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. However, 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 evident on the graph below, 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 some of the price movements shown on the graph include:
The leftmost three prices under the graph's trend line show average values for curbside recycled materials during months at the bottom of the three major recycled material price cycles over the period prior to the 2008 financial markets meltdown. A striking result 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 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. In addition, over the shallow downturn in late 2005 prices averaged $88, up again from the previous cycle bottom average of $64.
So the downside price risk to recyclers has been significantly reduced over the past 25 years, except that recycling markets will always be vulnerable to system-wide economic shocks such as occurred in late 2008. Improved resiliency against cyclical downturns is primarily due to upward trends in market prices for recycled materials such as mixed paper and plastic bottles.
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 (fifteen to twenty-plus 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 the Northwest along with some historical price data for the Northeast US. 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, archived editions of The Monthly UnEconomist - a newsletter containing information and analyses of recycling's market and non-market economic and environmental impacts.