May/June
2015
After
slipping in the last recession, the U.S. tire recycling industry regained its
traction in 2013, though the tire-derived fuel market showed greater strength
than rubber’s recycling-related sectors, according to an industry market
report.
By Kent
Kiser
After its recessionary downturn in 2011, the U.S. tire recycling
market bounced back strongly in 2013, setting a record for the proportion of
scrap tires (if not the tonnage) that found a beneficial use. Of the 233
million end-of-life tires the United States generated in 2013, roughly 224
million, or almost 96 percent, found a home, up nearly 13 percent from 2011,
according to the 2013 U.S. Scrap Tire Management Summary, which the Rubber
Manufacturers Association (Washington, D.C.) issued in November 2014. “The 2013
market was so much stronger because the recession was ending and we were
heading back toward more normal conditions economically,” says John Sheerin,
RMA’s end-of-life tire programs director. Tire-derived fuel was the big winner
in the 2011 to 2013 period, while most recycling-focused markets lost ground.
RMA’s report gives more detail on each of the sectors, and Scrap asked market
participants to weigh in on the dynamics behind the numbers and future directions
for the industry.
Fueling
Demand
In 2013, the tire-derived fuel market consumed about 58 percent of
recovered end-of-life tires in the United States. That’s approximately 129
million tires, or 2.1 million tons of scrap rubber. That’s a significant step
up in market share from 2011, when TDF demand dipped to 1.4 million tons. The
2013 results are close to the TDF market’s prior average annual demand of 2.2
million tons—seen in 2005, 2007, and 2009—and the market share of 60 percent it
held in 2007. (RMA publishes its market summary based on data from odd-numbered
years. The table on page 118 provides data from its five most recent
summaries.)
To understand TDF’s resurgence,
it’s helpful to recall the market conditions in 2011. The TDF market—and the
tire recycling industry as a whole—took a “big hit” that year, a tire recycling
industry source says, due to “a variety of economic factors at the time,” which
slashed demand from TDF’s main consuming sectors, such as cement kilns, pulp
and paper mills, and utilities. In particular, lower construction spending cut
demand for cement, prompting the closure of some kilns, which are major
consumers of TDF. “The slowdown in construction meant we didn’t need anywhere
near as much cement, so those markets slowed down,” Sheerin says. The
recession, in fact, had resulted in the “permanent loss of some older cement
kilns,” says Michael Blumenthal of MarShay Inc. (Nyack, N.Y.), a scrap tire
consulting firm, and “they are never coming back.”
RMA calls TDF a “cleaner and more
economical alternative to coal,” offering a higher Btu energy value and a lower
greenhouse-gas impact than coal. It also tends to be a lower-cost alternative
to competing fuels such as wood/biomass, coal, natural gas, and petroleum coke.
From 2011 to 2013, however, higher prices for competing fuels and improvements
in the quality and reliable delivery of TDF helped boost consumption of the
material almost 49 percent. Cement kilns continued to be the largest
TDF-consuming sector in 2013, buying 726,000 tons (equivalent to 44.3 million
tires), with their demand increasing 138 percent from 2011. Despite that jump,
electric utilities posted the strongest increase in TDF use from 2011 to 2013,
rising 260 percent, to 576,000 tons (35.2 million tires). Pulp and paper mills
increased their TDF consumption 21 percent, to 716,000 tons (43.7 million
tires), but dedicated tires-to-energy facilities reduced their demand 50
percent, to 102,000 tons (6.2 million tires), in the two-year period. The
closure of Exeter Energy’s tires-to-energy plant in Sterling, Conn.—which
consumed 8 million to 10 million tires a year—was a principal reason for that
sector’s decline, the tire recycling industry source says.
One positive development for TDF
was a decision in 2013 from the U.S. Environmental Protection Agency
(Washington, D.C.) classifying scrap tires as a nonhazardous secondary
material—and not solid waste—when used as a fuel in a combustion unit. “If EPA
had said TDF was a waste material, it would have killed the TDF market, and we
would have had the next great scrap tire crisis,” Blumenthal says. “What EPA
did preserved the market.” Now, as a nonwaste fuel, TDF might have greater
appeal to boiler consumers that currently don’t use the material. “It could
become more of an accepted fuel as long as the quality of the product is there,
meaning it’s properly sized and the steel removal is appropriate for the
particular boiler application,” the tire recycling industry source says.
The EPA also recognized that scrap
tires contain biomass—about 25 percent of their content is natural rubber—which
opens the door for TDF consumers to claim tax or emissions credits for burning
a biomass fuel, Blumenthal notes. As Sheerin explains, the biomass ruling
“gives TDF a further advantage over mineral-type fuels,” and it could elevate
the TDF market in the future. “When you do greenhouse-gas accounting, TDF is
going to come out better because of the natural latex content,” he says.
Recycling
and Reuse Markets
Even as the TDF market rebounded strongly in the 2011 to 2013
period, most non-TDF sectors nosed downward. As a group, all non-TDF uses of
reclaimed tire rubber slipped 7 percent, from approximately 1.7 million tons in
2011 to about 1.5 million tons in 2013.
Grinding
down. Ground rubber continued to be the largest non-TDF market for
scrap tires. These applications consumed 975,000 tons of tire rubber, which was
63 percent of the non-TDF use of scrap tires and 27 percent of all end-use
demand, according to RMA figures. Ground rubber demand in 2013 was up about 5
percent from 2011 but down 28 percent from its 2009 peak. Finely ground rubber
goes into applications such as new rubber products, playground and other sports
surfacing, and rubber-modified asphalt, while larger ground rubber pieces
become landscaping mulch and loose-fill playground material. “When the
recession came, tax dollars went down, budgets were slashed, and demand from
ground rubber’s main markets went down,” Blumenthal says. “Market demand hasn’t
come back as strongly as many had hoped.”
The molded/extruded product sector
used 33 percent of ground rubber sold in 2013, followed by the playground/mulch
sector (31 percent), sports surfacing (17 percent), asphalt (7 percent), and
automotive and export, each with 6 percent. The playground/mulch market was
ground rubber’s only large-scale niche to grow in the two-year period, rising
25 percent, from 160,000 tons in 2011 to 200,000 tons in 2013. Aside from
ground rubber exports, which increased 78 percent, to 40,000 tons, all other
ground rubber sectors declined in 2013 compared with 2011. Demand for ground
rubber for sports surfacing and molded/extruded products fell 19 percent and 12
percent, respectively, but the biggest decline was in the asphalt market, which
fell 59 percent, from 110,000 tons in 2011 to 45,000 tons in 2013. In the
recession, state transportation departments trimmed their use of
rubber-modified asphalt, Blumenthal says, and that niche “never really regained
its footing.”
Currently, ground rubber’s biggest
challenge is the debate over whether it causes health problems in people who
play on synthetic turf fields with ground rubber infill. “The concerns are not
science-based,” Sheerin says. “They’re anecdotal stories that mention cancer
and get people emotionally excited, but the science hasn’t supported any links
between the product and those types of diseases.” Only about 17 percent of
ground rubber went into sports surfacing in 2013, but the “sideways glances” of
this concern “stretch into the playground and mulch markets, where you have
people interacting with the product,” Sheerin notes. Together, roughly half of
ground rubber went into those markets in 2013. Although ground rubber producers
say the controversy has not caused a big slowdown in orders, he says, “the
press doesn’t help.” Blumenthal expects the controversy to continue, “and
ground rubber markets will be less than they might otherwise have been,” he
says.
An uncivil
decline. The same downtrend played out in even more dramatic fashion in
the civil engineering sector, which uses tire shreds in road and landfill
construction, septic tank leach fields, and as alternative daily cover in
landfill operations as well as other construction applications. In 2013, the
civil engineering market consumed 172,000 tons of tires, which was about 11
percent of non-TDF demand and roughly 5 percent of all recovered tires that
went to an end-use market that year. Since its peak in 2005, the civil
engineering market has declined, in part due to competition from TDF consumers,
who generally pay more for the rubber than civil engineering consumers, the
tire recycling industry source says. Civil engineering projects also can
require large tonnages of processed rubber on short notice, which can pose
purchasing, storage, and logistical problems for tire recyclers, Sheerin says.
“When the project’s a go, the contractor might suddenly need 50,000 tons of
tires, so the recycler would need to have that material in stock.” Such
challenges “created more problems than it was worth for many processors, so
interest in this market has waned,” Blumenthal says.
That said, there still are “viable
applications for civil engineering material, especially out West, where you
have the remaining stockpiles of tires,” Blumenthal says. Sheerin concurs,
noting that this sector could see a boost thanks to renewed interest in
Colorado and California, which are using scrap rubber in new civil engineering
projects. California, for one, has announced a grant for a project that will
use tire-derived aggregate as a vibration dampener for a light-rail line.
Holding
steady. Several smaller markets also consume U.S. scrap tires, such as
professionally engineered tire bales, reclamation projects (primarily to build
up mining sites), steel production in electric-arc furnaces, agricultural
applications, and products that are punched, pressed, or stamped from scrap
tires. The latter three markets remained constant from 2011 to 2013, with EAFs
consuming about 66,000 tons of scrap tires, agricultural uses consuming about
7,000 tons, and punched, pressed, or stamped products using nearly 2,000 tons.
Fewer tires—about 49,000 tons—went into reclamation projects in 2013, a decline
of just over 9 percent. Texas was the main user of scrap tire rubber for land
reclamation projects—principally at mining sites—and “it just stopped that
program,” Blumenthal says.
The engineered bale market, which
dipped significantly in 2011, returned in 2013 to its previous level of about
30,000 tons of demand, but market participants don’t see much growth potential
for this niche going forward. Most of the bales are exported from the West
Coast to consumers in Asia for use as TDF or feedstock for other processes, but
“that process has stopped—China has closed that door,” Sheerin says. U.S. exports
of scrap tires in general peaked in 2011, then slipped 19 percent, to about
246,000 tons, in 2013, and Blumenthal sees little potential for growth in that
sector. “The export market came and went,” he says. “It helped save the market
during the recession, but that market has gone away, and it isn’t coming back
in the foreseeable future.”
Shrinking
Stockpiles
RMA’s 2013 report indicates the tonnage of landfilled tires and
the number of scrap tires in U.S. stockpiles both are steadily falling. From a
peak of 653,000 tons in 2009, the number of landfilled tires fell 25 percent,
to 492,000 tons, in 2011 and 33 percent, to about 328,000 tons, in 2013. As for
stockpiled tires, the U.S. backlog has dwindled from about a billion scrap
tires in 1990 to roughly 75 million in 2013, a 92-percent reduction. “That’s a
major achievement,” Blumenthal says, “and everybody who has been involved in it
should be proud.” Colorado—the state with the largest remaining tire
stockpiles—has a new program that could cut an additional 30 million tires from
the U.S. stockpile, Sheerin says. “We’re hopeful this law will be successful
for the state.”
Despite such progress, the U.S.
stockpile will never reach zero, these industry watchers say. “There will
always be tires going to landfill—that’s as simple as it gets,” Blumenthal
says. “There are states—primarily those with sparse population and wide open
space—that basically don’t have any kind of tire management plan, and they
don’t have any volumes.” According to RMA’s 2013 report, 12 states allow the
landfilling of whole tires, and 38 allow the land disposal of cut or shredded
tires. Even though discarding tires isn’t ideal, it’s “better than leaving them
out in the environment,” Blumenthal says. “It’s not a market, but at least they’re
being managed.” The Road
Ahead
Sheerin expects the Southeast to continue to be the “brightest
spot” in the scrap tire market thanks to its high consumption of TDF. “There’s
so much demand there for TDF that if you can get tires in that area, they’re going
to be used. The market is pretty much sold out.” The Northeast, on the other
hand, remains a concern due to the closing of the Exeter Energy plant in
Connecticut. New England doesn’t have many market options for scrap tires,
Blumenthal says. One of the two pulp and paper mills in Maine that consumed
tires has been down for a while, he says, and “tires are piling up in the
pipeline. You can only sustain that kind of lack of markets for so long.”
According to Sheerin, “there was great concern that the Exeter closure would
lead to a lot more illegal dumping and stockpiles, but, fortunately, that has
not happened.” Even so, he says, “we’re still concerned and would like to see
more markets developing in the Northeast.”
Looking at the broader picture,
Blumenthal sees tire recycling markets plateauing in the near term. “I just
don’t see any major upswings in the marketplace; there’s nothing out there
that’s a game-changer,” he says. On a more optimistic, longer-term note,
Sheerin says, “new technologies and evolving existing technology may become
commercially viable further down the road and develop a more sophisticated
processing industry. The tire industry is not satisfied with the status quo.”
Kent Kiser
is publisher of Scrap and assistant vice
president of industry communications for ISRI.