Recycling Markets Continue to be in The Dumps

Samuel S. Sinel, of Pawtucket, has fond memories from the great heyday of the recycling business; it was only 10 months ago.   Back in February, Sinel paid local supermarkets as much as $100 for a ton of their cardboard.

Certain groceries and other suppliers would truck the stuff to his facility, where a work force processed the material for sale to mills and other buyers, setting up Sinel’s company for a profit that ranged from $50 to $100 per ton.

“We all made money when commodity prices were high,” says Sinel, a co-owner of Berger Recycling. “It was great. It didn’t seem like it would ever end.”

But the boom is over. The recent economic downturn has devastated the market for recycled goods including newspaper, metals, plastic and cardboard.  Recycling enterprises across the nation and in Rhode Island, from private outfits like Sinel’s to the state-run Central Landfill, in Johnston, have fallen on hard times.

And one of the major incentives for recycling — profit — has retreated farther than the stock market.  Prices paid for recycled scrap have plummeted in conjunction with sagging consumer demand for autos, electronics and new houses.

Plastic bottles, often recycled into new plastic packaging products, have gone from 25 cents per pound to 2 cents while scrap metal, frequently an ingredient for auto manufacturing, has plunged from $525 a gross ton to about $100, according to published reports. Light iron, a mixture of metals that might include tin and metals of lesser value, once sold for $327 per ton, then dove as low as $5 per ton recently before rising back to over $100.

Then, there’s cardboard — the corrugated kind that Sinel sells.  These days, Sinel counts himself among a select group of recyclers who can actually sell recycled cardboard at all. Prices, he says, range from $40 per ton — far less than the $200 per ton paid by some buyers earlier this year — to virtually nothing.   Right now, Sinel doesn’t pay supermarkets a dime for their cardboard; he takes it off their hands for free.

He says he can’t keep his plant open much longer unless he starts charging supermarkets a fee, about $10 per ton, to dispose of their cardboard for them.  Under the circumstances, Sinel fears his business will end up in an undesirable competition with the recycling operation at the Central Landfill, which accepts cardboard for free. The dramatic turn of events is stunning.  “I’ve seen ups and downs,” Sinel says, “but I’ve never in my life seen anything like this. This is the strangest set of circumstances I’ve seen.”  Recycling, you might say, is a cyclical business. China’s factories were a huge draw for recyclables as the global economy thrived in recent years.

Middlemen and brokers such as Recycle America — a division of Waste Management — bought vast quantities of recyclables from Rhode Island sources and found markets for them around the world.  Metal prices were so high that criminals were breaking into Rhode Islanders’ houses and cutting out copper pipe with hacksaws.

The Chinese market was expected to contract slightly after months of rising demand in advance of the summer Olympics, says Sarah Kite, director of recycling at the state’s Central Landfill.  But the credit crisis this fall and the collapse of the economy was a surprise.  In the United States, declines in the automobile and housing industries have taken a toll, too.

Allen Goldberg, owner of Charles Scrap Metals, on North Davis Street in Providence, says his warehouse had been handling 60,000 to 70,000 pounds of scrap metal a day.  “We’re doing like 10,000 now,” Goldberg says, as a forklift whirs around him. Business is off 70 to 90 percent and he’s had to lay off three workers, he says.  He is standing next to a pallet loaded with about 1,000 pounds of aluminum door-framing materials. At one time, he could sell that amount of aluminum for about $800, he says, but now the market only pays about $250.

Elsewhere in the country, sagging revenues from recycling have prompted some local governments to reconsider their recycling programs.  It used to pay to be green. That’s not so clear-cut anymore.

The Rhode Island Resource Recovery Corporation’s executive director, Michael J. OConnell acknowledges that it’s easy to be “green only when the money’s green.”  But he says the independent state agency, overseer of the Central Landfill, has a long-term commitment to recycling.  If it dismantles its program in lean times it won’t have customers around to buy its materials in good times, he says.   “We’re not changing our stance,” OConnell says. “We don’t react and won’t react to short-term situations.”  Last year, Resource Recovery received 104,000 tons of recyclables. The corporation’s more than $9 million in recycling revenues included more than $4 million from mixed paper, $1.7 million from aluminum — much of which was sold to Anheuser-Busch — and $925,441 from plastic.  That pace allowed the corporation to dole out $2.3 million in profits to cities and towns with recycling programs after the fiscal year ended June 30.  The corporation and the state reaped the remaining $2.3 million in profits, OConnell says.

Solid long-term planning can help the corporation’s recycling program make it through a period of slackening revenues from recycling.  For example, Resource Recovery reinvested some of its $2.3-million profit in upgrades to lights and processing equipment.  Revenue projections for the current year are sketchy.  “It’s hard to project because it’s still so volatile,” OConnell says. “At the old numbers, at the beginning of the fiscal year in July, we thought we would be seeing revenues of $11 million. However, it’s gone way, way down from there.”  Cities and towns that recycle can’t count on more hefty revenue sharing from the Central landfill.  But Kite and OConnell point out that recycling is still good economics for the state and for its various municipalities.

Sorting out recyclable materials lightens the load of trash dumped at the Central Landfill.  This means cities and towns will pay fewer tipping fees and they will help preserve the landfill as a resource.

Source: The Providence Journal

For additional information visit www.wihresourcegroup or www.wastesavings.net

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