LAST NOVEMBER, officials in Baltimore took note of a strange crime spree. Thieves had stolen 130 light poles from the city's streets and highways, apparently selling the aluminum for scrap. At the time, loose, un-baled aluminum scrap commanded a price of $0.35 per pound. Today, the thieves could get $0.45 per pound.
In January, The Associated Press reported that for-sale and recently purchased vacant houses in Springfield, Ohio, were turning up stripped of their aluminum siding and copper plumbing. The thieves also were stripping metal pipes, radiators and wires out of the properties.
The booming black market for stolen scrap metals illustrates how the markets for most recyclable commodities have fared in recent years. For almost all materials, demand is high, while supply is low, and prices are soaring.
“If you aren't making money in recycling today, you ought to find another way to earn a living,” says Bill Heenan, president of the Steel Recycling Institute, Pittsburgh.
The constrained scrap steel market has allowed prices to skyrocket. Heenan pegs the current price at $150 to $300 per ton.
He attributes the uptick in steel scrap prices to a drop in supply created by the growing global economy and longer-lived steel products. “Five years ago, the world consumed about 800 million tons of steel per year,” he says. “Today, it is 1.1 billion tons.”
Products made from steel also last longer than they used to, Heenan says. Ten years ago, a new car would last 10 years. Today, it will likely last at least 15 years. Most steel goes into products that last 15 to 100 years, instead of six months or six weeks. “To us, the Golden Gate Bridge is just steel scrap in inventory,” Heenan says.
Short-lived steel products make up a small percentage of the overall supply, Heenan notes. For example, out of the 100 million tons of steel produced in the United States in a year, just 3 million tons go to packaging applications such as cans. On the other hand, the U.S. aluminum industry produces 5 million tons per year, with 2 million of those tons going into aluminum cans.
Today, recyclers can receive about $1,600 per ton and 80 cents a pound for baled aluminum, and about half those rates for loose cans. Supply remains short today, as emerging Asian economies seize huge shares of the market.
“I've been in the business over 30 years, and I've never seen aluminum prices as high as they are right now,” says Steve Thompson, director of recycling initiatives for the Aluminum Can Council (ACC), Washington. “Up until this year, you would get excited when prices for truckload lots of bales were in the range of 50 cents per pound. But the price has been rising continually over the last year.”
As prices have risen, consumer recycling has declined. Thompson says that 67 percent of aluminum was recycled in 1992. The rate fell to 51.2 percent in 2004, the most recent period that recycling rates have been studied.
Research also shows that half of the households in the United States have access to curbside recycling pickup, but that only half of those households participate. ACC is attempting to redress the issue by working with local governments to develop educational and promotional efforts to boost the number of households engaged in recycling.
Paper is a Tiger
Old newspaper (ONP) prices have remained strong for more than three years now, according to Bill Moore, president of Moore & Associates in Atlanta. During much of that period, the average price of ONP has been higher than the price of old corrugated cardboard (OCC), the first time that has happened for a sustained period of time in 30 years.
The reason for high paper prices is the weak market for U.S. and Canadian newsprint, thanks to declining newspaper readership and slashed newspaper sizes. “Because there are fewer newspapers going into the system, ONP prices have remained high,” Moore says.
In the last half of 2005, Moore's research showed weakening prices for OCC. Today, prices appear to be rebounding.
“China appears to have an impact,” adds Ron Anderson, president of Office Paper Systems in Gaithersburg, Md. “When they gobble everything up, our prices soar. When China isn't in the market, the mills have their way with us, and prices fall.”
Right now, companies selling recyclable paper — ONP or OCC — are having their way with the mills. Published reports for April put the price of ONP at $70 per ton, with OCC coming in around $75 per ton.
While paper prices are strong, Anderson says that they are also steady. “Paper prices have stabilized in recent years,” he says. “They don't go way up or way down, and that makes life easier for us.”
Supply and demand issues are driving the plastics market as well. Polyethylene terephthalate (PET) is in short supply. “There are today more markets for recycled PET than there is supply of PET available for these markets,” says Dennis Sabourin, executive director of the Sonoma, Calif.-based National Association for PET Container Resources (NAPCOR).
Ditto high-density polyethylene (HDPE). “Right now and for a number of years, there has been more demand than supply of HDPE,” says Judith Dunbar, director of environmental issues for the American Plastics Council in Washington.
Published reports put prices of both commodities at strong, if not high, levels. PET brings in about 15 cents per pound or around $300 per ton. HDPE commands a market price of about 40 cents or about $800 per ton.
The PET market may be on the verge of change. Sabourin notes that while the percentage of PET recycled between 1995 and 2003 showed a steady decline, 2004 reversed the trend. “In 2004, the recycling rate increased for the first time since 1995,” Sabourin says. “It went up two points.”
Then again, the international market for recyclable PET and HDPE may well keep prices high despite incremental increases in supply. According to Dunbar, approximately 30 percent of all recyclable PET collected in the United States is exported, with China ranking as a major importer.
To boost supplies of recyclable plastic, the American Plastics Council has initiated the All Bottle program to help increase recycling in selected U.S. cities. “The program educates consumers to put any bottle with a neck into the recycling bin,” Dunbar says. “In most of the cities where we have tried this, we have found that the All Bottle program increases PET and HDPE recycling by 10 percent to 20 percent.”
Glass: Déjà Vu, Sort of
Call it déjà vu or a broken record but the story of glass in the recycling markets is similar to the other commodities, with a twist here and there. “The markets are good; the supply is not good,” says Curt Bucey, COO of Strategic Materials Inc. in Houston. “You often hear that there are no glass markets. That is wrong. There are a lot of markets. The trick is matching the quality to the specs required by each market.”
Published reports put prices for glass at $20 to $25 per ton for flint glass; $10 to $12 per ton for amber; and $5 per ton for green glass.
“Prices for glass have been flat,” observes Chaz Miller, director of state programs for the National Solid Waste Management Association (NSWMA) in Washington. Miller goes on to explain that while glass might seem to be made from common raw materials such as sand, that really isn't true. Glass requires a certain grade of industrial sand, along with a relatively uncommon material called soda ash, which comes from mines in California and Wyoming. Even so, the supply of these materials tends to remain stable, as do the prices of new glass and recycled glass.
A Giddy Electronics Market
“Right now we're having a giddy period,” says Robin Ingenthron, a principal with American Retroworks in Middlebury, Vt., an electronics recycler. “It started in 2005 when the supply of good quality CRTs (cathode ray tubes) spiked as businesses and institutions replaced their monitors with flat panel LCD (liquid crystal display) screens. We were getting perfectly working 2002 monitors that were easy to sell, and that was good.”
However, Ingenthron worries that hard times are coming because manufacturers that purchase recyclable CRTs and recondition them for use in new monitors have embarked on a major shift in production to flat screen LCDs. Demand for recyclable CRTs is falling in 2006.
Recyclers have the option of destroying the old monitors and disposing of the leaded glass in an environmentally acceptable way, but that is a costly procedure that can sometimes wreck the economic model of an electronics recycling business.
The recovery of precious metals from old computers has fallen off as well, as manufacturers have found that they can get by with less of the metals.
Another issue in the electronics recycling sector is the federal legislation known as the Health Insurance Portability and Accountability Act (HIPAA). Under the law, companies disposing of old computers must take all necessary steps to erase the hard drives in the machines to prevent identity theft. Many companies hand this job off to trusted recyclers, who wipe the drives clean before disposing of them.
Raw Material Markets
NSWMA's Miller says that in the end, raw materials will always set the floor price for secondary materials in the recycling markets. “You don't make money by having higher costs than competitors,” he says.
For the past couple of years, virgin material prices have been high, thanks to demand — which will rise and fall with economic conditions — in the global markets.
Mary Anne Remolador, assistant director of the Northeast Recycling Council in Brattleboro, Vt., says that the markets will take care of themselves if governments help ensure supplies. She attributes some of today's supply difficulties to state budget cuts in recycling programs made several years ago. “Those cuts reduced recycling staffs and programs,” Remolador says.
Now that the national economy is moving again, will states return to funding recycling programs? “It could go either way,” Remolador says. “We didn't expect New York City to set up a good recycling program, but it did. Other states have elected officials considered friendly to recycling; yet there has been no trickle down of resources to re-establish programs.”
“In the end, it is important to get people to recycle more materials,” Remolador says.
Michael Fickes is Waste Age's business editor.