GreenYes Archives

[GreenYes Archives] - [Thread Index] - [Date Index]
[Date Prev] - [Date Next] - [Thread Prev] - [Thread Next]


[GreenYes] Suggested Responses to Markets Tanking


It's time to make market transitions that were anticipated and advocated by Zero Waste advocates but are now essential to keep materials out of landfills and incinerators, including:
  • IMPLEMENT EPR PROGRAMS for normally recyclable materials, like have been implemented for toxics over the past 10 years.  Current prices of reuse, recycling and/or composting of products and packaging need to be paid for by manufacturers, first importers or retailers, shifted from garbage ratepayers
  • Cities should adopt policies to REQUIRE RECYCLING GOALS BE MET (e.g., mandatory source separation recycling ordinances, and banning recyclable materials from landfills).  Cities should allow recyclers on an open competitive basis to charge for recycling services.  Then let market forces establish what the current value of the commodities are, and what additional support is needed from fees for services.
  • Back to basics - MARKETS FIRST.  New programs should not be started until they have identified markets and their specifications.  Existing programs need to tighten up on quality standards through more aggressive outreach and education to the public, and more careful sorts of materials collected.  No city programs should accept "residue" amounts from curbside recycling facilities of more than 10%.  If residues are higher than that, it's an indication that there is something wrong with the system of education, collection and/or processing.
  • LOCAL MARKET DEVELOPMENT - Cities should enlist their economic development professionals to work with recyclers to support existing local reuse, recycling and composting businesses, and to help them and end-users to expand locally.  Work together on regional or statewide basis to develop new uses for reused, recycled and compost products.
  • FOCUS ON ORGANICS AND C&D - These streams are usually the top largest components of materials still discarded.  They also rely primarily on local uses of materials.  By focusing on these, cities are not as subject to worldwide market conditions for traditional recyclables.
  • STRENGTHEN GREEN BUILDING REUSE SPECS - Require ALL buildings in a community to meet some level of Green Building standards, and require or provide greater incentives for higher level of reused products, to stimulate deconstruction and reuse, which are inherently LOCAL markets.
  • RECOGNIZE CLIMATE CHANGE AS DRIVER - Zero Waste is the single fastest and most effective way for local governments to address climate change.  The above policies should be included in local community and business sustainability and climate action plans to help accomplish these market transitions.
I'd encourage others to
add to this list, and help us all focus on what needs to be done.  Then state recycling associations, and other reuse, recycling and composting advocacy groups and trade associations need to work with state and federal agencies to adopt these policies and respond quickly before programs all over the world fall apart that we have worked so hard to create.

Gary Liss

At 05:59 PM 11/3/2008, Monica Wilson wrote:
Dear Greenyes-ers ?
 
This discussion has been a real eye opener for those of us following recycling, but not involved in day-to-day market activity. Today?s Contra Costa Times ran a front page article called ?Recycling in the dumps? about the local impact of recycling commodities prices falling (article included below).
 
This seems like a potential crisis for recycling and zero waste if prices hold in the long term.
 
How are you talking about the future of recycling? What do you expect the next year will bring, or is there any way to predict this? What might it mean for potential growth in new recycling programs and new jobs in the sector?
 
Thanks for your thoughts,
Monica Wilson, GAIA
------------------------------------------------------------
 
http://www.contracostatimes.com/nationandworld/ci_10883791
Recycling in the dumps
By Matthias Gafni
Contra Costa Times
Article Launched: 11/02/2008 09:15:25 PM PST

BENICIA -- As a forklift stacked two more bales of recycled newspaper on a growing paper mountain, Steve Moore frantically searched for warehouse space to store the suddenly worthless commodity.
The pile of paper ­ mostly from central Contra Costa residents' recycling bins ­ represents an international problem that could raise homeowners' garbage rates and dent the drive to cut waste sent to landfills.
Moore's stack has reached its height limit at 16 feet and 1,000 tons. He has squeezed a week's worth of paper into the shrinking open space behind his Benicia recycling facility.
"Our forklifts can only go so high," he said, only halfjoking.
Moore, Pacific Rim Recycling's owner, has taken the unprecedented step of leasing two acres in Oakland to store some of Contra Costa's recycled waste, and he is searching for more warehouse space.
He is not alone.
The dominos-like collapse of the housing, credit, stock market and commodity collapses click-clacked into the recycling industry, and it fell fast. In six weeks, the price for recycled cardboard has gone from just under $200 a ton to $30 to $40 a ton ­ if you can find a buyer, dealers say.
"This isn't volatility ­ this is the bottom falling out," said Paul Morsen, executive director of Central Contra Costa Solid Waste Authority, which contracts with Pacific Rim to take its recyclables.
Recycling plants nationwide are debating whether to charge disposal companies for the recycled goods that garbage companies bring in. Most recyclers pay for the materials, then sell them for a profit.
If recyclers start charging, disposal companies likely would raise garbage residential rates. With storage space dwindling and material shelf life limited, it is possible that recycled materials will be sent directly to landfills, which could violate state regulations and set back green practices.
The global economic slowdown, particularly in China, has tanked the market during a historically peak period ­ Halloween and Christmas seasons. China, the largest consumer for West Coast recyclers, has almost stopped buying paper and most other recyclables, industry analysts say, creating a raw materials bottleneck.
In some instances, ships full of recycled materials sit anchored off the Chinese coast with no buyers. In other cases, Chinese buyers break contracts and force sellers into taking bargain-basement prices, industry analysts and brokers said.
"The entire industry is upside down right now," Moore said. "The question is how long people can hold on for or will they have to close their doors."
Making green
Commodities recycling exploded as the world's economy thrived a few years ago.
Recycling plants found endless customers who paid top dollar for raw materials, particularly in booming Asian markets. The trade kept waste out of landfills, increased efficiency and created a lucrative industry.
California mandated that municipalities divert half their waste from landfills. Central Contra Costa's waste authority received a cut of recycling proceeds ­ $2.33 million this past fiscal year. It used the money for new recycling programs, such as a test of turning restaurant food waste into electricity.
Pacific Rim receives 5,000 to 6,000 tons of recycled materials a month, three-quarters of it paper products. Moore estimated that earlier this year he could sell his materials for about $800,000 a month.
"The industry has enjoyed very good success the last few years," he said.
About the only problem the industry had was a sharp increase in metal thefts. Thieves have been stealing suddenly valuable metals off just about anything, sometimes even war memorials and gravestones, to sell as scrap.
Nine Dragons
When China opened its Nine Dragons paper mill in 1995, recycled cardboard prices jumped within months from below $25 a ton to more than $225 a ton. China is the No. 1 consumer of recycled fiber. Other Asian countries, such as South Korea and Japan, used to purchase recyclables but now buy internally. China, however, needs recycled paper because it has few forests and its economy is based on exporting products that need packaging, said Brook Edwards, author of The Brown Sheet, a paper recycling industry newsletter.
Typically, China buys the bulk of its paper from October to December, to prepare packaging for all the toys, electronics and other products exported for the holidays.
But as the world economy stiffened and China sold fewer products, a backlog began. Normally, Chinese buyers could take out loans to bridge the gap, but the credit crunch prevented that, said Bob Wallace of WIH Resource Group, a Phoenix-based waste management, recycling and logistical consulting firm.
Declining construction and car sales sent metal prices plummeting, as steel was no longer in demand, he said.
China began playing hardball, Edwards said.
"They don't want to buy anything until they know we're at a bottom," he said.
'Borderline illegal'
On Thursday, recycling broker Jim Fagelson was forced to drop the price of two shipments of cardboard heading to China by $10 a ton, two weeks after it left Los Angeles with a set agreement. Rather than argue the point with his Chinese buyers and risk having the price drop to today's rate of about $80 a ton, Fagelson reluctantly agreed to sell for $120 a ton.
"They kind of have you," said Fagelson, vice president of Newport CF Intl., a Southern California recycling brokerage firm. "It's truly unethical and borderline illegal. But to tackle it in the courts and overseas isn't practical."
Taking advantage of the recycled materials glut, Chinese buyers are wielding a powerful ax. Buyers will find a small mistake in letters of credit and quote a lower price to brokers once shipments are halfway across the Pacific Ocean. With few other options, most brokers are forced to accept it, Fagelson said.
Some speculators shipped tons of scrap metal and materials to China hoping to negotiate prices once there. This was not a problem during the good days, but now ships full of recycled materials are anchored off China's coast with no buyers.
"It's about as bad as I've seen it, and I've been doing this my entire life," said Fagelson, a 35-year industry veteran.
The domestic market for recyclables is small and other options have been exhausted, Edwards said. For instance, once the Chinese market slowed, trains with Midwest recycled waste were diverted from Los Angeles to Mexico. Now, Mexico is taking no more materials, he said.
Joe Recycled Sixpack pays
Moore needs a warehouse to keep his paper dry; waterlogged bales are useless. Storage costs money.
"I'm losing a lot of money right now "... a lot of money right now," he said.
Moore has some financial leeway, but he sayid that smaller "scrappers" and other recycling plants, many of which can not get credit, will shutter.
The facilities that stay open may have to pass costs on to others.
Pacific Rim pays the Central Contra Costa waste agency $30 a ton for recycled materials picked up from homes mostly along the Interstate 680 corridor. That price fluctuates, but may flip Pacific Rim asks the waste authority to pay to take the materials.
"That's a very serious concern of ours and we're watching the market very closely, hoping it will loosen up," said Morsen, the waste authority executive. "If it eats into the operational budget then customers "... will wind up paying more."
Many recycling centers are renegotiating their contracts with cities, said Wallace, who consults recycling facilities across the country.
Green no more
If Moore cannot sell his materials, he may have to send recyclables to landfills when he runs out of storage space.
That prospect does not make Morsen happy.
"In terms of a green approach, paper's very recyclable. If you take something that good and such a rich commodity and stick it in a landfill "... that would be a giant step back," he said.
It also might violate state law. The state requires half of all waste from cities and counties to go somewhere other than into landfills, with the percentage scheduled to rise in the next few years. The state could fine non-complying cities or counties $10,000 a day.
"We will work with local jurisdictions to help them be in compliance," said Beatriz Sandoval, a spokeswoman for the state's Integrated Waste Management Board.
One benefit of the struggling economy is less waste, which will make hitting diversion laws easier, she said. Nationwide, garbage is down 10 percent to 40 percent in different regions, mostly due to declines in housing and retail waste, Wallace said.
Still, East Coast and Canadian recycling centers have started sending recycled materials to landfills, Moore said.
Reach Matthias Gafni at 925-952-5053 or mgafni@no.address.
Paltry paper
The crumbling global economy has taken down the recycled paper market in the past few weeks. Here's how much buyers were paying per ton as of Nov. 1 in the Bay Area market, with decline since Oct. 1.

 
Nov. 1, 2008
Oct. 1, 2008
Cardboard
$40 to $45
$95-$100
Mixed paper
$25-$30
$100-$105
Newspaper
$65-$70
$145-$150
Office paper
$130-$140
$200-$210
Sources: The Brown Sheet and The Yellow Sheet
 
NOTE: The numbers in the table above are from the print version of the Contra Costa Times, 11/3/08 ? the table in the online article had different numbers that don?t look right:
Nov. 1 Oct. 1
Cardboard $40 to $45            $55
Mixed paper $25 to $30          $75
Newspaper $65 to $70            $80
Office paper $130 to $140      $70
Sources: The Brown Sheet and The Yellow Sheet
 
 
 
From: GreenYes@no.address [ mailto:GreenYes@no.address] On Behalf Of Bob Wallace
Sent: Friday, October 31, 2008 9:04 AM
To: 'David Biddle'; 'GreenYes'
Subject: [GreenYes] Re: Markets Tanking
Importance: High
 
Hi David:
 
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 since 1972.
 
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.
 
Best Regards,
Bob
Bob Wallace
Principal & V.P. Business Solutions
WIH Resource Group
Environmental & Logistical SolutionsTM
Phone:  480.241.9994 ~ Fax:  623.505.2634
E-mail:  bwallace@no.address
Website:  www.wihresourcegroup.com
Website:  www.wastesavings.net
 
From: GreenYes@no.address [ mailto:GreenYes@no.address] On Behalf Of David Biddle
Sent: Friday, October 31, 2008 5:54 AM
To: GreenYes
Subject: [GreenYes] Markets Tanking
 
Hey Folks-

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.

Any thoughts?
--
David Biddle, Executive Director
< http://www.gpcrc.com>
Greater Philadelphia Commercial Recycling Council
P.O. Box 4037
Philadelphia, PA 19118

215-247-3090 (desk)
215-432-8225 (cell)




 

 

Gary Liss & Associates  
916-652-7850    
Fax: 916-652-0485
www.garyliss.com

--~--~---------~--~----~------------~-------~--~----~
You received this message because you are subscribed to the Google Groups "GreenYes" group.
To post to this group, send email to GreenYes@no.address
To unsubscribe from this group, send email to GreenYes+unsubscribe@no.address
For more options, visit this group at http://groups.google.com/group/GreenYes?hl=en
-~----------~----~----~----~------~----~------~--~---


[GreenYes Archives] - [Date Index] - [Thread Index]
[Date Prev] - [Date Next] - [Thread Prev] - [Thread Next]