AKRON-Recycled tire rubber may finally overcome its ignoble status and become a traded commodity by the end of next year. To augment the value and marketability of ground tire rubber and tire-derived fuel, the Scrap Tire Management Council (STMC) has been working with the Chicago Board of Trade (CBOT) to list these materials on the commodities exchange.
The biggest obstacle now facing the industry, according to Michael Blumenthal, executive director of the STMC, is the concern of potential end-users over the steady future supply of ground rubber or TDF for their operations.
The CBOT listing would help alleviate this obstacle, he said.
Trading scrap rubber materials on the commodities market ``gives end-users knowledge and security that there is a supply of quality material to meet their specifications and they will know the (market) prices,'' Mr. Blumenthal said.
Securing the price and future supply flow of ground rubber or TDF is important to a company planning to invest in system and equipment overhauls to accommodate recycled rubber, he said.
Trading on the CBOT can also help expand markets and provide a level playing field for scrap tire processors, according to the STMC, which has been laying the groundwork for the project since last spring.
The CBOT is a 146-year-old institution and the world's largest futures exchange, handling agricultural contracts and U.S. Treasury bonds.
The trade organization is currently working with the U.S. Environmental Protection Agency, the National Recycling Coalition and other recycling industry organizations to develop a system that would link buyers and sellers of recyclable materials on an electronic cash exchange.
The exchange touts itself as a central trading point that:
makes it easier and more cost effective for buyers and sellers to locate each other;
enables large and small brokers and manufacturers to access a larger pool of suppliers;
provides detailed product descriptions and a third party to certify product quality to allow buyers to purchase material sight unseen;
provides a neutral arbitration process to encourage fair trading; and
lists real price information based on actual transactions to allow buyers and sellers to verify they are paying and receiving fair market value.
According to Mr. Blumenthal, the CBOT is now in the process of setting up a subscriber program-which is due to go on-line by mid 1995-for recyclable plastics and glass.
The organization wants to focus on scrap tire materials next.
``We see this as a tool to enhance value in the scrap tire product and it gives the end-user confidence that there is a constant supply of quality material at a fair price,'' he said.
For the suppliers, the CBOT provides a springboard to expand their markets from a local to a national arena. To ensure quality products on the exchange, the suppliers probably will have to receive certification from the CBOT, Mr. Blumenthal said.
Small suppliers of TDF and ground rubber may turn to brokers or cooperatives in order to participate in the trading of large volumes of material, he added.
Equipment manufacturers would also benefit from this program, as the CBOT would act as an indicator of the types of equipment or processing systems tire processors need in order to meet the most popular ground rubber specifications.
But before all this can happen, the industry must first meet certain standards and criteria for ground rubber and TDF, as required by the CBOT, including:
Standardized definitions-the STMC has already compiled a glossary of terminology for crumb rubber based on input from about 40 entities in the industry, and this glossary is now seeking approval from the American Society of Testing and Materials for universal recognition.
Standardized material-the STMC also has sought the assistance of the ASTM to approve standards for different gradations of ground rubber and definitions for TDF.
Independent laboratories to verify material specifications-after the ASTM committees complete their work on industry standardization of the materials, a testing protocol to sample and test ground rubber and the criteria for certification will be established for independent laboratories.
Once these requirements are met, the Scrap Tire Management Council will work with the CBOT to set up a computer program for the listing.
The CBOT will not be ready for inputting recycled rubber until the end of 1995, Mr. Blumenthal said.
Which is fine, he added, since the STMC needs about a year to prepare the standards before the program can commence.