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Against the backdrop of recycling-related legislation, including the Container and Packaging Recycling Act, the Home Appliance Recycling Act, and the upcoming Automobile Recycling Act, the momentum for recycling waste plastics has been growing steadily in recent years. However, 25 years ago, when the term "recycling" itself was not yet commonplace, Pana Chemical Co., Ltd. established a material recycling system for expanded polystyrene (EPS). Since then, the company has expanded its business to target various other waste plastics, such as waste PET. Among waste plastic recycling methods, material recycling is considered difficult to make profitable as a business due to challenges like securing markets for recycled products. Yet, Pana Chemical has achieved significant success in this area. We spoke with President Shihei Inukai (pictured upper right).

The oil crisis sparked the start of the recycling business. The company began in 1976 as a sales agent for Matsushita Ryuko's chemical products, handling all types of plastic raw materials. However, it faced major difficulties right from the start. The oil crisis caused an extreme shortage of the plastic raw materials it handled. Naturally, customers complained, but there was nothing they could do.

"It was during this desperate time that I conceived the idea of polystyrene foam recycling. I saw it when passing by the Tsukiji Central Wholesale Market and witnessed thick black smoke billowing from an incinerator chimney burning polystyrene foam," said Inukai. At that time, the market was transitioning from wooden to polystyrene foam fish crates. Returning these empty, used fish boxes to their origin markets incurred transportation costs, so they were incinerated or landfilled at the market. "This is such a waste," thought Mr. Inukai, a plastics expert. Although the term "recycling" didn't exist then, waste plastics like scrap from molds, molding, and raw material manufacturers—spools, runners, and non-conforming products—were already being collected and reprocessed. At its peak, there were reportedly over 1,000 recycling companies nationwide. As labor costs, including sorting, rose and profitability declined, the recycling business began to flourish again. It was perh
aps only natural that when Inukai saw polystyrene foam being incinerated, he thought that heating it to melt it might make it usable as raw material. He immediately set about developing a dedicated processing machine for polystyrene foam. The design was based on existing plastic recycling equipment, such as that for polyethylene chloride. The machine melted polystyrene foam using electric heat and processed it into sheet-like polystyrene resin raw material. Development took two years. The first model used heat from a gas burner, but considering risks like flammability, it was improved to an electric system. Currently, models utilizing friction heat are also available.

The company purchases the machines for a fee and exports them overseas. At that time, dedicated polystyrene foam processing machines did not exist, so the novelty of the machinery alone likely contributed to its sales. However, the key to the company's rapid growth was the establishment of a recycling system. This recycling system continues to function as follows today: The company sells the processing machines to markets, supermarkets, waste disposal companies, and local governments. Styrofoam fed into the machine is crushed into pieces approximately 3 cm square (depending on the model) and discharged as Styrofoam blocks about 30 cm wide and 1 meter long. The company purchases all of this Styrofoam, which has been reduced to about 1/50th of its original volume, for a fee. This means that for users, what was previously a disposal cost becomes a source of profit.

"Depending on the market price of polystyrene resin and the processing volume, the initial investment can be recouped in about one to two years," says Mr. Inukai. Initially, there were suspicions that the company might only sell the equipment without purchasing the recycled material. In some cases, customers were even made to sign a pledge to sell the material simultaneously with the equipment sales contract. However, by emphasizing that the primary goal was not just selling the processing machines but purchasing the raw materials, and by making this proposal, they first delivered four units to Tsukiji Market. Seeing this result led to an overwhelming influx of inquiries from fish markets nationwide. Furthermore, since it is a system where materials are purchased for a fee, securing a supply of recycled raw materials is the company's lifeline. "You could say we effectively own recycled raw material factories nationwide, and the responsibility is immense. If we can sell recycl
ed materials at a high price, we can purchase them at a higher price from users. We consider that our mission," stated President Inukai. Simultaneously with product sales, they advanced market development. President Inukai chose overseas markets. In Japan, even today, due to the Food Sanitation Law, Safety Law, JIS standards, and other regulations, developing applications for recycled polystyrene foam materials—such as food containers, trays, toys, buttons, and building materials—remains challenging. Therefore, we sought sales channels in Taiwan, Hong Kong, and China, where regulations were fewer and plastic was beginning to gain widespread use. President Inukai chose overseas markets. In Japan, even now, regulations like the Food Sanitation Act, Safety Standards Act, and JIS standards make it difficult to develop applications for recycled polystyrene foam materials in products like food containers, trays, toys, buttons, and building materials. Therefore, he boldly sough
t sales channels in Taiwan, Hong Kong, and China, where regulations were lighter and plastics were gaining traction. In fact, the demand for recycled materials for toys, stationery, trays, and more was surprisingly high, even surprising President Inukai. Among these, video cassette cases saw a particularly rapid increase in demand. Recycled materials for video cassette cases were in high demand, with buyers wanting as much as possible. Recycled materials were continuously transported from processing sites to ports and exported. This situation persists today, with some businesses placing orders for 10,000 or 20,000 tons. Currently, the company's processing machines are installed at "Ecolopace," a seafood and produce wholesaler. With a processing capacity of approximately 400 kg per hour, these machines are deployed at 1,200 locations nationwide, including the most lucrative markets, major department stores, processing manufacturers, and intermediate waste treatment facilities
. The monthly recovery volume is 2,500 tons, totaling 30,000 tons annually. Its domestic market share for polystyrene recycled ingots reaches a remarkable 80%, which is truly significant. By implementing a paid purchase system for recycled materials and developing overseas sales channels, they have built a system that benefits all parties: the equipment users, Pana Chemical, and overseas businesses. "Recycling business succeeds only when it is economically viable," states Mr. Inukai.

Furthermore, the expanded polystyrene "Clean Heat Packer" has a processing capacity ranging from 10kg/hour to 1000kg/hour. Heated material circulates within the melter body, and odors are treated using catalytic activated carbon. Its compact design has led to its installation at 400 locations, including supermarkets and department stores. Aiming to collect and export 3,000 tons of polystyrene and 5,000 tons of waste plastic, the company similarly developed shredders and volume reduction machines for its waste plastic recycling business, launched after polystyrene. It currently processes 2,000 tons monthly. Equipment is installed at processing manufacturers and intermediate treatment facilities, while recycled raw materials are primarily sold overseas to markets like Hong Kong and China. There is a constant shortage of recycled raw materials for common resins like polypropylene, polyethylene, and PVC. Furthermore, demand exists not only for these single-material resins but als
o for mixed resins as raw materials for railroad ties, building materials, and agricultural supplies. Additionally, the company launched a PET bottle recycling business in 2001. It has delivered PET bottle flake recycling systems to 100 locations nationwide and is advancing collection by assigning fixed responsibility areas. For recycled applications, the company envisions recycling PET bottles into textiles like clothing in China. It has begun efforts to establish a system capable of collecting and recycling 5,000 tons of PET bottles monthly in the future. Currently, the company's sales composition is 70% from exporting recycled raw materials, 20% from new equipment sales and replacements (typically renewed every 5 years), and the remainder from sales of chemical products, its former core business. Sales for the fiscal year ending February 1996 were ¥2.4 billion, growing to ¥3.0 billion by February 2002. The company projects ¥4.0 billion for the next fiscal year, indicat
ing steady growth. The immediate goal is to collect and export 3,000 tons of expanded polystyrene and 5,000 tons of waste plastic. "Overseas demand for recycled materials remains very high, so we are focusing all our efforts on collection. We also receive many inquiries about equipment from Europe and the US. However, indiscriminate sales could disrupt the supply-demand balance for recycled materials and cause prices to collapse. We are currently examining recycling systems, including those in Europe and the US."