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May 1, 2006
WHAT A YEAR for markets! Recyclers may be enjoying the best markets they have seen in a long time as scrap metal prices, in particular, soar. In March, the Wall Street Journal highlighted the strength of these markets when it ran two front-page stories on steel recycling in a one-week period.
Other scrap metal markets also are strong. Paper markets have softened a bit over the last year, but they remain strong. Only plastic and glass markets have failed to ride the tide.
Export markets are driving the prices for recyclables. The most recent data on exports of recyclable paper, for instance, show a 14 percent increase in the first two months of this year, compared with the same period a year ago.
Other countries have become important markets for our recyclables for a number of reasons. In many cases, newer, more technologically advanced and efficient plants are located overseas. The buyers for these plants are more sophisticated and reliable than they used to be. Another factor is that in previous years, even if demand was high, the export market could run aground if enough containers were not available for shipping these products. Now, as America's industrial strength declines, ships sail to our country full of consumer goods and return full of discarded products.
China, in particular, is the 800-pound gorilla of export markets. Our recyclables are a raw material that Chinese manufacturers use to supplement their own supplies of virgin raw materials. Our recyclables are helping to improve China's infrastructure and to satisfy its citizens' demands for more consumer goods. Export markets have always played a role in recycling. What is unique today, however, is the size of the Chinese market and its demand for our recyclables.
The impact of strong export markets was noted in the two previously mentioned Journal articles. One was about a micro-brewery employee visiting junk yards to find empty kegs that had been stolen and sold for their scrap value. The other was about a scrap steel company that has started buying auto junk yards to ensure that it has a supply of raw material. I recently read about a Montana rancher hauling old tractors to a scrap dealer. I guess it's a good thing that I donated my 20-year-old Subaru to a charity before the car could be stolen for scrap.
Metal markets aren't the only winners. Paper markets may have softened a bit, but a local paper recycler marveled recently about a new employee who was upset when corrugated prices fell to $45 a ton. He laughed and remembered when he had to pay to have corrugated boxes taken away. Again, China, which is desperate for paper fiber, is driving those prices, too.
Only plastic and glass continue to disappoint. Plastic prices are depressed by an excess supply of virgin resin. And glass is glass. Industrial sand is not in short supply; neither is soda ash, which is the truly “rare” raw material in glass making.
Markets will not always be this strong. Economies have cycles. I've already read about softening Chinese demand. But a global economy means that other countries may step in and replace at least some of the Chinese demand. The important thing is that recyclables are moving — and that's what counts.
Opinions in this column do not necessarily reflect the National Solid Wastes Management Association or the Environmental Industry Associations. E-mail the author at: [email protected].
The columnist is state programs director for the Environmental Industry Associations, Washington, D.C.
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