Tuesday, November 11, 2008

As world demand falls, prices for recyclables go down too

A sudden collapse in worldwide demand for re- cyclables, particularly from China, has scrap dealers from Sacramento to San Diego stockpiling curbside collections as never before and charging walk-in customers for their throwaways.

As world demand falls, prices for recyclables go in dumper
Published Monday, Nov. 10, 2008 Sacramento Bee

A sudden collapse in worldwide demand for re- cyclables, particularly from China, has scrap dealers from Sacramento to San Diego stockpiling curbside collections as never before and charging walk-in customers for their throwaways.

Stacks of baled paper, plastic and metal are mounting at the Sacramento Recycling & Transfer Station plant on Fruitridge Road because market prices are too low to turn a profit or, worse, no buyers can be found, its operators said.

Five miles to the west, Ming's Recycling Corp. recently posted a sign at its entrance on 47th Avenue: "Ask for prices before you unload."

"We got fed up reloading everybody's pickup," said Kevin Luong, the company's marketing director, now in his seventh consecutive week of meager sales. "People are so shocked by the low prices. They think they are being ripped off here, but that's not the case. It's not us. It's the market."

If the scrap market doesn't recover anytime soon, homeowners could see their garbage rates rise. Most recyclers pay for the materials cities and counties collect from residents' blue curbside bins and then sell it for a profit. The proceeds help offset the government's costs of collection.

"It helps keep our recycling rates low," said Jessica Hess, a Sacramento city spokeswoman.

Local officials also see the buildup of unsold rubbish as a potential public health hazard. State waste regulators anticipate that dealers will ask that limits on the volume of stockpiled bales be relaxed.

"We're wondering what can we do to provide some relief," said Jon Meyers, spokesman for the state Integrated Waste Management Board.

Devalued recyclables easily could end up in the dump, making it harder for municipalities to comply with a state mandate to divert at least half of their waste from landfills, Meyers said.

As far as Sacramento County officials know, recyclers "are not landfilling it as yet," said Paul Philleo, county director of waste management and recycling.

The scrap market took a nosedive in late September. At first, industry analysts thought they were seeing a short-term "Olympics effect" from the shutdown of Chinese paper mills and other big polluters during the Summer Games in Beijing. But as the weeks of rock-bottom prices wore on, the cause became clear.

China, a voracious consumer of West Coast scrap, has all but stopped buying used paper and plastic because international demand for Chinese products made from these recyclables has diminished. Much of the material goes to making cardboard and plastics for packaging everything from iPods to eyewear, computers and cars.

"A lot of the material was going to China to make boxes for all the things they were shipping back to the United States," said Bruce Savage, spokesman for the Institute of Scrap Recycling Industries in Washington, D.C. "When they aren't producing products, they don't need the packaging materials."

When the cavalcade of collapses in housing, credit, stocks and commodities hit the recycling industry, it plummeted.

On Oct. 1, for example, baled newspapers in Northern California were going for $140 to $150 a ton. By Nov. 1, the market price had dropped more than 60 percent to $55 to $60 a ton.

The scrap market is inherently volatile. Two years ago, demand from China and India was high enough for thieves to steal newspapers from street stands, rip off water meters and manhole covers and strip cemeteries of bronze plaques.

The depth and speed of the recent price fall has taken many by surprise.

"We've seen recyclables crash down in value in 1995, but we never have had a situation where we couldn't sell our materials at any price," said Steven Moore, president of Pacific Rim Recycling, which sells curbside scrap from several East Bay cities.

The cavernous Sacramento Recycling plant has 120 workers and a maze of electronic conveyors, chutes, sorters and balers processing 450 to 500 tons a day of papers, cardboard, plastic containers and metal cans collected at the curbs of Sacramento area homes.

Beginning last month, some of its regular scrap brokers and paper mills stopped buying no matter how low the price dropped, said Shawn Guttersen, the company's vice president, who entered the business during the 1995 slump.

"I've never seen suspended orders in the recycling industry during my career," Guttersen said.

Recyclers, being the experts they are at finding silver linings, have recovered a good piece of news from the tanked market.

"We haven't been seeing as many of the stolen materials coming in lately," said Luong of Ming's Recycling.

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