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An important positive in this policy is that MRFs all over the country are working to change and update their processing systems to improve the quality of the material they are sending to end markets. This is a very good thing and means that more items will get sent to the right markets and more will get recycled. It also means that we will see more of the non -recyclable items pulled out of the recycling and thus higher reported residual rates. Part of the solution is to make sure that companies that design and sell the packaging we buy take compatibility with existing recycling processes into account when they make the items. It also means that more emphasis will be placed on educating residents. This is because residents play a big role in making sure that only recyclable items end up in their cart. The low cost of oil continues to put downward pressure on the price of recyclable plastics as manufacturers can choose to use virgin oil over recycled content. Long Haul Trucking: Another impact to the recycling market has been a shortage of long haul truckers. This is a difficult job that is not always well compensated. Additionally tighter safety regulations were implemented that require electronic monitoring on all trucks to ensure drivers aren't on the road longer than allowed. Between this and the hurricanes in the fall that increased demand for trucking, all end markets have seen trucking costs increase significantly. This will depress markets that require trucking long distances such as aluminum and tin. Fortunately we have a strong regional demand for PET and HDPE so that part of the sector has been hit less by the market but still may see impacts. Material Specific Updates: News, Mixed Paper, OCC: As mentioned previously we have seen markets drop significantly this fall due to China's National Sword Policy. We expect this trend to continue for at least six months and as long as two years. We may see pricing increase after six months if China loosens its regulations in order to get more material or as long as two years if China is able to continue manufacturing without US recyclables —two years is about how long we estimate it will take for new end markets to develop. At this time there is minimal action because investors and recyclers are reluctant to start projects that would fail if China loosens regulations suddenly. Textiles: In the last few years we have seen the price of textiles drop precipitously as a result of "fast fashion", a trend towards manufacturing cheaper low quality clothing that wears out faster so has a lower reuse value. Because consumers are buying more of this, and discarding more of it, not only does it have a lower reuse value, but the market is flooded with this low quality clothing, reducing the value of all textiles. We expect this trend to continue in 2018. Aluminum Cans: Most of our markets for aluminum cans are in Tennessee and Kentucky. Because of this distance, this market has been hit by the aforementioned higher cost of long haul trucking. 9