The waste recycling industry is at a crossroads. North American recycling operations have seen historically reliable overseas markets for their fiber products become much more difficult to access. Rising global purity standards are either virtually unobtainable using traditional recycling methods or too costly to meet through adding more manual sorters.
China National Sword and Blue Sky effectively closed the door of the world’s largest purchaser of recovered paper, and that was just the beginning. “Markets like Indonesia, India, and Japan are all following China’s example and demanding the same high purity standards for recycled material,” says Nick Doyle, recycling area sales manager, North America West, for TOMRA Sorting Recycling. The result is high supply, low demand, and a market saturated with recovered fiber.
This has driven down the price of mainstay MRF fiber products like Mixed Paper and corrugated boxes (OCC). Mixed Paper now consistently sells at a negative value or zero (at best) dollars per ton in most markets. OCC is trading at the lowest levels seen in a decade. “It’s the simultaneous drop of both commodity prices that is hurting MRFs,” says Dan Gee, a senior associate with Moore & Associates, an Atlanta, GA-based consulting firm specializing in the paper recycling industry.
Market indicators show this being more of a long-term industry trend rather than a short dip in the market. “There is no quick fix for Mixed Paper,” adds Gee. “Most estimates are it will take a minimum of two or three years, possibly longer, for Mixed Paper to recover, and recycled paper quality required from MRFs will increase.”
Gee sees MRFs handling these current market challenges in several ways. Some are renegotiating contracts with their municipal customers, if possible. Others are simplifying what recyclable material they will accept, while some are returning unmarketable material to the landfill. “Lexington, Kentucky, stopped accepting paper altogether,” he mentions. Still, others are biding their time and hoping for a market rebound.
Hope Is Not an Option
The US recycles roughly 58 million tons of fiber products annually. With MRFs processing high volumes of fiber daily, sitting back and waiting for a market rebound could be a costly strategy. “My customers tell me roughly 70–75% of their volume received is fiber—cardboard, newspaper, office paper, et cetera,” comments Doyle. “Think about it. Most of the material inflow is sorted into products the operation either has to pay someone to take, or the value is a fraction of what it has been.”
If the paper market takes years to recover, Doyle questions the ability of MRFs to survive long-term. Private companies receive hauling fees to take in recyclable materials, so this may be propping up some businesses. However, “MRFs must start looking at sorting their paper differently. While there isn’t money in Mixed Paper, there is money if this commodity is further separated,” he says.
Mark Neitzey, director of sales for Van Dyk Recycling Solutions, a builder of turnkey sorting systems based in Stamford, CT, agrees with Doyle and tells his customers to examine the market from a supply and demand angle. “Say you run a soup business, and for years your customers wanted this one soup recipe. It was your cash cow,” he explains. “Unfortunately, demand for that recipe has vanished, but there are opportunities for you to switch to other recipes and make more money.” What would the company do?
This metaphorical soup, Mixed Paper, has evolved over the years to include a variety of materials ranging from just the leftover paper after the sort to now include corrugated boxes, chipboard, newspaper, and office paper. Sold as Mixed, they have little or negative value in today’s market, but if sorted, these products will demand a higher value.
“Think of Mixed Paper as the mirror image of being ‘greater than the sum of its parts,’” says Doyle. “Mixed Paper sorted into individual components can result in much more revenue for the MRF, measured in the thousands of dollars per day.”
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To survive, MRFs must rethink their recycling streams and practices to focus on making more profitable products that are in demand. “One MRF manager in the Southwest put it well when he said, ‘We are no longer in the business of making commodity grades. We are in the business of making products,’” comments Doyle.
Even without plant modifications or adding new sorting technology, shifting focus to a product versus commodity mentality can help MRFs pull more OCC from Mixed Paper to increase profitability. Estimates show approximately 40% of Americans shop online several times a month, resulting in the “Amazon Effect,” where a significantly higher percentage of smaller OCC ends up in single-stream recycling.
“We are not seeing as much large cardboard in single-stream anymore. Virtually everything comes in boxes today, so there are a lot of small boxes and chipboard in the stream,” comments Neitzey. Doyle agrees and continues, “Many existing MRF sorting systems were designed to remove the larger cardboard boxes, and, since small boxes act like paper, more cardboard and chipboard will end up in Mixed Paper. Further sorting Mixed Paper to remove the OCC will help to boost profitability.”
Moore & Associates’ Gee mentions that a trend for some MRFs is producing a sorted residential papers & news (SRPN-PSI #56) product from the residential paper stream rather than mixed paper. SRPN consists of newspaper, junk mail, magazines, printing and writing paper, and other acceptable paper coming from residential material. Depending on the region, this “new” newspaper grade currently commands up to $55 per ton.
MRFs can invest in sorting technology to further sort Mixed Paper contents and substantially improve sorted fiber revenue streams. Cognizant of today’s market trends and tightening purity standards that MRFs must manage, optical sorting equipment manufacturers, such as TOMRA Sorting Recycling, have responded with a new generation of technological advancements to meet the sorting needs of today’s MRFs.
While robotics is the hottest topic in the recycling industry right now, Van Dyk’s Neitzey tells customers the savings from replacing manual sorters with robots only goes so far. “While upgrading existing circuits is not as flashy as robotics, investing in intelligent separation through upgraded technology and rethinking sorting practices has the potential of saving the MRF hundreds of thousands of dollars a month in lost revenue,” he says.
For example, the introduction of laser sorting technology last year promises to help deliver cleaner paper products like SRPN. Most MRF sorting systems include near-infrared (NIR) technology to either positively or negatively sort paper. “NIR works great for sorting newspaper, white paper, magazines, PET bottles, milk jugs, et cetera,” comments Neitzey. “However, this technology cannot see the black bowl from a to-go container or glass from the belt, allowing some of this material to end up in SRPN as impurities or prohibitives.”
Laser technology, such as TOMRA’s Laser Object Detection (LOD), was designed specifically to identify and remove these materials from the paper stream, helping MRFs to pass a mill customer’s sight-test. “Since LOD detects items like black plastic and glass that NIR cannot see, combining LOD technology with our AUTOSORT system gives MRFs the ability to produce a cleaner paper product that meets today’s purity standards,” mentions Carlos Manchado Atienza, regional director Americas for TOMRA Sorting Recycling. “It can be installed as an add-on to an existing line to minimize investment cost or it can be a stand-alone unit on a new circuit.”
Consider the Office
Commanding over $100 per ton domestically and much more in certain markets, sorted office paper (SOP) may be the holy grail needed to help MRFs survive today’s Mixed Paper market. This product consists of primarily white and colored groundwood-free paper, free of unbleached fibers, and cannot contain more than 1% prohibitive materials with outthrows plus prohibitives not exceeding 5%.
SOP can be separated from the residential paper, but there is a catch. Unless the MRF has contracts with businesses or receives shredded paper, the percentage of white paper found in single-stream can be limited and is market dependent. “MRFs operating in a place like Boulder, Colorado, which has a high telecommute population, will tend to find more paper fitting the SOP parameters than those operating in urban areas,” offers Neitzey.
Still, Doyle is a strong proponent of MRFs making the effort to sort out the SOP product and consider changing business practices to take in more white paper. “Say the MRF receives $148 per sorted ton of SOP,” he says, “but is paying $2 per ton to offload Mixed Paper. That’s a $150 per-ton swing toward profitability.”
Equipment manufacturers’ next generation of optical sorting technologies also aids in separating office-grade from mixed paper. TOMRA’s evolutionary step for its AUTOSORT system, called SHARP EYE, peers through the paper into its molecular makeup to give a cleaner paper sort.
“SHARP EYE can look through the color to see if the fibers are completely dyed or the paper is just color-coated with a white base,” explains Doyle. “It is capable of sorting the fully colored fibers from the white paper wanted in an SOP clean product sort.”
The new TOMRA technology includes a larger, high-resolution lens not available on previous versions. “We now offer customers,” continues Doyle, “the flexibility to choose between the standard resolution for regular sorting and a high-resolution package with SHARP EYE for sorting different products, including office paper that meets purity standards.” Manchado Atienza stresses to customers that purity is critical with sorting and adds, “Classification volume is important, but without detection precision, the investment is useless.”
Neitzey advises customers who want to separate out office paper that tipping floor management is key. “Blending everything together on the floor will reduce the amount of white paper an operation can separate from the Mixed Paper,” he says. “It’s best to sort out as much of the white paper as possible on the floor. Some customers currently do this and dedicate two or three days a week for sorting office paper.”
While targeting high-value products within the fiber stream isn’t new, the consequences of not doing so within the confines of today’s market conditions may be the difference between profitability and survival. Fiber continues to command the majority composition of the recycled wastestream.
“Fiber is also the most labor-intensive process to which there is no financial gain, given today’s Mixed Paper market plus labor costs,” concludes Doyle. “If MRFs continue to ‘weather the storm’ by increasing labor and decreasing throughput to make a negative-value product, I fear by the time Mixed Paper rebounds, we will have already lost much of our recycling infrastructure.”
However, with equipment manufacturers now offering the market-proven paper sorting technology advancements, such as LOD and SHARP EYE, the resources are available for MRFs to use purity and product diversity to their advantage.