Boring is Good

After the volatile post-consumer commodity markets of the mid-1990s, some might consider the last year of the 20th century rather boring. But to recyclers who bemoan the frenzied ups and downs of the marketplace, boring is good.

1999 offered few surprises to recyclers, especially to those who monitor larger economic trends. Low unemployment and interest rates, strong retail sales and housing starts, and favorable pricing for shipping containers all helped recyclers.

Most commodity markets remained relatively stable, including aluminum, glass and scrap tires. Steel and fiber markets offered some excitement, recovering from the losses of late 1998 and early 1999. Even plastics showed signs of market strength and stability late in 1999 and early 2000.

The Market Basket Steve Edelson, director of materials marketing for Recycle America, the recycling subsidiary of Waste Management Inc., Houston, is pleased with the performance of curbside recyclables as a group. He refers to what he calls the "market basket effect," which considers the stability of prices for curbside materials as a whole, rather than for the individual commodities.

"The most advantageous scenario is a good market basket, not where you have lots of high and lots of lows, but where you have good prices overall," Edelson says. Like most longtime recyclers, he prefers what 1999, for the most part, delivered: healthy, predictable prices.

"I don't want high prices," he says. "That just leads to scalping from the curbside and fly-by-night traders who capitalize on the scene."

After a dismal year in 1998, when markets for steel cans and white goods started high and ended low, 1999 provided much-needed relief. "1999 was a mirror image of 1998," says Bill Heenan, president of the Steel Recycling Institute, Pittsburgh. "We started low and ended high with a great recovery in late '99."

Steel Making a Comeback Steel's slump in late 1998 and early 1999 is blamed largely on the failing Asian economy of that time. "Asian mills were dumping steel into the United States," Heenan says. "They not only took the orders, but they couldn't buy our scrap, so it was a double whammy for recyclers." Fortunately, Asia recovered, and the markets turned around mid-year.

"1999 was a record year for car sales, and it was a great year for appliances and home starts," Heenan says. He expects steel's bounce back to remain steady throughout this year, assuming that the U.S. economy remains strong.

Heenan says his industry's trend of making steel using electric arc furnaces, which require very high levels of scrap steel, will continue. New, stronger but lighter types of steel also will allow the industry to expand its end-uses, creating additional markets for steel recyclers, he says.

1999 also was the tale of two years for fiber grades, according to Bill Moore, president of Moore & Associates, Atlanta.

"The first half was markedly different than second half," he says. "First we saw prices as low as they had been since '93. In the second half of the year, we saw prices as high as they'd been since '95." The paper industry ran stronger in the second half of the year, while the supply declined, leading to unusual price increases in the last quarter of the year.

Moore believes the strong pricing is due in part to lagging paper recycling programs, especially for office grades, which creates a lack of supply. Many office paper recycling programs were started in the mid-1990s to feed new deinking mills. When those mills faltered, solid waste haulers let go of their office recycling programs, and many of them never were restarted.

Don Majka, northeast marketing manager for Recycle America, agrees. "The demand for sorted office paper is exceeding what's available in the marketplace," he says. "When [office paper] went to $250 per ton in 1995, lots of people put programs in. But when it dropped back to $80 per ton, they dropped them."

Majka and Moore both see stability for all the major fiber grades in 2000. "We won't ride the high prices that we've had [in January 2000], but it will be another productive year," Majka says. Except for two newsprint projects in Texas and Washington, Moore expects very little new capacity to come online in 2000.

"Overall, prices could be just about equal or a little lower, but it's going to be a much more balanced year," Moore predicts. He also believes that magazines and residential mixed paper are two under-recovered grades that could make progress in a strong 2000 fiber market.

Steady as She Goes Aluminum and glass markets remained relatively steady in 1999, with aluminum ending the year slightly up and glass ending slightly down. The strong U.S. economy and recovering Asian economies, along with a restructuring of the aluminum industry in China, point to improving aluminum prices in 2000.

Joe Cattaneo, executive vice president of the Glass Packaging Institute, Washington, D.C., says cullet purchases from glass container manufacturers were down about 5 percent in 1999. While the figures for non-container uses such as tile and road aggregate were not available at press time, Cattaneo expects these markets to grow during this year.

One glass container manufacturer, Ball-Foster Glass Container Co., Muncie, Ind., is expected to close its Marion, Ind., plant this year, but no other major changes are expected in glass markets, according to Cattaneo.

He does expect more glass processors to install ceramic detection equipment on their sorting lines, which will increase cullet's quality. Even with new systems to detect and remove contamination, Cattaneo says the glass industry suffers from contamination with the rise of single-stream, commingled collection programs. "We never will get back to the quality of the past," he says.

The markets for post-consumer plastics also experienced typical ups and downs with few significant changes within the industry. Polyethylene terephthalate (PET) markets received a boost in 1999 with strong demand from Asian export markets, especially China.

The export market is expected to remain strong in 2000, with domestic reclaimers struggling to keep pace with the prices, according to Patty Moore, president of Moore Recycling Associates Inc., Sonoma, Calif. While foreign competition bodes well for recyclers selling PET abroad, domestic reclaimers could find themselves priced out of the market if the supply of post-consumer PET bottles does not increase.

Fun Means Trouble Recycle America's Edelson expects major food manufacturers to continue experimenting with PET resins of different colors. "They see PET as a great resin, and they want to do fun and interesting things with it, which could make it more difficult for recycling," Edelson says.

Edelson sees continuing growth in the 20-ounce, single-serve PET bottles. Many of these smaller bottles are consumed away from the home, so they won't be captured by residential curbside programs. When the bottles are recycled at the curb, their smaller size makes them easy to miss on recyclers' sort lines, he says.

Luke Schmidt, president of the National Association for PET Container Resources (NAPCOR), Charlotte, N.C., says his organization will emphasize collection of the smaller-sized water and soft drink bottles in 2000.

NAPCOR is promoting using "PETE's Big Bin," made from 100 percent post-consumer green PET bottles, in both permanent and temporary locations, such as special events.

Natural high-density polyethylene (HDPE) continues to bring the best prices of all the post-consumer plastics. "HDPE really is settling in as an understood and accepted post-consumer resin," Edelson says. "There are no apologies any longer, and there are credible and significant producers of the resin."

Export markets also are strong for HDPE. However, domestic reclaimers still are ahead in the marketplace.

"Domestic markets have barely stayed in front [of exports] this year, but exports are always breathing down their necks," Patty Moore says. The domestic market is less competitive on colored HDPE and more of that material is going offshore, she adds, noting that many recyclers don't take advantage of the export markets. Perhaps this is because they don't know how to tap into them or aren't comfortable with international financial transactions, she says.

Still, Edelson encourages recyclers to consider exports in 2000 if they are having trouble marketing their plastics.

Beyond the Bin Post-consumer materials beyond those collected at the curb are expected to have good years at the turn of the century.

Markets for scrap tires in 1999 were very similar to 1998. According to the Washington, D.C.-based Scrap Tire Management Council (STMC), about 178 million tires went to a variety of end-use markets including civil engineering applications, ground rubber products and tire-derived fuel. The remaining tires, about 33 percent of the 273 million generated, were stockpiled or landfilled. These figures represent a slight drop in the use of scrap tires from two years ago, says Michael Blumenthal, STMC president.

Blumenthal cites lightweight backfill for construction, road embankment fill, leach pads in septic systems and landfill leachate collection systems as strong markets for tires shreds with some slight growth. Tire shreds in septic systems outperform stone, he says. They hold more water, are easier to install and cost about $300 less per job.

Another boost to the market is that many of the technical issues holding people back from using scrap tire products have been resolved. "A lot more technical information is available now," he says. "The technical issues have been resolved and we have good construction guidelines and engineering specifications."

While Blumenthal is excited about developments in the markets for tire shreds, he is cautious about over-capacity in the ground rubber market where a lot of new production capacity has come online.

"This new supply, if rushed into the market, could have a debilitating impact. It could lead to a significant downward pressure on prices for scrap tires," he says. Blumenthal says he expects a shakeout in the ground rubber industry this year, similar to the industry closures and consolidation that took place about three years ago.

"I hope the new supply comes on slowly and that it comes with some new product development to absorb it," he notes.

Markets for compost saw healthy growth in 1999, especially agricultural and landscaping uses, says Ron Alexander, president of R. Alexander Associates, Cary, N.C. As the national solid waste hauling companies divest in composting, the industry is being dominated once again by small- and medium-sized firms, a trend that should continue in 2000, Alexander says.

He sees a renewed interest in establishing specifications and certification programs within the industry, including a new compost certification program being piloted by the U.S. Composting Council, Amherst, Ohio, called the Seal of Testing Assurance program.

"The market is looking for ways to differentiate one product from another," he says. The U.S. Composting Council program will assist buyers in writing specifications for compost products. In the past, the inability to write specifications has hindered compost market development.

Now in place, industry certification programs should lead to numerical compost standards, and composters should be able to take advantage of government buy-recycled and bio-based product procurement programs, Alexander says. He further hopes that penetration of these markets will lead to a snowball effect for the industry in the next few years.

Electronics Recycling Reuse and demanufacturing of consumer electronics has grown by leaps and bounds, says Dan Draper, principal of Wuf Technologies, Concord, N.H. "We saw two or three demanufacturers spring up per month in 1999," he says. But Y2K upgrades and the rapid development and turnover of computer systems has flooded an already glutted market. Resale markets for whole computer systems are weak, Draper says, although some subcomponents such as monitors are selling well to export markets.

In 2000, recyclers can expect to learn about new technologies that identify and sort the wide range of engineering plastics used in electronic equipment such as computer and printer housings. These technologies are vital for the electronics recycling industry if there is any chance of increasing recycling revenues, Draper says. Recyclers are also trying to identify the best methods for handling the leaded glass and cathode ray tubes in computer monitors.

Similar to scrap tires and organics processors, most electronics demanufacturers charge a tipping fee to cover their costs - often 15 cents per pound to 20 cents per pound for computer equipment. When recycling companies profit from the recovery of materials (e.g. precious metals) or through the resale of computer systems, they often share the revenues with the customer that supplied the computers. Draper says he expects these shared tipping fee and revenue arrangements to stabilize in the coming year.

"It's still a young industry with a lot of experimentation," Draper says.

Overall, experts agree that more of the same is expected for the recyclables markets in 2000. Curbside materials, as a group, are expected to remain steady with no galloping highs or horrible lows, predicts Recycle America's Edelson.

Recyclers always should expect the small tweaks in the marketplace that come with seasonal variables such as cold weather, Edelson says, but overall, expect stability this year.

Heenan agrees that a healthy recycling industry as a whole, instead of focusing on specific commodities, is the best goal. He encourages recyclers to continue educating their constituency about recycling's value - regardless of the material. A variety of educational and promotional tools are available, he says.

And after all, the most successful recyclers in 2000 and beyond will be those who produce quality materials and communicate regularly with both the public that generates recyclables and the mills that buy them.