Recycled plastics markets stabilizing
Last October the bottom fell out of commodity prices and plastic recyclers were stunned. But this is a tough, resilient sector of the recycling industry and the people in it are adaptive to up and down markets and working with lean margins. After all, it’s a relatively young industry – only about 30 years old – and the players have learned from previous economic bumps and bruises.
For instance, after a healthy 1995, commodity prices nose-dived in 1996 and the lessons were not forgotten – watch prices and demand closely, avoid burdensome inventories, always look for new customers, even new markets if necessary, and try to have orders in hand before acquiring new supplies.
“We reached peak prices last summer because the crude oil price was very high and all the plastics made from petroleum products were consequently high. Life was good. There was demand and always a shortage of supply because we did not have enough recycled plastics to satisfy all the domestic and export demand. We are returning to 2005 price levels when crude oil was about $50 per barrel, like it is priced today,” said David Cornell, technical director for the Association of Post-Consumer Plastic Recyclers.
Since late last year, plastic recyclers have been slowly clawing their way back. There may have been some unexpected “winter vacations” for management and labor, but the business is reviving. It is nowhere near the peak levels of last summer, but getting back to a sustainable business model. ...read more
FOCUS on PAPER/PLASTICS
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As many have become painfully aware, the global economic crisis sent shockwaves through the recycling industry. Domestic and international demand for recovered paper was strong through the first half of 2008, but a sharp decline in demand in the second half drove prices down. Since January, however, there have been glimmers of hope in several recycled commodities, including recovered paper.
“Recycled markets are not sustainable at prices we saw last summer, and they are not sustainable at the prices we saw in November and December. That was historically very high and historically very low,” said Marc Forman, president of Harmon Associates LLC, a Georgia-Pacific company and one of the largest buyers and sellers of recycled fiber in the world. The company sources secondary fiber for Georgia-Pacific’s recovered fiber mill system, as well as for other global customers. Harmon has been in the wastepaper business for 40 years and trades approximately 7 million tons per year. “So, prices will ultimately migrate to where they have traded in the past, within a band. Do we believe that prices will be sustained at current levels? No. It’s impossible for anyone to predict when demand will come back, but when it does there’s likely to be a shortage of supply which will spike prices up. We will recover and find our way back to where prices have historically traded,” said Forman.
According to AF&PA, exports represented 38 percent of all paper recovered through recycling during 2008 with China taking the lion’s share, 11.6 million tons of the 19.5 million tons exported to all countries. China also imported recovered paper from Europe and Japan, but United States exports provided the majority. For 2008, the U.S. Department of Commerce estimated the value of all American recovered paper exports to all countries at nearly $2.96 billion. ...read more