2019_06-25_PWETCpacket - Laserfiche WebLink

Home

Recycling Market Outlook for 2019 2018 has been a difficult year for the sale of recyclable materials. From a zero -waste perspective we appreciate the efforts China is making to insist on quality materials and build their internal recycling system. In the long run, this could help the U.S. clean up our recycling stream and build up our capacity to recycle plastics and paper domestically. We see investment in increased capacity but it is yet to be determined how exactly these investments will impact capacity and pricing for both paper and plastics. Furthermore, until that capacity is built, we can expect to continue to see depressed paper markets. At this point, we expect the current pricing will continue through the year, though it could get a bit better or even a bit worse — industry experts aren't sure. Although there were predictions that China's National Sword and Blue Sky policies would impact plastics pricing, we were fortunate not to see that in 2018 and that helped counter some of the decrease from significantly depressed fiber prices. That said, oil prices have been decreasing and that tends to bring lower plastic pricing so we expect those commodities to depress a bit. Metals markets were thrown into chaos the fall of 2018, and we expect to see that volatility continue in 2019 and likely get even worse. This depression was caused by a few different factors including: • one of the major aluminum markets deciding to close one of their aluminum can manufacturing facilities, thus flooding the market with aluminum cans that had limited places to go, • the uncertainty around tariffs which discouraged businesses from making investments and made it difficult to consistently market metals to other countries, • and the decreased production in the auto market which has historically been a large purchaser of recycled steel and aluminum. We expect the metals market to continue to decrease at least through the beginning of the year and are unsure of what will happen long term. There are plans to increase beverage can manufacturing in the U.S. but it will take a few years before that has an impact on aluminum demand so won't impact pricing in 2019. Trucking also continues to impact pricing negatively as there is a shortage of truck drivers and much stricter limits on how long they can drive. This is increasing the cost of transportation which can negatively impact pricing—especially for materials that are shipped out of state such as tin and aluminum. Although the pricing for recyclable materials is not very optimistic, Eureka Recycling continues to have good relationships with our end markets and has not had any problem moving material in 2018. We have at least three markets interested in each material except for glass and regularly get positive comments regarding the quality of the recyclables we sell. Additionally, we continue to focus on local markets when possible — in 2018 85% of the material we processed stayed in Minnesota, 90 percent in the Midwest, and all of it stayed in North America. These business practices have been in place for years as a reflection of our values around the environmental, economic, and human impacts of recycling, and we have seen the benefit of these relationships even more than usual in the current market environment. The current policies in place in China and the flooded domestic markets have created an industry -wide focus on reducing the contamination in our recycling stream, and the focus is now on "recycling better' rather than simply "recycling more'.