People, if you care whether or not PTOI has any value, look

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Faustus PaperProphet #14943
Quote:
People, if you care whether or not PTOI has any value, look up the prices for scrap HDPE/LDPE/PP. The prices of scrap will be a bit lower recently because those prices vary with the price of oil and oil is down. Those scrap prices are around $700/$750 or so.


People -

Paper Prophet is hoping that you overlook some fundamental flaws in the math and assumptions he has been promulgating as invalidating PTOI:

1) that all HDPE/LDPE/PP sells on average for $700 - $750 a ton

While the average price he comes up with can be arrived at mathematically, as a practical matter this is demonstrably false, as prices per metric ton for HDPE/LDPE/PP waste plastic vary widely, from $180 - $1,500+, depending on the condition and type of plastic being offered. There are many examples of sellers who are asking far less than the $700 - $750 a ton Paper Prophet proposes; I've shown him two already, and he knows he could easily find more, but he would rather ignore the evidence presented to him, and pretend that there are only one or two sellers at those lower prices, and they are likely not real (I see a pattern emerging here.....)

2) Just because there is a market for HDPE/LDPE/PP, everyone in possession of HDPE/LDPE/PP waste plastic will be able to sell every last ounce of their scrap at the price Paper Prophet claims they can sell it for.

This ignores many realities of all markets - just because you could sell something doesn't mean that there will always be somebody to buy it, or that they are willing buyers for the price that Paper Prophet thinks it should be. Location, transportation costs, quality, demand - all of these factors repudiate the assumption that every producer of scrap plastic can sell that plastic for $700 - $750 a ton.....sort of self destructs by itself, once you think about it. Madison County is a perfect example: if they could sell their waste ag film for $700/$750 a ton, why would they ever consider trying to partner with anybody who could only give them $600 worth of fuel? For that matter - did JBII give Madison County the fuel from the ag film that they did process for them, or the proceeds from the sale of that fuel? Or was Madison County just happy that they found someone who would take it for free? Why would Madison County give away stuff they could get $700/$750 a ton for?

3) Anybody using a processor would only sell the output at the spot price of diesel

This assumption ignores the possibility that producers / consumers of waste plastic would use the output of the processor to offset their own fuel usage, thereby reducing their fuel bills by more than the spot price of diesel.

So, to recap:

Quote:
Given his grandiose assumptions, he's correct...but make sure your assumptions are correct.


If you are willing to accept Paper Prophet's assumption that all producers of HDPE/LDPE/PP waste plastic can sell their waste for $700/$750 a ton; if you're willing to accept Paper Prophet's assumption that all producers of HDPE/LDPE/PP waste can sell every ounce of waste plastic they produce ad infinitum; and if you're willing to accept Paper Prophet's assumption that the only thing users of a PTOI processor would do with the output fuel is sell it for the spot market price of diesel -

Then yes, Paper Prophet's simple math formula demonstrates that PTOI does not make sense. I'll let you decide whose assumptions are grandiose, and whose are correct.

Quote:
...and additionally in the interest of keeping that math simple, that math does not even include any operating costs. Not labor, not depreciation, not maintenance, not anything.


Nor does the math take into account any of the tax benefits of purchasing a processor, reduction in fuel bills, reduction in disposal costs, or the value of the rest of the output (Naphtha, pet coke).

It is a very simple formula - but it's not turning out to be a very useful one.

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