Overall, despite the fact that prices generally are not quite as high for recycled commodities as a few years ago, MSW managers are still fetching decent revenue from fiber and plastics as the global market steadily grows. To take advantage of this growth, they would do well to invest in new equipment for their material recovery facilities (MRFs) that will allow them to ship their commodities both locally and overseas
That’s the sentiment among several industry experts who recently spoke with MSW Management. Despite the fact that the global market is evolving, their collective assessment is basically optimistic.
Fiber Markets Steady Overall
Bill Moore, president of Moore & Associates, Atlanta—which provides analysis on pricing, markets, and trends in paper recycling—reports that newsprint volumes have declined significantly due to major decreases in worldwide demand, although the market for recycled fiber remains strong overall. The market for old newsprint (ONP) peaked in the late 1990s and has declined by more than half since in the United States, while Europe and even Asia have also seen significant declines, he says. “It’s really affected the MRFs,” he adds. “Fifteen to 20 years ago, ONP would have been 60% of the material that a MRF would process—now it’s down to maybe 25%.”
A second grade that has seen continued strong foreign demand is packaging fiber, which consists mainly of recycled paper and old corrugated container (OCC) paper, according to Moore. “The box business in the United States has been flat to declining, especially recycled paper board, which is primarily boxes—cereal boxes, shoe boxes, pizza boxes, et cetera,” he says. “China has become the manufacturer to the world, so box production has really skyrocketed in China and has really fallen in the US in the past 10 years, but the boxes still wind up here. We’re the consumers of the world; the amount of OCC and, to a lesser degree, old boxboard has been going up steadily. In the residential wastestream, it has gone up quite a bit due to direct Internet sales. Twenty years ago, of the amount of paper in residential, we would see a couple of percent of OCC—now we’re seeing as much as 15% to 20%.
“That’s not enough to make up for a drop in newsprint, but it’s certainly enough to think about separating it out, and that’s led to some equipment issues,” Moore continues. “For example, disk screens in residential recycling have become the norm in cutting-edge plants.”
Another grade for which demand is growing is what Moore calls “away-from-home-tissue business, which consists of napkins, paper towels, and tissue other than high-end facial tissue for businesses such as institutional, restaurants, and airlines. According to Moore, China’s government incorrectly perceives hygienic issues with using recycled paper for tissue and uses virgin pulp in this market. However, because tissue does not ship well overseas, China does not ship tissue to the United States, which sees widespread use of recycled paper in tissue. “The feedstock is office papers, a subset of what we call printing and writing papers, which, just like newsprint, are declining in the US,” Moore says. “Over the last five years, because of electronic documents, we’re putting less printing and writing paper in, and that’s keeping prices kind of high because of the supply shortage. There’s also less export of it.”
The fourth major grade in recycled fiber is what Moore calls “printing and writing paper.” The least economical recycling is converting printing and writing papers to printing and writing papers, primarily because of the yield loss, and it requires fairly labor- and capital operating cost-intensive operations to get it up to the quality for reuse. A little is used in the US and Western Europe. India, a distant second to China in importing recycled paper, is an anomaly and uses a lot of recycled printing and writing paper.
Communities within Lake County, IL, “export” large volumes of paper to paper mills in Michigan, Wisconsin, and Indiana, says Pete Adrian, recycling coordinator for the Solid Waste Agency of Lake County (SWALCO), Gurnee, IL, which provides recycling technical resources to 41 local governments. Markets for fiber have not really changed too much for SWALCO members since the economic slowdown made its presence felt in 2008, he says.
“We definitely see the mixed paper grades and some of the ONP grades going overseas and having more demand than domestically, whereas OCC and cardboard still tend to stay domestic,” Adrian says. “In our region, it appears that it’s not that economically viable to ship to the ports on the coasts and still get the value that you could probably get by keeping it local. Even though the export markets seem to be paying more, you’ve got freight issues that tend to increase shipping costs. And there still is a lot of demand within the five-state region [Illinois, Indiana, Michigan, Ohio, and Wisconsin] for that OCC.”
Overall, recycled fiber represents a steady market for SWALCO members. “The problem with ONP is volume,” he says. “Take a look at your newspapers—they’re thinner, fewer people are buying them, and they’ve even gone as far as taking a couple of inches off of the sides of them. In turn, the consumers are not putting as much paper in their recycling bins,” he says, adding that OCC is the one fiber grade that appears to be in demand-supply balance.
PET, HDPE Still Lead Plastics
Predictably, demand for polyethylene terephthalate (PET) and high-density polyethylene (HDPE) remain highest among plastic grades, Adrian reports. In addition to being reused for containers, these grades are in demand for such items as plastic decking material, plastic picnic benches, and outdoor seating, he says. For other grades, such as low-density polyethylene and polypropylene (PP), “we just don’t have the economy here, and the demand for that material is not that great in this area, as well. We don’t have the established industries like we do for PET and HDPE.” Industries that demand PET include textiles and carpet, he points out, and a big market for HDPE is containers for consumer package goods such as laundry detergent bottles.
“The other [grades have] just lesser volumes, lesser availability,” says Adrian. “It’s harder to pick them off of a stream, and I think that MRF technology has something to do with it, too. Few MRFs are running near infrareds, not many MRFs are running optical sorters, and manual sorting is time-consuming and expensive as well. If you’re just not able to get much stuff out of the stream, it doesn’t become economical to pick it.”
Still, he says, “One thing I’ve been noticing is that there’s a shift from PET to PP lately in some non-bottle-grade materials.” A major recent development that has increased PP use was Starbucks Coffee Co.’s switch from PET to PP for its cold cups. This change resulted from a study indicating that PP cups use 15% less plastic than PET cups and emit 45% fewer greenhouse gases during production. Additionally, they do not contaminate other PP containers when commingled for recycling and are easier to recycle than PET cups in most communities, according to Starbucks.
Richard McMillan, assistant director of public services for the city of High Point, NC, says that most of the city’s PET is used by Mohawk Industries to manufacture carpeting. The Calhoun, GA–based company is a typical consumer of commodities for the city, which exclusively focuses on local markets. McMillan reports that the city solicits bids for its recycled aluminum, steel, plastics, and fiber from several local buyers. The city operates a 58,000-square-foot single-stream MRF that serves roughly 36,000 households and apartment units and processes about 7,000 tons annually. “Over the past couple of years, we have focused on getting a good base of people who realize the quality and the quantity of the material we put out,” says McMillan. “When we get enough material to make multiple truckloads, Melanie [Bruton, the city’s materials recovery facility superintendent] and the staff put out a notice to everybody telling them how many truckloads they have and that they’re accepting quotes for the next day or two. We pick the highest quote for us and sell to that group—we don’t lock in with any one group. I think everyone appreciates that, to a point.”
“Negative Value,” Still in Demand
Many commodities recycled by SWALCO stay local, too. According to Adrian, a major consumer of the group’s aluminum is Anheuser-Busch, and much of its steel winds up in Illinois foundries. He notices that aluminum demand is seasonal, spiking in the spring, declining in the fall, and spiking again around the holidays.
Similarly, glass is a regional product, Adrian says. Houston-based Strategic Materials has a large beneficiation facility on Chicago’s South Side, where much of SWALCO’s glass ends up. Adrian notes that the glass grades in the most demand are “flint,” aka “clear,” which is used for bottling such items as beer and pickles, followed by brown and green, the latter of which comes in a distant third in demand. Most MRFs in the area crush all three types of glass together for a “three-mix glass” that is shipped to a processor like Strategic Materials that separates the material optically. Adrian describes glass as a “negative-value material,” but notes that, for SWALCO’s member communities, the cost to recycle the material is lower than landfill tipping fees. He adds that high demand for it exists among clear glass manufacturers and the fiberglass industry.
A development that is affecting glass recycling is a gradual death of the glass monitor for desktop computer monitors and television sets, Adrian says. “One of the big challenges in the electronics industry is what to do with glass—it’s a growing problem,” says Adrian, adding that foreign countries such as India and Indonesia are major players in consumer electronics manufacturing and markets for recycled glass exports. “There is a finite time span, too. Eventually, there will not be any more glass monitors; people will eventually purge them from their homes and offices” and demand will dry up among manufacturers and recycled glass exporters alike.
The 2009 digital TV signal conversion will also have an impact on the use of recycled glass in TVs, Adrian adds. Noting that many residents within SWALCO’s communities have forgone converting analog signals to digital, opting instead to purchase digital-ready TVs, “I think that people are starting to realize that it’s just not worth trying to revive the glass television,” he says. “I see it all the time in the electronic collections—the older sets just don’t have the ports you need, either.”
The Economics of Recycling
Taking competitive bids for commodities as they become available can maximize prices, according to the experts interviewed.
The Capital Regional District in Victoria, BC—described as roughly equivalent to a US county, according to Tom Watkins, B.S., manager of solid waste and recycling operations for the district’s Environmental Sustainability Department—does not operate a MRF but uses a contractor to process and market its recyclables. The district manages residential refuse collection from a population of about 370,000 living in single-family and multifamily homes within the greater Victoria area. Recyclables include OCC, ONP, mixed paper, metal cans, glass bottles and jars, and plastic grades 1–7.
The district receives a percentage of revenue from the various kinds of paper products, which are shipped as far away as the Pacific Rim, as well as local paper mills, many of which have suffered during the global recession that began late in the past decade, according to Watkins. Different types of glass are recycled into a substitute for use locally as construction aggregate, Watkins reports. Recycled ferrous metal is used in Seattle and non-pigmented HDPE is used in Vancouver.
“We give the contractor autonomy to maximize revenues,” Watkins says. This arrangement allows the district to maximize revenues for its fiber and is similar to High Point’s approach in that it uses market forces to maximum benefit. “We fluctuate with the market conditions, so when the price of OCC or ONP is up, we generate more revenue,” Watkins points out.
“That flexibility has helped us to maximize revenues. If we were to say we want a minimum guaranteed price, bidders would be tempering their bids with the lower expectations in order to ensure that they’re not left hanging in instances of a market depression. In better times, we were making significant revenues; now with the worldwide economic slowdown, market values for these materials have suffered somewhat, but certainly it’s not zero, and it helps fund the curbside collection program.” Similarly, private collection vendors are not required to adhere to prescriptive methods of collection, although the MRF sorts two streams using manual labor: fiber and plastics. “We want to allow greater flexibility among private industry collectors to maximize efficiencies of collection systems,” he says.
“We’ve enjoyed solid and good revenues for the fiber streams,” Watkins adds. “Obviously, there’s zero market value for glass, and there has been for decades. There are certain types of plastics like non-pigmented HDPE—our contractor gets good revenues for that—PET to a lesser extent, and it drops off rapidly from there. Metals prices fluctuate with the scrap metal markets. The steel market is softer now, and prices have suffered correspondingly.”
Most SWALCO members cover the cost of recycling operations in their waste-hauling contracts, according to Watkins. Most contracts include weekly trash and recycling pickup and, in some cases, landscape waste, which can be a subscription or sticker arrangement. Some communities do not specify containers; 26 SWALCO communities use carts, which is a growing trend driven by the haulers, according to Adrian. He adds that the typical increase in rates to cover the cost of carts ranges from $1 to $1.50 per month.
Most SWALCO communities do not build refuse collection costs into property taxes, according to Adrian. Most refuse haulers prefer having a municipality bill residents, which allows them to send one bill to the municipality. Building the cost into property taxes does not make people realize that the service carries a cost, Adrian contends. However, some lower-income communities might take this approach in order to make people pay the bills and keep the community clean in the event that some residents do not pay under direct billing.
Overall, the economics of recycling continue to work in favor of the communities and the refuse haulers alike, Adrian says. SWALCO manages an arrangement with an area MRF operated by Waste Management in which haulers rebate SWALCO communities based on the cost per ton using a blended commodities pricing index. After accounting for negative-value glass and residue in the recycling stream, the blended value per ton is usually about $60 per ton, according to Adrian. With processing costs at about $25 to $35 a ton, communities often rebate the waste hauler up to $10 per ton when they deliver that material. “It’s an incentive for the waste haulers, too—they didn’t pick up a tipping fee for that material, they were able to charge the customer a little extra to provide that service, and they were also able to get added value for that material,” says Adrian.
Adrian notes that MRF operations are covered by the prices for recyclables. “That hasn’t always been the case, though,” he says. “Had the economics been the way they are today back in the early ’90s, when we started these programs, maybe we would have never seen a cost for recycling—period. But they got used to charging it, knew they could get it, and kept doing it even when they were making money off of the material. It’s a win-win when everybody’s making a little money.”
McMillan says that High Point’s MRF currently is unprofitable and the cost of its operation is covered by tipping fees charged at the Kersey Valley Landfill. However, “Our MRF was probably operating in the 30% to 35% efficiency range for a while, until probably two years ago,” says McMillan. “We’ve changed management and we’ve gone up to about 80% efficiency on average, and we’re capturing far more product. The only semblance of automation at the facility is the use of magnets at the end of the lines for pulling out metals; everything else is separated by hand.” The MRF employs 56 full-time workers, and temporary employees are called in when volume peaks twice a year, in October and in April, when local furniture showrooms receive new furniture and the volume of cardboard, foam, and wood packaging spikes for about three weeks.
Impact on Equipment
McMillan says he would like to upgrade the MRF with star and disk sorters for fiber materials, which comprise about 50% to 60% of the weight of the incoming stream. He estimates that it takes six people 40 hours per week to sort fiber. Additionally, conveyors would be an improvement over the trucks that are used to transport the recyclables from one line to the next after metals have been separated, according to McMillan.
Recyclers can capitalize on recent trends in markets by investing in high-density balers for fiber, Moore says. “High-density balers are used to ship recovered paper across oceans,” he explains. “You’ve got to get it as dense as possible to keep the transportation costs down. Given the fact that we’re buying all of these products from China and elsewhere in Asia, the containers have to get back there. Backhaul freights are quite low and a very efficient global shipping industry that’s emerged over the past 25 years has allowed this. Fifteen, 20 years ago, if you were near New York, Los Angeles, or Seattle, you would have been export-oriented. But now, if you have a high-density baler in Kansas City, your material can wind up in China.”
“Now, you can run your residential paper over disk screens and recover enough OCC to make it worthwhile,” adds Moore. He says that more recyclers are thinking about investing in optical sorters for paper because, often, there is enough office paper in the residential stream to justify the investment. This lower-quality recycled paper lends itself to being recycled in new state-of-the-art Chinese mills that have been designed to use dirtier materials than many older US mills. Also, there is a move toward recycling paper from office buildings in a single stream. Any increase in residential paper use is not even coming close to a major reduction in paper use among both offices and the printing industry that is due to the rise in electronic communication, Moore points out.
Recyclers planning future facilities might want to consider locating them near rail lines, Moore adds. “There are a lot of rail shipments to the ports,” he says. “We never used to think about putting solid waste facilities or MRFs near anything other than roads.”
Overall, Moore sees all signs pointing toward increasing global demand for recycled paper in the coming years as new uses for polycoated paper grades emerge for such packaging as aseptic juice boxes. Single-stream recycling will continue to grow in use as more uses like these emerge. “The demand is there; in some ways it will be a supply-short market for the next five or 10 years,” Moore concludes.