Ironically, we conducted a small-scale study on the subject
recently for a client and what our industry sources told us, specifically commodity
brokers (who are closest to the action – and whose well being depend on
making money of the commodities), is that they have not seen markets this bad
Further, they expect this to last at least 9 months and as long
as 3 years. They based this on the fact that China, one of the main
consumers of recycled paper, have warehouses full of raw material; have ships
floating at sea loaded with containers of raw materials; and finished roll
stock stacked in warehouses as well so they are backlogged on sales of finished
goods – backing up the entire supply chain. Our sources told us
that at best, if markets were corrected today, it would be at least six months to
eliminate the backlog of finished goods once orders were placed, shipping
commenced and the plants were back to 100% utilization of raw materials.
Sources also stated that mixed waste is nearing $ 0.00 value and
with the cost of curbside collection and processing the commingled materials, it
may start seeing the landfill for disposal instead of being stock piled for
later sale – something that will not bode well with many.
Principal & V.P. Business Solutions
WIH Resource Group
Environmental & Logistical SolutionsTM
Phone: 480.241.9994 ~ Fax: 623.505.2634
GreenYes@no.address [mailto:GreenYes@no.address] On Behalf Of David
Sent: Friday, October 31, 2008 5:54 AM
Subject: [GreenYes] Markets Tanking
I’d like to get a discussion started here about the state of the markets
and what others are seeing in their regions.
I don’t know about any of you, but we are now dealing with a set of
commodities markets that have fallen through the floor. Cardboard has dropped
by more than 50%, office paper and commingled containers are way down, scrap
steel we are hearing has dropped by 80-90%. I’m planning on doing a
systematic call to all of our main markets to get a pulse and solid numbers
beginning next week.
This is an acute problem here in the Mid-Atlantic and obviously no one knows
how long we’re going to be struggling with this situation. What it means
for my member companies is that they won’t be seeing rebate checks for a
while and they may well start having to pay more for recycling services.
My biggest concern is for businesses just now trying to put programs in place.
They’re going to take a look at the economic equation of shifting over to
recycling and have a hard time understanding why they should be recycling. In
the case of our big haulers its very likely that they’re now going to be
uninterested in working with small and medium accounts to put recycling in
place — no doubt they are losing money on dumpster service systems where
they just charge a flat monthly fee for recycling.
I’m not panicking here. I understand that this is a long-term game.
We’ve seen this before in the early 90s. I’m going to be working on
getting the word out to the business community on the need to do proper
long-term economic analysis and to work things through on a group level (we’ve
formed a partnership with IRN and are offering cooperative marketing services
now to our members).
This is potentially very serious, though. The zest for “green
programs” is meeting the realities of the market economy and I dare say
folks are going to lose interest at least in recycling if we don’t figure
out how to help them properly. We’ve come too far to let things slip like
they did in the 90s.
David Biddle, Executive Director
Greater Philadelphia Commercial Recycling Council
P.O. Box 4037
Philadelphia, PA 19118