The tire and rubber industry:
Leading a dynamic lifecycle
By ITRA's Tire and Rubber Advisory Council
The market capacity for scrap tire products is catching up with processing volumes.
Substantial investments have been made, especially in the past decade, to recover and utilize scrap tires and other rubber products. This recycling industry will continue to grow.
This article, which was prepared by the Tire and Rubber Recycling Advisory Council of the International Tire and Rubber Association (Louisville, Kentucky), describes the current status of tire and rubber recycling. Details regarding TRRAC are provided in a sidebar.
To fully understand the current status of tire and rubber recycling, we must first understand the lifecycle of the materials and products involved, up to the point where the recycling process begins. This is portrayed in the accompanying sidebar.
In the first part of the lifecycle, the players are largely rubber producers (virgin or synthetic), rubber users (tire manufacturers, hose and gasket producers, etc.), equipment manufacturers who use rubber products (carmakers, agricultural equipment manufactures, etc,), (tire retailers, automotive supply houses, etc).
Consumers then use the rubber products, either as tires on our cars, as gaskets sealing our doors and windows, or in balls with which we play. These products, due to the resilience of rubber, normally have fairly long use cycle. So, in terms of time elapsed, this is the longest stage of the rubber products lifecycle.
The scrap and recycling cycle
Once the product has reached the end of its useful life, it enters the scrap and recycling stream. As seen in the accompanying box, this is a multi-stage progression.
Clearly, the players in the disposition and recycling of scrap rubber or tires are scrap generators, state and local governments, collectors, processors and end users. Since tires represent the vast majority of rubber scrap, we will look at the players from a scrap tire perspective, with the understanding that the dynamics for other forms of scrap rubber are similar.
Scrap tires are commonly generated when new tires are purchased to replace used ones. Because most of us buy new tires from dealers, the scrap tire generally becomes the dealer's responsibility.
Depending on state law, the dealer may charge a fee or tax to compensate the firm or the state for tire management costs. Documentation and certification forms for tracing purposes are usually required to validate that the dealer generated these scrap tires, through new-tire sales.
The dealer will normally contract with a collector to pick up and haul the tires to an approved processor. Before the processor receives tires, the dealer and/or the collector may sort them to cull out tires that can be resold as uses tires or as retreadable casings.
Funding. As noted above, a fee or tax is charged on the sale of a new tire to fund scrap tire management and disposal efforts (30 states impose a fee). The fee or tax is generally added to the sale price of the new tire, and the funds are sent and managed by the state. The funds typically flow back to processors or countries as reimbursements for the costs of properly managing tires, or are used in some form to reimburse end users to promote increased use of tire-derived materials.
Permitting and licensing. The state government imposes permit or license requirements on collectors, processors and disposition sites (such as tire monofills). These requirements are normally structures to minimize the state's risk of having to clean up tire piles or residues left by a defunct collector or processor. The requirements include site plans, turnover requirements (e.g. 75 percent of material received in one year must leave the site or be disposed of properly), storage limits and financial assurances.
Tracking. Dealers, collectors and processors (or disposition site operators) use tracking form to validate the legitimacy of the flow: the forms become the basis for funding. These forms require the generator (commonly a dealer) to certify the amount of tires and how the tires were generated. Then the collector and processor must validate or confirm those facts.
Enforcement. State enforcement personnel inspect and audit tire dumps, collection sites, processing facilities and disposition sties to ensure that scrap tire flow is being managed appropriately. Their audits cover all the parameters of the state's specific scrap tire management law and the individual permit involved. These personnel generally have the authority to write violation notices and to start penalty proceedings.
Additional programs. Some states also fund and manage or dispose of them. Additionally, more and more states are using mechanisms, such as grants and other sources of funding, for the development of markets for scrap-tire-derived materials or products.
|The recycling cycle
Regional and national collectors also operate in the market. Because the used tire market is fairly large, especially for export, these firms can collect vast numbers of resoluble tires efficiently. They also fill a need of large tire dealership chains that do not want each store having to manage its own scrap tire flow.
Processors. Many scrap tire processors are also big players in the collection market. To ensure the proper management of their input volume and to improve the revenue picture, most processors still rely heavily on tipping fee income. Leaving the collection business to third parties may leave the processor without a guaranteed flow of tires and with tires delivered at lower tipping fees. In addition, the used tire casing business represents income potential. Process who are not also collectors find they have already been culled, leaving them with little or no used tire revenue.
As recently as five years ago, the processing industry was extremely fragmented. However, since then significant consolidation has occurred, and most industry members are experienced and professional in their operations. There are four major categories of processors.
Monofills As regulations have increased and recycling markets have developed the flow of whole or processed tires into landfills that receive, shred and bury tires. Increasingly, however, even these processors are entering the recycling market, particularly as chip suppliers to fuel or civil engineering users.
Chip markets. The largest-volume markets today are in chip markets, with tire-derived fuel (TDF) and civil engineering uses dominating. These markets have created a niche for many processors to service, wherein the processor can handle large volumes of tires and sell all or most of the material.
Crumb rubber. Crumb rubber producers take shredded tire scrap and size reduce it further, while removing all the non-rubber components (dire, steel fiber, etc).
Some firms specialize in crumb rubber production, and others make both chips and crumb rubber. Although chips are the largest market segment, many chip producers are moving into crumb rubber production because they recognize that their viability in the chip market is largely dependent of tipping fees due to the low value of chips. As tipping fees go down, these firms want to move into the higher value market represented by crumb rubber.
Overcapacity has plagued the crumb rubber market. As a result of passage of the 1991 federal highway act, which called for the increased use of crumb rubber in highway projects, crumb rubber production capacity rose by 200 to 300 percent. When the usage requirement was repealed, the tire recycling industry was left with excess capacity. The result has been consolidation in the industry and the opportunity for crumb rubber end users to discriminate in their purchases based on quality and price. Prices have, therefore, been depressed, making it harder for processors to be profitable.
The prognosis for crumb rubber producers looks positive, however, as more and more research and development is being done to allow the use of crumb rubber in rubber products. The automotive and tire industries are particularly aggressive in this effort.
Integrated firms. Some processors make crumb rubber and then use the rubber to make products. This is currently the smallest market segment, but one with enormous growth potential. The growth will come as consolidation of the industry continues and processors realize that the best opportunity to make a profit is in end-use product manufacturing. We also may see some current or future end users integrated downward into the processing business to better control quality and price.
The most important and least developed part of the industry is the end-user sector. The key to increasing the use of scrap tire materials in the development of new end-use applications and the increased use of these materials in existing applications.
Today's big players in the end-use sector are tire manufacturers; state transportation agencies: power generators and cement and paper producers that use TDF; and manufacturers of rubber products, such as mats, solid wheels, friction brakes and other industrial, agricultural and automotive rubber products.
Driven by improved markets and concerned government action,
more scrap tires are being recovered than ever before. In several regions
of the country, tires in stockpiles have been processed and used in practical,
cost-saving applications. Gradually, market capacity is catching up with
processing volumes. As these trends continue, the tire and rubber recycling
industry will continue to use its energy, technologies and financial resources
to create the best possible end results for the material.
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