Recycling prices hit the skids

Demand for cardboard, plastic, paper and metal plummets

Auto manufacturing, banking … now even trash has crashed. The slumping economy has sent the market for recycled materials like cardboard, plastic, newspaper and metals plummeting in recent months.

In the New North and across the country, recycled materials that would ordinarily be turned into car parts or packaging are selling at rock bottom prices, or accumulating in stockpiles. As materials prices drop, recycling becomes less cost effective. Will the weak markets cause businesses and communities to scrap recycling altogether?

Tom Knippel doesn’t think so. He is the industrial marketing manager at scrap metal recycler Sadoff & Rudoy Industries in Fond du Lac. The company purchases industrial scrap and converts it to raw materials for foundries, steel mills and smelters. Knippel’s business is slow because his customers have seen demand for their products drop substantially.

“It comes with the drop off in consumer spending,” says Knippel. “The scrap metal market is way down because it is closely tied to demand for new products like automobiles. There’s still some activity, and we’re optimistic that things will turn around. It’s cyclical, and we have to ride out this cycle.”

Sadoff & Rudoy has made some internal business adjustments, says Knippel, but the company has not laid off employees.

Just one year ago, prices for commodities, including recyclables, soared. On a wave of global growth, especially in China and India, gold shot up to a record $1,033 an ounce in March 2008 and oil reached $147 a barrel in July. But a large part of the buying was fed by speculators who believed demand would only go up. Prices began to skid as the U.S. economy weakened.

By late December the price for a barrel of oil had plunged to around $35, with other commodities like gold and copper dropping as well. Recyclables didn’t escape the economic downturn.

Nationwide, plastic used to make detergent and shampoo bottles sold for $195 a ton in November, down from $691 in September. Plastic for milk jugs dropped to $349 per ton in November compared to the year’s high of $860 just a month earlier. Plastic for soda bottles dropped more than 73 percent from September to November.

Like Knippel, others in the recycling business are hoping prices will rebound soon. Jill Haygood, recycling coordinator for Outagamie County, says when it comes to mixed paper, the county is essentially giving away the material it collects and processes.

“Last August, we sold mixed paper for $95 a ton. Today, we might get $5 a ton, or we might get zero. The mills simply won’t take shipment because they don’t need it,” she says.

Outagamie County takes in about 40 tons of paper a day, and is now shipping only about half that amount. The rest is being stored at the county’s recycling site. The markets’ downturn led in part to the recent shutdown of the county’s recycling collection company, Wittenberg Disposal.

Last year the county signed an agreement with Brown and Winnebago counties to spend $9.9 million for a new recycling processing plant. The new plant will allow residents to mix paper, plastic and metals instead of sorting. It is scheduled to open in mid-summer, and is the largest publicly owned plant of its kind in the state. The county’s share of the new plant’s cost is 37.3 percent.

If recyclable prices stay low, residents’ costs to support the plant, and recycling collection services, could go up. In addition, the state of Wisconsin, which contributes about $32 million a year to local recycling programs, is facing a $2.9 billion budget deficit for 2009-10. Some recycling grants have been trimmed already, and more cuts may be on the way.

Haygood says it’s too soon to panic, though. “At this point, everyone is feeling the effects of the economic downturn — the state, the counties, the municipalities and the end-users. We won’t simply look somewhere else to make up the difference,” she says. “We are working very hard to think outside the box and find other ways to deal with this situation before we look at price increases.”

Haygood, and Waupaca County solid waste manager Roger Holman, agree the markets’ collapse has been nearly invisible to individuals and businesses outside the industry.

“Right now in Waupaca County, nothing has changed for folks,” says Holman. “Their recyclables go away. End of story. The enthusiasm, the belief that recycling is the right thing to do, the participation is all still there,” says Holman. “We hope that will continue to be the case until the economy picks up again.”