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Recycling Market Outlook for 2023 Prices for recycled material reached record highs during the spring of 2022. This was partly due to increased demand as a result of the war in Ukraine and brands increasing their use of recycled content. However, prices began to decline by summer, and cardboard and paper prices decreased significantly during the fall. While end markets are hopeful that this decline will ease once winter ends, there is no expectation of a return to the high prices of last spring. The decline is attributed to reduced purchasing from consumers as stimulus money has disappeared and high inflation decreased people's discretionary income. The decrease in consumer purchasing has made more trucking available, but inflation has countered with an increase in cost per mile to ship materials. Eureka Recycling continues to develop and foster strong relationships within the various end markets, selling all our processed material in 2022 —with the exception of wet -strength boxes (soda and beer boxes). Strategically, our roster holds at least three markets for each material (with the exception of wet - strength boxes and glass). More details on this is provided in the paper markets section. We regularly receive positive comments regarding the quality of the recyclables we sell. Additionally, we continue to focus on local markets, when possible, to contribute to a thriving local economy. In 2022, 74 percent of the material we processed stayed in Minnesota, 94 percent in the Midwest, and 98 percent stayed in the US. These business practices have been in place for years and are reflective of our values around the environmental, economic, and human impacts of recycling. We — along with our municipal partners and residents— have always benefited from these business practices and end market relationships, and that benefit has been even greater than usual in the current market environment. Paper Markets: WestRock's decision to close their cardboard line last fall deeply impacted the Minnesota and Midwest recycled paper markets. The majority of the paper and cardboard processed at Eureka is sent to WestRock's boxboard line, which is still in operation. This line makes cereal and cracker boxes and does require some cardboard, but their overall cardboard needs have reduced by a third since the closing of their cardboard line. In addition, this closure resulted in an increase in extra cardboard in the Midwest, which contributed to a decrease in prices for cardboard. Other contributors include a slowing economy with less demand for cardboard as consumers reduce discretionary spending. End markets project that this extra material will be eventually absorbed as other mills increase capacity — and when the economy rebounds —though it could take a few years for this to happen. Additionally, the WestRock cardboard line closure leaves Eureka without a place to send wet -strength boxes. Because this material has an extra plastic lining on it, it needs to pulped for longer. When it is not, this plastic lining stays with the paper and isn't likely to get recycled. When we remove it and ship it separately, some cardboard mills with the right equipment can pulp it separately for longer to separate the fiber from the plastic. However, as long as cardboard is plentiful and the price is low, mills would rather handle cardboard so are not accepting pop and beer boxes at this time. We don't generate a lot of this material so are waiting a few months to see if cardboard pricing picks up in the spring which would make this material more appealing. We should check in throughout the year regarding the status of this market and whether we can continue to accept this material. Plastics markets also had a volatile year and varied significantly by material type. Demand for PET bottles started strong and reached record highs in the spring before abruptly plummeting in the summer. Most markets believe the cause was a combined effect of a bubble that popped and increased supply that Page 57 of 67