California Waste Tire Market Report

Always detailed and comprehensive in its tire recycling market data, the California Waste Tire Market Report takes a new and important turn in the 2019 edition providing the first glimpse of tire recycling in the “still unfolding COVID-19 pandemic.”

Leading off with California waste tire flows in 2019 and current trends as of Spring 2020, the report frames the market discussion throughout against the backdrop of broad management trends affecting waste tire management in the state including the onset of COVID and its impact on current waste tire management operations, the abrupt economic decline, uncertain projections, growing budget deficits and reduced funding.

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The COVID-19 global pandemic that hit California and the world in early 2020 has had a major impact on human health, the economy and virtually every aspect of life. However, while the waste tire industry has been impacted, it has continued on a “new normal” basis, the report said.

The most cited COVID-related concerns were employee safety (75 percent) and the potential for future supply and demand disruptions (50 percent). Several companies also reported concerns over revenue, ability to meet payroll and access to financing.

Tire derived product (TDP) manufacturers and installers have not reported major disruptions to the supply of tire-derived materials (TDM), but 50 percent (7 of 15) of respondents to an early May online survey saw some reductions in demand and/or customers. Some paving and sports field construction projects, however, have been accelerated due to empty schools and reduced drivers on the road, the report said.

On the economic front, California entered 2020 with a very strong economy but as COVID-19 progressed, this changed quickly. According to the California Legislature Analyst’s Office, the state has been in a deep recession since March and the future rate of recovery remains uncertain.

Due to projected reduced tire sales in 2020, CalRecycle tire program funding is expected to decline, as are several state and local infrastructure funding mechanisms that rely on consumer-driven revenue from gas tax, bridge tolls, and local sales tax mechanisms. Historically unprecedented state and local budget deficits are forecast and could further jeopardize these special funds that benefit California tire recycling, the report authors said.

In 2019, an estimated 518,400 tons (51.8 million PTE’s) of California-generated waste tires were managed, in nine different market segments.

Looking at the 18-year trend for waste tire diversion, recycling and landfill disposal, the 2019 diversion rate held steady at 82 percent. Approximately, 424,919 tons (42.5 million PTEs) were diverted to uses other than landfill disposal.

On the recycling side, 37 percent, about 191,197 tons were recycled – consistent with the 2018 recycling rate.

Breaking down the 2019 markets, the reuse market including retreading and culling of used tires for sale accounted for 92,682 tons (9.3 million PTEs) about two percent higher than 2018.

Sixteen percent of California waste tires or 81,915 tons (8.2 million PTEs) were used to produce crumb rubber and ground rubber used in applications such as paving, synthetic turf infill, playgrounds and a variety of landscape and building construction products. This is about seven percent less than 2018, the report said.

About 13,300 tons were used to produce tire derived aggregate (TDA) used in civil engineering applications, accounting for three percent of the total and rendering a 160 percent increase over 2018. Based on on scheduled and potential new projects for 2020, TDA use could remain at 2019 levels.

The largest use for California waste tires was the 145,412 tons (14.5 million PTEs) exported as TDF or baled waste tires and treads, an eight percent increase over 2018. Breaking this down, an estimated 116,383 tons of size reduced TDF (11.6 million PTEs) were exported by California firms, primarily to Japan and Korea, or 114,427 tons (11.4 million PTE) after excluding the share of out-of-state tires processed at these California facilities. The report notes that while pricing is reportedly less favorable than in recent years, with specifications tightening and competition from other exporting nations increasing, this market is expected to continue to consume large quantities of California waste tires at or near the same level as in 2019.

However, according to the report, this may not hold true for the export of baled waste tires and treads. An estimated 30,985 tons of baled waste tires and treads (3.1 million PTEs) were exported in 2019, primarily to India. In early 2020, these imports into India were halted pending permit renewal. Due to this and the expected overall reduction in waste tire generation, the quantity of bales exported may decline markedly in 2020.

An additional 70,807 tons (7.1 million PTEs), 14 percent of the total, were used as TDF in California cement kilns, 12 percent less than in 2018. TDF has been a strong and relatively stable market for many years, thriving without government support. The report attributes the 2019 decrease in TDF to reduced usage at one kiln based on production limitations. According to the report, this facility expects to increase TDF use to ” historic levels in 2020,” pending sufficient demand in the construction industry, so 2020 TDF consumption may increase over 2019.

Landfill disposal of California-generated waste tires has varied widely in recent years. In 2019, 93,433 tons (9.3 million PTEs) were disposed in landfills, three percent more than in 2018. While the 2020 landfill disposal trend is difficult to predict, declining waste tire generation due to COVID-19 economic impacts combined with potentially strong diversion and recycling segments could reduce disposal.

Looking ahead, the report suggests that despite the uncertainty over the pandemic and economic recovery, it is possible that 2020 waste tire recycling levels may approach or even exceed the 2019 levels. if current strong activity in paving and turf infill continues and other segments are able to remain at or near 2019 levels. With expected declines in waste tire generation this could potentially translate into an increase in the recycling and diversion rates.

Longer term, increasing California’s tire recycling levels will require expanded or new markets for TDM (tire derived materials) and TDPs (tire derived products) that are sustainable and profitable to serve. This will also require a highly motivated manufacturers willing to make a sustained commitment and investment that may pose risks and opportunity costs. In addition, the state’s TDM suppliers need to be properly equipped and well positioned to secure customers. However, in some cases, access to financing and the relatively high cost of doing business in California may impede new investments, the report concluded.

© Scrap Tire News, October 2020