ON THE UPDRAFT OF a healthier economy, demand for most recyclables is strong, and should maintain, if not increase, in 2005. As the domestic economy continues its steady growth and Asian activity increases in the coming months, the markets for all sectors of recyclables should benefit.

“Definitely over the next year [China] will be a primary factor for recycling,” according to Mary Anne Remolador, assistant director of the Northeast Recycling Council (NERC), Brattleboro, Vt. She expects especially strong Chinese demand for recyclable paper and plastics because the Asian nation hasn't developed the internal production to support its breakneck industrial output. Domestic need for paper and other commodities is light. However, other countries, especially China and India, are continuing to snatch up American scrap. China has recently expanded its processing infrastructure tremendously, Remolador says, but it still does not have the domestic supply to operate the new facilities at capacity. Even without exports, though, experts agree that 2005 can be a profitable year for all recyclers.


Paper recovery by ton surpassed 50 percent of consumed material for the first time in 2003 and is expected to have grown again when the 2004 numbers are tabulated. Robin Crawford, spokeswoman for the Washington-based American Forest and Paper Association (AF&PA), attributes the consistent growth to better community education about recycling. The association hopes to raise the retrieval rate to 55 percent by 2012 to provide enough fodder for domestic needs and for increasingly voracious international mills.

“OCC (old corrugated cardboard) and newspaper will remain strong, and the market should be relatively flat at the prices we've seen over the past six months,” says Ron Anderson, president of Office Paper Systems, Gaithersberg, Md.

Others echo Anderson's expectations. “You'll see your normal seasonal peaks and valleys,” says Bob Rickman, material manager vice president of Georgia-based SP Newsprint Co. Old newspaper (ONP) prices are lower than Rickman would like, but he says his company is holding onto inventory. Overall prices should be more stable this year than in the past five years, he predicts.

The story behind those stable prices, especially in paper recycling, continues to be an expanding domestic economy and steady international demand, especially in Asia. “Believe it or not, paper is one of the No. 1 exports,” Anderson says. Rickman adds that for simple geographic reasons, competition — and, accordingly, pricing — for scrap paper is most ferocious on the West Coast.

AF&PA indicates that while ONP and OCC are recovered about 75 percent of the time, the recovery rates for office paper (48 percent) and printing-writing paper (39 percent) are not as high. Crawford attributes the smaller numbers to weak historical demand from recyclers compared to ONP and OCC. As ONP and OCC collections approach practical limits, however, he indicates that clean office paper — printer paper, copier paper and office stationary — may be an important source for achieving the overall 55 percent recovery goal by 2012.


Matthew Coz, recycling director for the Houston-based Recycle America Alliance (RAA), a subsidiary of Waste Management Inc., calls tin cans and ferrous metals “clear winners” today and in the economy's coming months. Bill Heenan, president of the Pittsburgh-based Steel Recycling Institute, agrees, seeing a simple, positive equation for metal recycling, specifically steel, in the coming year: “In an expanding economy, people build more … and the infrastructure's middle name is steel,” he says. The market for steel no longer relies on just what's happening next door, either. “That recycler in Pretty Prairie … who thinks Dallas is where everything's happening is really being affected by New Delhi and Beijing,” Heenan says. While China, with its massive public works projects and preparations for the 2008 Olympics, is a major magnet for steel, Heenan says the domestic market and India are two overlooked factors.

“The crown jewel is India,” he says. “India is about 10 to 15 years ahead of China and has a huge middle class [that is] buying cars.” With the second-largest population in the world, India also is building furiously to provide its people with transportation and housing, Heenan says. Here in the United States, government demand for armor plate, a construction industry bolstered by low interest rates and steady auto sales all signal that strong demand will continue through the year.

At the wholesale level, steel is selling at prices higher than it ever has. Many steel mills were at “under-optimal” inventories of material in 2004, so they started buying from processors to bring stock to acceptable levels, says John Keyes, a commercial buyer from Glassport, Pa.-based Tube City. “As the year went on, steel mills didn't want to be caught, so they continued to buy above inventory,” Keyes says. Prices peaked around $430 per ton for prompt industrial scrap (PIS) in November 2004, and while they have fallen nearly $160 per ton since then, Keyes says prices are still very good from a historical standpoint.


While steel sees strong continued demand, aluminum, which relies heavily on domestic demand, is a mixed bag. Steel recyclers depend on commercial suppliers, while aluminum is more closely connected to curbside collections of used beverage containers (UBC).

“Curbside programs have been experiencing limited participation rates,” says Steve Thompson, director of recycling initiatives for the Aluminum Association, Washington. “The fundamental reason is that environmental issues are off everybody's radar screen.” There are about 4,000 recycling centers — where you can get cash for cans — nationwide, down from a high of approximately 10,000 in the mid-'90s.

The good news is that aluminum prices are high at around 60 cents per pound, up from 48 cents per pound just a few years ago. This allows recyclers to make money while trying to re-energize customer participation, Thompson says. Even with the broad collapse of the extended buyback network, recyclers still can succeed with curbside programs. Participation is the key to regain volume, and door hangers, refrigerator magnets and letters to the editor all help, he says. “To the extent that they can increase participation in the household and ritualize participation, recyclers will succeed.”


While other sectors of the recycling industry struggle to match supply with demand, glass is not like the other commodities where you see huge moves up and down, says Curt Bucey, COO of Houston-based Strategic Materials. RAA's Coz says glass has been the “laggard” in an otherwise healthy recycling industry. Weak prices are forcing processors to look for alternate outlets for mixed glass. One option, Coz and others suggest, is to grind the glass for fill at dumps and at construction projects.

Prices for cullet, sold to the fiberglass and bottling industries, are up slightly, and buying prices for raw glass are about the same as last year, Bucey says. However, he notes transportation has created pressures. “Five years ago, there was a glut of trucks and nobody was making any money,” he explains. “Now [that] the economy has started picking up, there's not enough trucks.” With volatile oil prices, Bucey's company winds up paying a fuel surcharge on top of the normal shipping rate just to truck product in and out of its plants.


Polyethylene terephthalate (PET) and high-density polyethylene (HDPE) have commanded strong prices over the past few years, says Judith Dunbar, recycling manager at the American Plastics Council (APC), Arlington, Va. “I don't see that stopping over the next year.”

A burgeoning international economy means strong demand for plastic both at home and overseas. Like aluminum, curbside collection of plastic is down, driving prices up. “With plastic, the demand overseas is so strong that people can't afford to buy it here,” says NERC's Remolador. In fact, more than 30 percent of recycled resin is going to exports, says Robin Cotchan, manager of the Association of Postconsumer Plastic Recyclers, Arlington, Va. That high overseas demand, especially for PET, leaves domestic mills with a large portion of underutilized capacity, Dunbar says.

“We want to increase the supply to reclaimers,” Dunbar says, so the APC has focused on grassroots initiatives to improve collection and recovery of usable plastic. The group offers grants to municipalities and organizations that install “on-the-go” receptacles in high-traffic locations such as highway rest stops and community centers. APC also has launched a Web site in California to direct consumers to local collection centers. “Some communities either don't give the right signs or education,” she says. “The key is good education that is concise. Pictures are great. Graphics are great.” She adds that educational marketing does not have to be expensive, but maintaining recycling awareness at the community level is essential to keeping operations profitable.

Nevertheless, prices are likely to remain high for plastics because more expensive crude oil is making producing virgin plastic more expensive. Accordingly, demand for recycled plastic should stay high in tandem with oil prices through the year, RAA's Coz says.


Meanwhile, electronics recycling is facing pressures to find markets while under public scrutiny. Retroworks, a Middlebury, Vt.-based post-consumer electronics handler, for example, highlights some of the misunderstandings about recycling electronics. “It's as if all used car sales and part sales [are] called recycling,” says Robin Ingenthron, a company principal. Ingenthron processes a lot of completely obsolete electronics equipment solely for the worth of the base metals he can extract. However, he admits the more profitable side of his business comes from extracting still-working but unwanted components.

“I'm looking out my window at 3,000 15-inch monitors,” he says. “Nobody wants 15-inch screens in the United States anymore. There's no domestic market for that, but India is the second-largest code-writing country in the world, and [companies there will] buy them from me.”

Remolador cautions, however, that “a lot of American companies have rethought sending old electronics [abroad]” when whistle-blowing environmentalists pointed out that less scrupulous recyclers were exporting useless and toxic cathode ray tubes (CRTs) found in monitors and TVs to get them off their hands and creating environmental and health problems abroad. It takes time and capital to properly demanufacture e-waste for scrap metals or to find and post recovered network cards for sale on eBay. This cuts into profit margins, but “nobody wants to end up on the cover of The New York Times,” Ingenthron says. Nevertheless, Ingenthron says despite the added work to find sound markets, demand for his recycled e-waste will remain strong through the year.


To succeed in 2005, electronics demanufacturers and recyclers will have to navigate a perilous regulatory and public opinion landscape. On the other hand, led by ferrous metals and plastics, experts expect recyclables to stay in high demand through 2005. Efforts to boost local collection, especially of UBC, all plastic grades and clean paper should pay-off. Demand for glass will likely remain flat, but even that commodity, recyclers say, is not a loser.

Ben Rogers is a contributing writer based in Evanston, Ill.