Attendees
of the inaugural Corporate Growth Conference, a Waste
Today event held in Chicago Oct. 17-18, 2018, heard from
presenters with viewpoints on how the lower value of collected recyclables is
affecting the bottom line of waste and recycling firms.
Bill Moore,
president of Atlanta-based Moore &
Associates; Seth Cunningham, project manager of the Kansas City,
Missouri-based consulting firm Burns
& McDonnell; and Peter Keller, vice president of Phoenix-based
waste and recycling firm Republic
Services, discussed market conditions recyclers are facing in the
fourth quarter of 2018.
Moore said
China’s decision to curtail the import of recyclables from outside the country,
especially recovered fiber and plastic scrap, means many recyclers are
confronted with declining prices and fewer end markets for the material.
The drop in the
value of recyclables has not only had a negative impact on private recycling
firms, but also municipalities that have signed contracts with these recyclers
to process materials and share in the revenue generated. With the drop in
prices, many of these cities are seeing increased processing costs rather than
revenue, and glass is being dropped from curbside programs in some places.
Moore said that
while prices for many paper grades are flat, old corrugated containers (OCC)
demand is increasing, and the growth of e-commerce is shifting more OCC from
distribution centers to residences. This trend is expected to continue and will
result in municipal recycling processors being able to pull more OCC from
curbside collection programs.
On the down side,
mixed paper, which traditionally was created at municipal material recovery
facilities (MRFs) and sought after by Chinese mills, continues to experience
depressed pricing after China’s move to curtail most mixed paper import
shipments.
For plastics,
Moore said there is a burgeoning anti-plastic movement, which is forcing more
companies to develop ways to reduce plastic’s environmental footprint. He said
prices for many plastic scrap grades will see downward pressure due to an
oversupply of resin on the global market.
Cunningham of
Burns & McDonnell said after commodity prices plummeted during the global
recession of 2008 and 2009 prices had rebounded before the Chinese restrictions
were announced. He said now there are other factors affecting pricing for many
recyclables, including contamination in residentially collected material, which
he said “is a big cost.”
“Moving forward,”
Cunningham commented, “we will have to reset expectations. One thing that needs
to be done is reducing contamination. This will require more education.”
Cunningham said
the traditional revenue model many municipalities operated under with recyclers
needs to change. The high costs of processing and the slumping prices make it
more difficult for recyclers to honor contracts when they may be losing a
significant amount of money.
Republic’s Keller
gave a snapshot of his company’s operations and steps it has taken to work
through the challenges of the 2018 market.