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Technical Report #19 - Chelsea Center for Recycling and Economic ...

Technical Report #19 - Chelsea Center for Recycling and Economic ...

ii. Compounding

ii. Compounding Manufacturing CostsProcessing Cost: A typical turnkey pellet compounding line with a capacity of 1,000 to2000 lbs./hr will cost $600,000 to over $1,000,000 installed. At these prices, processing costswill be 10 to 15 cents per pound of finished compound. For our purposes, we will use 12.5 centsfor compounding costs.Material Cost: Recycled plastics suitable for compounding will vary between 12 and 25cents/lb., with a typical cost of 18 cents. Wood flour suitable for compounding will vary between4 and 12 cents/lb. with a typical cost of 8 cents.Packaging Cost: Compounds are typically packaged in gaylord boxes or tote bins on pallets.The gaylords will hold 800 to 1,600 pounds of pellets depending on gaylord size and pelletbulk density. A typical new quality pallet will cost $10 and a new gaylord $20 to $40, adding 3to 4 cents per pound to the finished compound. To help offset these costs, serviceable gaylordsand pallets used to deliver plastic to the compounder are typically reused. Because compositepackaging is normally a mix of new and used gaylords and pallets, we will assign an additionalcost of 2 cents/lb. to cover packaging.Table 18 describes costs that vary according to plastic prices. Table 19 describes compoundcosts based on varying the wood prices.Table 18: Cost to Produce One Lb. of Compound (50% Wood/50% Plastic)with Variable Plastics CostCOST OFPLASTIC (1/2LB.)COMPOUNDING(CENTS PER LB)WOODFLOUR(CENTS PER1/2 LB)PACKAGING(CENTS PERLB)TOTAL COST(CENTS PERLB)6 12.5 4 2 24.56.5 12.5 4 2 25.07 12.5 4 2 25.57.5 12.5 4 2 26.08 12.5 4 2 26.58.5 12.5 4 2 27.09 12.5 4 2 27.59.5 12.5 4 2 28.010 12.5 4 2 28.510.5 12.5 4 2 29.011 12.5 4 2 29.511.5 12.5 4 2 30.012 12.5 4 2 30.512.5 12.5 4 2 31.048

Table 19: Cost to Produce One Lb. of Compound (50% Wood/50% Plastic)with Variable Wood Flour CostCOST OFPLASTIC (1/2LB.)COMPOUNDING(CENTS PER LB)WOODFLOUR(CENTS PER1/2 LB)PACKAGING(CENTS PERLB)TOTAL COST(CENTS PERLB)9 12.5 2 2 25.59 12.5 2.5 2 26.09 12.5 3 2 26.59 12.5 3.5 2 27.09 12.5 4.5 2 28.09 12.5 5 2 28.59 12.5 5.5 2 29.09 12.5 6 2 29.5iii. Comments on CompoundingWood-filled plastic compounds are often mistaken for a cheap alternative to virgin resins.The tables show that this is not so. While the raw material costs are less than virgin materials, thecompounding cost and extra packaging raise the price of the compound to the point where otherattributes must be marketed and taken advantage of if sales are to be made.Currently, virgin PP sells for less than $0.20 per pound when purchased in bulk in rail carquantities. In truckload quantities packaged in gaylords, the price is typically $0.25 to $0.30.HDPE will run about 10 to 15 cents more than PP. Virgin HIPS will cost 15 to 20 cents morethan PP.Compounders successfully market their product based on the enhancements the wood fiberbrings to the finished product. This may be appearance, as in the case of flower pots; performanceas in the case of window and door components; or a combination of both, as in the caseof hot tub siding.A minimal amount of information is needed to market wood-filled plastic compounds.Standard property data sheets for standard compounds should be developed. The technical informationshould include bending and tensile properties, and impact performance, as well assome basic processing characteristics. Extensive testing is best left until specific end products areidentified by a customer.B. Composite DeckingAccording to sources inside the treated lumber industry, alternative decking materials, includingboth composite products and plastic lumber, reduced sales of treated lumber for decksurfaces by 7% in 1998. If industry capacity can meet it, the alternative decking material marketshare is expected to more than double in 1999. With composite decking sales approaching $70-$80 million dollars per year, these numbers are significant.49

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