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January 08, 2001 01:00 AM

2000 a boon for scrap tire recovery market

Vera Fedchenko
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    WASHINGTON—Growth in three major segments of the scrap tire recovery sector made 2000 a satisfactory year, marking the likelihood the market growth will continue into 2001.

    Tire-derived fuel, crumb rubber and civil engineering applications all posted modest growth in 2000. That trend is expected to continue for 2001, according to Michael Blumenthal, executive director of the Scrap Tire Management Council. "We saw more things go up than go down," he said.

    The U.S. generated about 276 million scrap tires in 2000, 70 percent of which went toward an end use instead of into landfills or dumps.

    The recall of 6.5 million Firestone tires, the most significant event in the tire industry in 2000, was a non-issue in most parts of the country, except for states that had not developed scrap tire markets, Blumenthal said.

    About 120 million tires were converted to TDF in 2000—6 million more than in 1998—as more cement kilns burned TDF as opposed to other fuels, he said.

    The increase came despite the fact that a few major TDF users—including the former Oxford Energy plant in California, which burned 6 million tires annually—either shut down or went out of business.

    Blumenthal predicted paper mills will create additional demand for TDF in the new year, but he said the STMC doesn't have estimates yet.

    A market that continues to advance, particularly in the Southeast, is civil engineering applications. The STMC estimates that 30 million scrap tires were used in 2000 for this purpose, a 50-percent increase from two years earlier.

    Most civil engineering projects use tires in landfills as alternate daily cover, closure caps or leachate liners. A growing end use is tire chips in septic field drain pads, which help clean and retain water in a septic drainage system.

    Blumenthal said several states are increasing their use of tires for septic field drain pads, including Florida, Georgia, North and South Carolina, Alabama, Mississippi and Arkansas. He said a number of states are considering implementing that application, because it's cost effective and uses large amounts of tires. "I think we're going to see more of that particular market," he said.

    But Blumenthal admitted that, though he's optimistic about the potential use of tires in civil engineering projects, many states still are pondering the merits. "We're seeing (civil engineering applications) as something that can increase nicely, can use large numbers of tires, can be beneficial, can be cost competitive—but it's a fight," he said. `Every year you have to come up with more and more markets. In certain states we have bureaucracies that move very slowly. That's going to be a weight on this market."

    In the crumb rubber market, 18 million scrap tires were ground up to produce end-use products, 3 million more than 1998. Blumenthal said the larger-mesh producers—those making 3/8-, 1/2-, 5/8- and 3/4-inch pieces for playgrounds and horse arenas—are doing well, considering the market didn't exist a few years ago. The STMC expects this segment will continue to make modest gains during the new year.

    Three large crumb rubber makers that collectively accounted for 40 percent more capacity than needed by the market went out of business in 2000. One of those companies was Santee River Rubber Co. L.L.C. of Charleston, S.C., whose parent filed for Chapter 11 bankruptcy in October.

    But Blumenthal noted that those firms had no impact on market supply because a core of up to 12 companies continues to supply 80-85 percent of the crumb business.

    Still, the crumb rubber industry continues to be a tough business, Blumenthal said, as firms keep trying to beat their competitors' prices and sometimes compromise product quality. If anything, business failures in 2000 may repel investors from crumb rubber companies in 2001.

    The ground rubber industry also is consolidating and maturing, he added. Certain parts of the U.S.—such as the Southeast, New England, California and Illinois—consume all of the scrap tires generated for crumb rubber usage. In comparison, states that border these areas often have a weak market infrastructure for crumb.

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