Down, Down, Down: Recycling Markets 2012

Michael Fickes, Contributing Writer

Prices in the recycling commodity markets have generally fallen over the past 12 months.

The downward trend in volumes and prices for recovered newsprint has grown stronger with the proliferation of tablet computers and newspaper apps. Prices for other recycled fiber materials have fallen as well.

“Prices for recycled resins have made relatively large moves down over the past 12 months,” says Pete Keller, vice president, recycling and customer solutions with Phoenix-based Republic Services Inc. “That has to do with the downward movement of fuel prices, which creates negative pressure on recycled plastic.”

Steel and aluminum prices also have trended down in fairly dramatic ways.

As usual, glass is generally unaffected by the turmoil in other markets, with glass prices remaining relatively stable. “Because glass is heavy, it can’t support much transportation,” says Keller. “So glass remains a local market. Today, a growing number of regional secondary processors are taking more and more glass cullet and glass waste from MRFs [material recovery facilities], which seem to be landfilling less glass.”

Moreover, it appears that the downward move in prices will continue. “Price movements between the third quarter this year and last year appear to be diverging, and that’s unusual,” says Keller. “Historically prices have picked up in the third quarter when orders for packaging increase in preparation for the holiday season. It happened last year. This year, however, we’re seeing downward pressure on prices. It may turn around, but in mid-July, we’re really not seeing the levels of demand we’ve seen in the past.”

Paper Cuts

Prices for old corrugated containers (OCC), mixed paper and old newspaper (ONP) have taken hits since June of 2011. When prices fall, you expect rising volumes, says Bill Moore, president of Atlanta-based Moore & Associates. That happened in the case of OCC, but mixed paper and ONP volumes fell.

“Prices for OCC and mixed paper are linked to the economy in China, which has slowed — it isn’t falling off a cliff, but it isn’t showing any strength either,” says Moore.

In the second quarter of 2011, OCC prices stood at $159 per ton. “We saw a significant correction in the third and fourth quarter of last year,” says Moore. “By the second quarter of this year, the price had fallen to $132 per ton. Since then, prices have stabilized a bit, but the trend is still down.”

OCC volumes showed a major increase in recent years. Volume in 2009 was 24.3 million tons. Volume spiked to 27 million tons in 2010 and to 29.1 million tons in 2011. What’s behind the sharp increase? “I think that new materials have worked into the OCC mix,” Moore says. “We’re seeing a lot more boxboard from households. By boxboard, I mean pizza boxes, shoe boxes and other box packaging.”

Mixed paper was going for $112 per ton in the second quarter of 2011 and had fallen to $96 per ton by June of this year. “The price of mixed paper has been even more volatile than that of OCC, again because of world economic developments,” adds Moore.

Mixed paper volume fell about 700,000 tons from 9 million tons in 2010 to 8.3 million tons in 2011. “Two important components of mixed paper are newsprint and printing and writing paper, including magazines,” Moore says. “Usage of these grades is dropping. The widespread conversion from paper billing and paper direct mail to electronic billing and electronic direct mail are two more factors driving down the volume of mixed paper.”

U.S. ONP prices plummeted from an average of $160 per ton in the second quarter of 2011 to an average of $104 per ton in the second quarter of 2012. ONP volumes are down slightly, from 8.94 million tons in 2010 to 8.78 million tons in 2011.

Plastics Bend To Market Pressures

By and large, prices for polyethylene terephthalate (PET) and high-density polyethylene (HDPE) fell during the course of the last 12 months.

Prices for PET dropped from a high of 42 cents per pound at the beginning of 2010 to 30 cents per pound by the end of the second quarter of 2011. Prices rebounded to 40 cents per pound in the third quarter of last year. “At the end of last year, there was a down period, after which prices hovered around 30 to 35 cents,” says Mike Schedler, director of technology with the National Association for PET Container Resources (NAPCOR) in Sonoma, Calif. “Then in the second quarter into the beginning of the third quarter of this year, the price of virgin PET plummeted and recycled prices started down.”

Recycled PET prices are linked to virgin prices, continues Schedler, and virgin prices respond to the supply and demand for PET’s chemical components. “We’re now in a market correction caused by weak demand in the United States and China and a strong cotton crop in China, which affects the price of polyester,” he says. “When you add all of that up, virgin prices have fallen and recycled prices have followed.”

It could be worse had several new PET plants not opened last year, says Schedler, increasing demand for recycled PET. “More plants are coming, too,” he adds. “New plants keep bale prices higher than normal.”

HDPE prices are mostly down as well, according to Tamsin Ettefagh, a vice president with Envision Plastics, an HDPE re-processor with facilities in Reidsville, N.C., and Chino, Calif.

East Coast processors were buying natural HDPE for 35 cents per pound last year at this time, says Ettefagh. Today, prices have fallen into a range of 28 to 30 cents per pound.

East Coast mixed prices were 23.5 cents per pound last July. Currently, that material is priced in a range from 19 to 24.5 cents per pound. So it is mostly lower and occasionally higher.

On the West Coast, the natural HDPE price inched down from 30 cents per pound last year to 28 cents currently.

The exception is West Coast mixed color HDPE, which has risen from 20 cents per pound last year to its July 2012 price of 23 cents.

Ettefagh explains the general downward trend in HDPE prices by pointing to the plunging price of virgin HDPE. “Prime went down 14 cents in May and June,” she says. (“Prime” is an alternative term for virgin material). “Spot prime went down even further.”

Ettefagh looks for something of a rebound starting in August, saying the price of prime is expected to rise by 5 cents.

Steel and Aluminum: Weighed Down by Economics

Struggling global economies with little construction activity have caused the price of ferrous scrap and aluminum to plummet.

After rebounding from its recessionary trough of $100 per ton, the ferrous scrap price rebounded to $400 per ton in May of 2009. Over the next year, the price fell back to $300 per ton. Then the price went back up to $400 where it stayed for most of 2011. But in the second quarter of this year, the price took another tumble and dropped to $300 per ton.

The reason? Oversupply relative to demand and a sluggish global economy, says Gregory L. Crawford, executive director of the Steel Recycling Institute in Pittsburgh.

Higher volume explains the $400 cost per ton in 2011. Scrap consumption in 2011 reached 54.7 million tons compared with 51.8 million in 2010.  

This year’s lower price may presage a decline in volume next year.

Significantly more expensive than steel, the price of aluminum nevertheless also fell substantially during the past 12 months. At the beginning of July in 2011, the price of aluminum listed on the London Metal Exchange stood at $1.20 per pound. The price plummeted through the end of the year, reaching 91 cents by December.

During the first quarter of 2012, the price recovered somewhat but fell back substantially by the end of this year’s second quarter, moving down to 83 cents per pound, just 10 percent above the lowest monthly price ever recorded, according to a report on HarborAluminum.com, a web site that tracks the aluminum market.

The U.S. Geological Survey tracks the volume of aluminum scrap recovered annually. In 2011, recoveries totaled 3 million tons, up from 2.7 million tons in 2010. Tonnages of recovered aluminum scrap have hovered just over and just below 3 million tons since the onset of recession, even as prices have fluctuated wildly.

Glass and Secondary Processors

There was a time when glass manufacturers and glass processors hated single-stream recycling. The glass came through the process with pieces of paper and other contaminants stuck to it. The different colors were mixed together.

Today, of course, it is still much the same, but there is much less gnashing of teeth thanks to the rise of different kinds of secondary processors.

LVH Industries in Orwigsburg, Pa., for instance, accepts glass from a county MRF and a number of independent recycling operations. “Cullet processors need 3/8-inch material,” says Michael Kurtz, the plant manager with LVH. “We take the smaller material and make it into products. We make an abrasive for sandblasting and fine powders for plastic filler.”

A young company, LVH is involved in researching and developing a number of new products from glass fines.

Cougle’s Recycling Inc., a MRF in Hamburg, Pa., collects the glass that comes through its process and cleans and sorts it into clear, green and amber to ensure the highest possible price.

“We sell our materials to a secondary processor,” says Matthew Cougle, the company’s chief operating officer. “Glass prices are low but extremely stable. While the low price may be a negative, the positive is that you never have to wonder what the price will be.

“For clean, well-sorted material, we’re seeing around $30 per ton for clear glass, $8 to $10 per ton for green and $12 per ton for amber. We haven’t seen major shifts in these prices for many years.”

Cougle’s also uses some of the glass to make aggregate products for pipe trenching, back fill and other construction works.

“While some MRFs continue to landfill glass,” Cougle says, “as secondary processors and processing methods proliferate, less and less glass will end up in landfills.”

Michael Fickes is a Westminster, Md.-based contributing writer.