TDP Catalog

Section 3 Key Trends by Market Segment

This section describes in more detail the current balance between supply and demand in the California waste tire market, and key market trends for each market segment.

Supply and Demand Balance As in any commodity market, the balance between supply and demand is constantly in flux, and this balance directly impacts pricing, competitive pressures and, generally, the profitability and resiliency of firms operating in the market. In the case of California tire recycling markets, there are two sets of supply and demand issues: those involving the supply and demand for whole tires generally, and those involving the supply and demand for various specifications of ground rubber and other processed tire feedstocks used to make a wide range of products. Following is a brief update on the current status of these issues. California has a large, dynamic infrastructure for collecting and processing waste tires, including over one thousand registered haulers and exempt common carriers, several facilities with a major waste tire facility permit, and more than two dozen facilities with a minor waste tire facility permit. In 2012, the vast majority of tires generated in California flowed to one of 14 processors or seven exporters analyzed in this study, with the remainder hauled directly to disposal or end uses such as reuse or cement kilns consuming whole tires, which were also surveyed for this report. Although whole tires and processed product are sometimes shipped between Northern and Southern California, to a large degree most operators are only active in one region or the other, with relatively little flow of whole tires between the two distinct regions, with the exception of used tires, and with each region having somewhat different market dynamics. The supply of waste tires was up by as much as 10 percent in 2012. Driven by strong export market demand, competition for whole California tires hit what might be an all-time high in summer 2012. As detailed in the 2011 California Waste Tire Market Report, highly favorable economics combined with strong export demand for baled or shred waste tires and for processed tire-derived fuel had catalyzed a number of firms to quickly set up operations to compete for waste tire collection accounts with generators across the state. These new export operations competed with established processors and drove down tip fee revenues, while disrupting supplies of tires to some firms that process tires for ground rubber production and other markets. This trend appears to have hit its high point in late 2012 as export demand began to decline and the economic drivers became less favorable. (See discussion under exports below.) As a result of this market shift and concurrent CalRecycle enforcement of permit and operating requirements, the aggressive competition for California waste tires has subsided somewhat, and processors report that tip fees in many cases are moving back up. However, while reduced, export demand does remain strong and several exporters continue to handle a large number of tires, exports of waste tire bales/shreds (as opposed to export of used tires or tire-derived fuel) may not return to their pre-export rise levels any time soon. Outside of the exporters, no significant expansions in waste tire processing capacity occurred in 2012 or early 2013. Overall, demand for whole waste tires is expected to remain relatively strong for the duration of 2013. Supply and Demand for Whole Tires

Contractor’s Report to CalRecycle

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