By: Carol Brzozowski
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Serving the American Liquid Waste Industry Since 2002
Plastics cost & portable sanitation
Rising fuel prices aren’t just affecting portable sanitation businesses at the fuel pump. One need not look beyond the
company’s yard to see yet another impact on the bottom line: rising fuel costs means an increase in production costs for
portable sanitation units as well as other industry items manufactured from plastic resins. How portable sanitation
manufacturers will address the issue will unfold throughout the year, but one thing is certain: “It’s affecting all of us
across the board,” points out Robert Nelson, purchasing manager for PolyJohn Enterprises.
Nelson also points out that the major resins used by portable toilet manufacturers in general are High Density
Polyethylene (HDPE), and Linear Low Density Polyethylene (LLDPE).
The price for HDPE is at 85 cents a pound, up nearly 15 percent over last year’s average, according to Brian Pruett, vice
president of the Houston, Texas-based Chemical Data, which provides ongoing market research and analysis for the U.
S. plastics, petrochemical and petroleum industries. That despite forecasts that prices were to have dropped by seven
cents this year.
“The two significant factors causing prices to be higher today than people - including us -
were forecasting include much higher oil and energy prices in general and a delay of what
everybody is calling a glut of global capacity increases,” says Pruett. “Those didn’t
happen in 2008; they’re most likely going to happen in the second half of 2009 and into
2010. Some of them are happening now.”
Pruett emphasizes that prices are before discounts and that discounts can be
“substantial”. "Substantial" also is the word to describe recent price increases over the
past few years. For mid-grade HDPE, the price increased by about two cents from 2006 to
2007.
“One of the bigger moves was from 2004 to 2005; 2005 to 2006 wasn’t as big,” notes
Pruett. “It’s been consistently moving up.”
were forecasting include much higher oil and energy prices in general and a delay of what
everybody is calling a glut of global capacity increases,” says Pruett. “Those didn’t
happen in 2008; they’re most likely going to happen in the second half of 2009 and into
2010. Some of them are happening now.”
Pruett emphasizes that prices are before discounts and that discounts can be
“substantial”. "Substantial" also is the word to describe recent price increases over the
past few years. For mid-grade HDPE, the price increased by about two cents from 2006 to
2007.
“One of the bigger moves was from 2004 to 2005; 2005 to 2006 wasn’t as big,” notes
Pruett. “It’s been consistently moving up.”
He adds that in 2006, oil prices were half of what they are today. Weather events that affect oil prices, such as hurricanes
that hit the Gulf of Mexico and its resident oil refineries, can cause price fluctuations in any given quarter. The hurricane
season begins June 1 and lasts through November 30; hurricane experts are predicting “above average” activity this year.
“Everybody has this misperception that polyethylene is a derivative from natural gas,” says Pruett. “That’s partially true.
Thirty to forty percent of polyethylene, however, comes from oil-based feedstocks. The issue with natural gas is that it sets
a floor price for the feedstocks that are extracted from natural gas, which they refer to as natural gas liquids – NGLs – or
more specifically, methane, propane, and butane. Those chemicals have a value in natural gas and that sets the floor
price for them.
“In today’s market, when the remaining thirty or forty percent is manufactured from oil-based feedstocks. Those help set
the prices for the other feedstock that is extracted from natural gas and moreso than the natural gas cost itself. Many in
the industry always felt polyethylene tracks natural gas prices because it’s a raw material, because that’s not true.”
Pruett says there’s not much of a difference in pricing for LLDPE, also used to make portable sanitation units.
“They are both made from the same machine and there’s a minute difference in cost,” he says. “The significant use of
HDPE is for injection molding, toys, and things like portable restrooms, bottles, and in some cases, film. The bulk of LLDPE
is to make film, but there are other applications.”
It takes an average of 155 to 220 pounds of plastic – made from crude oil and natural gas - to produce a portable
restroom. Plastic also is used to manufacture handwash facilities and holding tanks. In mid-May, the price for crude oil was
up to $126 a barrel. Four years ago, when the Sanitation Journal addressed this issue, crude oil went for $50 a barrel and
at the time, that was considered burdensome. Also at that time in November, polyethylene was going for 72 cents a pound.
At the same time, the Sanitation Journal calculated the plastic portion cost of producing a portable sanitation unit –
excluding other factors such as molding, labor and electricity – as being $111.60 for a 155-pound unit. In today’s numbers,
the cost of just the plastic for that unit would come to $131.75.
Plastic isn’t the only increasing cost involved in manufacturing a unit, points out Kathy Duck, president of PolyPortables.
Duck has to pay $1.20 per pound for the coloring agents that go into manufacturing the units. Therefore, to add color to
that 155-pound unit would cost another $186 for a total of $317.75. Plus, add the cost of adding UV protection and
conversion costs and the price shoots up even higher.
PolyPortables doesn’t do its own plastics extrusion to create the forms; that function is outsourced. Even companies that
extrude in-house are looking at conversion costs, which brings the price per pound even higher.
“I’ve never seen anything like this,” notes Duck. Her advice to portable sanitation operations is to stop doing accounting
“out of their back pocket. “I would definitely encourage everybody to stay on top of their costs on a daily, weekly, and
monthly basis so they don’t wait until the end of the year to realize they’re losing money on what they’re charging.”
The same advice the Sanitation Journal offered its readers four years ago is just as pertinent now: ask your vendor what
kind of price increase you may be looking at as you prepare budgets for future purchases.
that hit the Gulf of Mexico and its resident oil refineries, can cause price fluctuations in any given quarter. The hurricane
season begins June 1 and lasts through November 30; hurricane experts are predicting “above average” activity this year.
“Everybody has this misperception that polyethylene is a derivative from natural gas,” says Pruett. “That’s partially true.
Thirty to forty percent of polyethylene, however, comes from oil-based feedstocks. The issue with natural gas is that it sets
a floor price for the feedstocks that are extracted from natural gas, which they refer to as natural gas liquids – NGLs – or
more specifically, methane, propane, and butane. Those chemicals have a value in natural gas and that sets the floor
price for them.
“In today’s market, when the remaining thirty or forty percent is manufactured from oil-based feedstocks. Those help set
the prices for the other feedstock that is extracted from natural gas and moreso than the natural gas cost itself. Many in
the industry always felt polyethylene tracks natural gas prices because it’s a raw material, because that’s not true.”
Pruett says there’s not much of a difference in pricing for LLDPE, also used to make portable sanitation units.
“They are both made from the same machine and there’s a minute difference in cost,” he says. “The significant use of
HDPE is for injection molding, toys, and things like portable restrooms, bottles, and in some cases, film. The bulk of LLDPE
is to make film, but there are other applications.”
It takes an average of 155 to 220 pounds of plastic – made from crude oil and natural gas - to produce a portable
restroom. Plastic also is used to manufacture handwash facilities and holding tanks. In mid-May, the price for crude oil was
up to $126 a barrel. Four years ago, when the Sanitation Journal addressed this issue, crude oil went for $50 a barrel and
at the time, that was considered burdensome. Also at that time in November, polyethylene was going for 72 cents a pound.
At the same time, the Sanitation Journal calculated the plastic portion cost of producing a portable sanitation unit –
excluding other factors such as molding, labor and electricity – as being $111.60 for a 155-pound unit. In today’s numbers,
the cost of just the plastic for that unit would come to $131.75.
Plastic isn’t the only increasing cost involved in manufacturing a unit, points out Kathy Duck, president of PolyPortables.
Duck has to pay $1.20 per pound for the coloring agents that go into manufacturing the units. Therefore, to add color to
that 155-pound unit would cost another $186 for a total of $317.75. Plus, add the cost of adding UV protection and
conversion costs and the price shoots up even higher.
PolyPortables doesn’t do its own plastics extrusion to create the forms; that function is outsourced. Even companies that
extrude in-house are looking at conversion costs, which brings the price per pound even higher.
“I’ve never seen anything like this,” notes Duck. Her advice to portable sanitation operations is to stop doing accounting
“out of their back pocket. “I would definitely encourage everybody to stay on top of their costs on a daily, weekly, and
monthly basis so they don’t wait until the end of the year to realize they’re losing money on what they’re charging.”
The same advice the Sanitation Journal offered its readers four years ago is just as pertinent now: ask your vendor what
kind of price increase you may be looking at as you prepare budgets for future purchases.
