Notes about Recycling Markets
 Price volatility in recycling markets is a given. Managing revenue fluctuations can make or break a recycling program. Negotiating long-term contracts that feature price floors or other revenue/risk sharing agreements, and broadening markets by developing local manufacturing demand for recycled feedstocks, can moderate revenue peaks and valleys.
Prices for all recycled materials tend to follow expansions and contractions in overall demand for manufactured goods. At the same time, specific trends in each industry -- be it paper/paperboard, glass, steel, aluminum, or plastics -- can push prices for different recycled materials in opposite directions. As a result, recycling programs that collect many different materials may experience less revenue volatility over the course of an economic cycle.
But even curbside recycling programs that collect a wide variety of materials, such as residential mixed paper, newspapers, cardboard, glass, metals, and plastic bottles, experience pronounced revenue swings. This is shown on the graph which gives the weighted average market price (large quantities packed for shipment to end-use manufacturers, F.O.B. processing facility) for materials collected by curbside programs in Washington state's Puget Sound region.
Underlying causes of price movements shown on the graph include:
- Supply increases from new curbside recycling programs (late eighties - early nineties)
- General economic slowdown (late eighties - early nineties)
- Manufacturing feedstock inventory buildup in anticipation of shipping container shortages during the 1991 Persian Gulf War.
- Increases in recycled-content manufacturing capacity and demand especially in the paper industry (early to mid-nineties)
- Manufacturing feedstock inventory buildup in anticipation of continued price increases or supply shortages (1994-1995)
- Recession in Asian Economies (late nineties)
- Unanticipated inventory shortages at domestic and
foreign paper mills - especially in China, Mexico, and Indonesia; Y2K fears;
and substantial recovery for sales of many grades of paper and paperboard
(1999 and early 2000)
The three
numbers on the graph show average values for curbside recycled materials
during months at the bottom of the three major recycled material price
cycles over the 1992-2005 period. What is striking is that bottom-end
prices have moved up substantially from an average level of $33 per ton during the
1991-1993 downturn to $64 in the most recent 2001-2002 downturn. In constant dollars (2003) bottom-end prices have increased 43% from $46 per ton during 1991-93 to $66 in 2001-02. So the
downside price risk to recyclers has been significantly reduced. This is primarily due to an upward trend in market prices for mixed paper
and newspapers. Prices
for other curbside materials, by contrast, showed no particular trend either
up or down over this period.
Sound Resource Management's Markets Survey, Newsletter & Garbometrics
To help you track and anticipate price trends for recycled materials [mixed paper, newspaper, cardboard, glass containers, aluminum cans, tin-plated steel cans, PET bottles, and HDPE bottles], Sound Resource Management provides price history graphs (five to fifteen years of monthly prices depending on material) for large quantities packed for shipment to end-users (F.O.B. processing facilities). Price data is provided for both the Northwest and the Northeast. Graphs comparing virgin and recycled prices are also online.
Download reports including... Recycling Versus Incineration: An Energy Conservation Analysis; Economic & Environmental Benefits of Beverage Container Recycling: The Case for Updating Massachusetts' Bottle Bill; Recyclables in the Wrong Can: A Lost Opportunity to Benefit the Economy and the Environment in Washington State; and The Chicago Board of Trade Recyclables Exchange: Evaluation of Trading Activity & Impacts on the Recycling Marketplace.
Download, The Monthly UnEconomist - a newsletter containing information and analyses of recycling's market and non-market economic and environmental impacts.
Plus, download elegant Garbometric models and tools for solid waste and recycling.
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