 percent. These markets, while controversial, play an important role in the expanding diversion rate for California waste tires, the report stated. CalRecycle is focused on increasing diversion through ground rubber and CE, and these segments are currently diverting only 21.6 percent and 1.4 percent, respectively.

Key Market Trends

Following are some key trends in California’s waste tire management industry and markets:

Waste Tire Generation
Status: Down
Factors: sluggish economy, high unemployment,
reduced miles driven, consumers using tires longer.

Competition for Waste Tire Supply
Status: Up
Factors: Strong demand for waste tires in Asia and other parts of the world; new baler/export facility start-ups; favorable export economics.
Concern: This is shifting the established supply lines for processors and cement kilns who use whole tire fuel.

Processor Revenue
Status: Down
Factors: increased export demand, increased competition. reduced tip fees.
Concern: processors’ business model/structure affected. Could eliminate tip fees for cement kilns or require them soon to pay for tires.

Status: Up sharply. Most significant trend in 2011
Factors: the 2010 export demand doubled over 2009 levels, and 2011 levels increased by 50 percent over 2010 export levels. This trend appears to be continuing in the first part of 2012, further exacerbating the tire supply disruptions described in the previous bullet. When used tire exports (4.5 percent) are combined with waste tire exports (23.4 percent), the export total in 2011 was nearly 28 percent. If the current export growth rate persists, more than one-third of California tires will be exported in 2012.
Concern: the majority of the new baler/exporters do not have waste tire facility permits and are noncompliant in other respects. CalRecycle has stepped up compliance monitoring and enforcement. Legislative bill introduced (AB 1647, Gordon, 2011-12 session) to improve and streamline permitting and enforcement programs.

Infrastructure Future
Status: Uncertain
Factors: export-induced market shifts may effect how California’s current tire processing infrastructure evolves in the future.
Concern: A worst-case scenario would be a significant decline in California’s established processing and market infrastructure, followed by a rapid decrease in exports. This would impact the significant investments made by CalRecycle and private industry over the past two decades and also leave the state poorly equipped to maintain waste tire diversion levels similar to current ones.

On the other hand, if export demand and economics continue to be strong, it is likely that baler/exporters will become established, fully compliant businesses that assume a lasting role in California’s waste tire management infrastructure. While this will surely disrupt established processors, to the extent that current pricing continues it could result in reduced costs for waste tire management and a pillar, for better or worse, of a newly cast tire recycling marketplace.

Status: Up
Factors: truck tire retreading and culling of used tires for sale domestically, increased by 22 percent over 2010, with domestic used passenger vehicle tire reuse increasing by 39 percent and truck tire retreading increasing by 13 percent. Truck tire retreaders expect the trend to continue in 2012. Demand for retread services as well as domestic reuse of tires are strengthened as consumers view reuse and retread as valid means of saving costs in the challenging economic times.

Ground Rubber
Status: Up slightly. Overall ground rubber market demand showed a modest 3 percent increase in 2011.

Rubberized asphalt: the report shows an increase in use in 2011 although California processors reported selling slightly less ground rubber (0.1 million PTE less) into that market segment.
Factors: stressed municipal and county budgets defered paving projects funded by local governments.

Turf and athletic field: use increased by 27 percent from 1.4 million PTEs in 2010 to 1.7 million PTEs in 2011. Despite this increase, according to California crumb producers, significant quantities of imported crumb rubber are being purchased for California turf projects.

Molded and extruded products: market increased by 27 percent, but still comprises a very small part of the overall crumb rubber market, at 0.9 million PTE in 2011 compared with 0.7 million PTE in 2010.

Pour-in-place playground market: slight increase in the use of crumb rubber (1 percent) and market demand for other ground rubber applications, including loose-fill play/bark/mulch, and “other” applications, was flat, on average.

Civil Engineering
Status: Down significantly
Factors: Estimated CE applications decreased from 1.8 million PTEs in 2010 to 0.6 million PTEs in 2011. Some landfills indicated that their cell construction, closure, and landfill gas collection system installation schedule slowed due to reduced landfill activity from the depressed economy. The use of TDA in transportation-related applications decreased from less than 0.1 million PTEs in 2010 to no use in 2011. Transportation-related TDA use depends on the timing of road and rail construction projects and there were no projects slated to use the material in 2011. Weak budgets and the exhaustion of federal stimulus funding contributed to the decline. At least two projects expected to use about 1.5 million PTE are planned for late 2012 and 2013. Although civil engineering use was down in 2011, as the economy recovers and transportation projects progress, CalRecycle expects this decline to reverse.

Tire-Derived Fuel (TDF)
Staus: Down
Factors: This decline is a result of a co-generation facility slowing activity (and eventually closing in early 2012) and reduced cement production at one of the four cement kilns that accept TDF as a fuel source. Three cement kilns reported increased usage in 2011 and all indicated that they expect usage to continue expanding in 2012 as demand for cement is expected to increase.

Status: Down to a Record Low – declined by 36 percent, from 7.8 to 5.0 million PTEs
Factors: The decline in disposal appears to be largely due to the increase in exports, as well as the increase in demand for reuse.

© Scrap Tire News, September 2012