Downturn of the Recycling Markets: Impact on Municipal Programs State of Texas Alliance for Recycling August 2009 Copyright © 2008 by R. W. Beck, Inc.
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Downturn of the Recycling Markets: Impact on Municipal Programs
Downturn of the Recycling Markets: Impact on Municipal Programs
State of Texas Alliance for Recycling
August 2009
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08
by R
. W
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, In
c. A
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ese
rved
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Robert CraggsVice President and National Director
R. W. Beck, Inc. 2
Presentation OverviewPresentation Overview
Status of Recyclable Materials Markets Implications for Local Government Programs
Recommended Strategies and Principles to Ensure Sustainable Programs
Texas-Focused Resources
R. W. Beck, Inc. 3
Status of Recyclable Materials Markets
Status of Recyclable Materials Markets
R. W. Beck, Inc. 4
Status of Recyclable Materials MarketsStatus of Recyclable Materials Markets
What has been the extent of the downturn in the recycling market?
How does the recent decline in pricing compare to historical pricing for the various commodities? Cyclical pricing (15 years) 2008 pricing volatility 2009 pricing trends
R. W. Beck, Inc. 5
OCC (#11) Paper Stock Prices 1993-2007OCC (#11) Paper Stock Prices 1993-2007
0
20
40
60
80
100
120
140
160
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Pri
ce p
er T
on
Source: Official Board Markets (Chicago Region)
R. W. Beck, Inc. 6
OCC (#11) Paper Stock Prices 2008OCC (#11) Paper Stock Prices 2008
0
20
40
60
80
100
120
140
160
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Month
Pri
ce p
er T
on
Source: Official Board Markets (Chicago Region)
R. W. Beck, Inc. 7
OCC (#11) Paper Stock Prices OCC (#11) Paper Stock Prices
Source: Official Board Markets (Chicago Region)
0
20
40
60
80
100
120
140
160
2008
R. W. Beck, Inc. 8
OCC #112009 TrendOCC #112009 Trend
0
20
40
60
80
100
120
140
160
Jan Feb Mar Apr May Jun Jul
Pri
ce
pe
r to
n
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ONP #8 Paper Stock Prices1995-2007ONP #8 Paper Stock Prices1995-2007
0
20
40
60
80
100
120
140
160
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Pri
ce p
er T
on
Source: Official Board Markets (Chicago Region)
R. W. Beck, Inc. 10
ONP #8 Paper Stock Prices2008ONP #8 Paper Stock Prices2008
0
20
40
60
80
100
120
140
160
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Month
Pri
ce p
er T
on
Source: Official Board Markets (Chicago Region)
R. W. Beck, Inc. 11
0
20
40
60
80
100
120
140
160
ONP #8 Paper Stock PricesONP #8 Paper Stock Prices
Source: Official Board Markets (Chicago Region)
2008
R. W. Beck, Inc. 12
ONP (#8) Paper Stock Prices2009 TrendONP (#8) Paper Stock Prices2009 Trend
0
20
40
60
80
100
120
140
160
Jan Feb Mar Apr May Jun Jul
Pri
ce p
er
ton
R. W. Beck, Inc. 13
Mixed Paper (#1) Paper Stock Prices1993-2007Mixed Paper (#1) Paper Stock Prices1993-2007
Source: Official Board Markets (Chicago Region)
0
10
20
30
40
50
60
70
80
90
100
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Pri
ce p
er T
on
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Mixed Paper (#1) Paper Stock Prices2008Mixed Paper (#1) Paper Stock Prices2008
0
10
20
30
40
50
60
70
80
90
100
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Month
Pri
ce p
er T
on
Source: Official Board Markets (Chicago Region)
R. W. Beck, Inc. 15
Mixed Paper (#1) Paper Stock PricesMixed Paper (#1) Paper Stock Prices
Source: Official Board Markets (Chicago Region)
0
10
20
30
40
50
60
70
80
90
100
2008
R. W. Beck, Inc. 16
Mixed Paper (#1) Paper Stock Prices2009 TrendMixed Paper (#1) Paper Stock Prices2009 Trend
0
10
20
30
40
50
60
70
80
90
100
Jan Feb Mar Apr May Jun Jul
Pri
ce
pe
r to
n
R. W. Beck, Inc. 17
Aluminum Cans 1996-2007Aluminum Cans 1996-2007
Source: Waste News (Midwest)
0
10
20
30
40
50
60
70
80
90
100
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Cen
ts p
er P
ou
nd
R. W. Beck, Inc. 18
Aluminum Cans2008Aluminum Cans2008
Source: Waste News (Midwest)
0
10
20
30
40
50
60
70
80
90
100
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Month
Cen
ts p
er P
ou
nd
R. W. Beck, Inc. 19
Aluminum CansAluminum Cans
Source: Waste News (Midwest)
0
10
20
30
40
50
60
70
80
90
100
2008
R. W. Beck, Inc. 20
Aluminum Cans2009 TrendAluminum Cans2009 Trend
0
10
20
30
40
50
60
70
80
90
100
Jan Feb Mar Apr May Jun Jul
Ce
nts
pe
r p
ou
nd
R. W. Beck, Inc. 21
Steel Cans 1996-2007Steel Cans 1996-2007
Source: Waste News (Midwest)
-50
0
50
100
150
200
250
300
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Pri
ce p
er T
on
* Data was unavailable from April through November 2005
*
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Steel Cans2008Steel Cans2008
0
50
100
150
200
250
300
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Month
Pri
ce p
er T
on
Source: Waste News (Midwest)
R. W. Beck, Inc. 23
Steel CansSteel Cans
Source: Waste News (Midwest)
-50
0
50
100
150
200
250
300
2008
R. W. Beck, Inc. 24
Steel Cans2009 TrendSteel Cans2009 Trend
0
50
100
150
200
250
300
Jan Feb Mar Apr May Jun Jul
Pri
ce
pe
r to
n
R. W. Beck, Inc. 25
PET #11996-2007PET #11996-2007
Source: Waste News (Midwest)
0
5
10
15
20
25
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year
Cen
ts p
er P
ou
nd
R. W. Beck, Inc. 26
PET #12008PET #12008
Source: Waste News (Midwest)
0
5
10
15
20
25
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Month
Cen
ts p
er P
ou
nd
R. W. Beck, Inc. 27
PET #1PET #1
Source: Waste News (Midwest)
0
5
10
15
20
25
2008
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PET #12009 TrendPET #12009 Trend
0
5
10
15
20
25
Jan Feb Mar Apr May Jun Jul
Cen
ts p
er
po
un
d
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Glass (Flint) 1996-2007Glass (Flint) 1996-2007
Source: Waste News (Midwest)
0
5
10
15
20
25
30
35
40
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
Cen
ts p
er P
ou
nd
R. W. Beck, Inc. 30
Glass (Flint)2008Glass (Flint)2008
Source: Waste News (Midwest)
0
5
10
15
20
25
30
35
40
Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec
Month
Cen
ts p
er P
ou
nd
R. W. Beck, Inc. 31
Glass (Flint)Glass (Flint)
Source: Waste News (Midwest)
0
5
10
15
20
25
30
35
40
2008
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Glass (Flint)2009 TrendGlass (Flint)2009 Trend
0
5
10
15
20
25
30
35
40
Jan Feb Mar Apr May Jun Jul
Pri
ce p
er
ton
R. W. Beck, Inc. 33
Market Pricing Summary ConclusionsMarket Pricing Summary Conclusions
2008 market pricing reflects a severe decline for all the traditional commodities (OCC, ONP, metals, plastics, and glass containers).
Recyclable materials pricing in 2008 for several commodities (OCC, ONP, mixed paper, and PET) reflects a dramatic change from historical highs to historical lows.
Cyclical nature of pricing in the past reflects a likely upturn in pricing in the future.
R. W. Beck, Inc. 34
Where Are Prices Trending in 2009? Where Are Prices Trending in 2009?
Paper OCC – slowly rebounding ONP – slowly rebounding Mixed paper – slowly rebounding
Containers Glass – no change Metal cans – little change Aluminum cans – little change Plastics – visibly rebounding
R. W. Beck, Inc. 35
Implications for Recycling Industry and
Local Government Programs
Implications for Recycling Industry and
Local Government Programs
R. W. Beck, Inc. 36
Implications for Industry and ProgramsImplications for Industry and Programs
Methodology: Gather general feedback from local governments in various U.S. regions.
R. W. Beck, Inc. 37
Local Government FeedbackLocal Government Feedback
“Reduced revenues with revenue sharing arrangement” Applies to multiple types of contract arrangements
(i.e. processing costs, floor pricing, sliding scale)
“Request from private service provider to renegotiate the agreement” Service agreement has no processing fees and a
50/50 revenue share up to a defined threshold of revenue
Temporary agreement reached
R. W. Beck, Inc. 38
Local Government FeedbackLocal Government Feedback
“Termination of service agreement to process and market recyclables” Highly visible processor of wastepaper terminated an
agreement to accept processed fiber from a regional waste authority because of the present lack of markets
“Temporary suspension of accepting specific material types” Rural county with drop-off program has temporarily
excluded plastics and glass from their program because of depressed markets
R. W. Beck, Inc. 39
Local Government FeedbackLocal Government Feedback
“Receiving more recyclable materials from local haulers” Public MRF becoming market of last resort because
some commercial processors in region no longer accepting plastics from haulers on spot market
“Recycling program abruptly transitioned from a net revenue generator to a net expense” Revenues received from private MRF operator under
revenue sharing agreement no longer exceed materials processing costs
R. W. Beck, Inc. 40
Local Government FeedbackLocal Government Feedback
“Our processor has chosen to warehouse materials indefinitely and we are concerned about health and safety issues” Most recovered materials in California are exported
to end users, but lack of buyers has resulted in materials being stored in warehouses and in ports in U.S. and China.
“The lack of recovery value results in recyclable materials being disposed at a landfill and/or WTE” None reported.
R. W. Beck, Inc. 41
Recommended Strategies and Principles to Ensure Sustainable
Programs
Recommended Strategies and Principles to Ensure Sustainable
Programs
R. W. Beck, Inc. 42
Recommended Strategies to Ensure Sustainable ProgramsRecommended Strategies to Ensure Sustainable Programs
Emphasize the importance of maintaining recycling through the economic downturn to various stakeholders
Foster development of local end-use markets for recycled materials to move away from dependence on export markets
Promote increase in recycled content requirements
Diversify recycling programs by establish or expand organic diversion
R. W. Beck, Inc. 43
Recommended Principles in Today’s Marketplace Recommended Principles in Today’s Marketplace
Structure contracts to share market risk Maintain the course because the markets will improve
Focus on the environmental benefits of recycling and materials diversion
R. W. Beck, Inc. 44
Texas-Focused ResourcesTexas-Focused Resources
R. W. Beck, Inc. 45
NCTCOG Recycling Contract Negotiation GuidebookNCTCOG Recycling Contract Negotiation Guidebook
Comprehensive guide for local governments and private companies in the region
Topics include: Procurement process description Processing and collection contract provisions Commodity price discussion Detailed financial explanations Sample contract language Case studies from cities within region and outside of
region
R. W. Beck, Inc. 46
Contracting Guidebook ScheduleContracting Guidebook Schedule
Draft Guidebook submitted to NCTCOG
Final Guidebook by Summer 2009
Workshop on August 14, 2009
R. W. Beck, Inc. 47
Other Regional Studies Can be Leveraged Across TexasOther Regional Studies Can be Leveraged Across Texas
H-GAC Recycling 101 and 102 workshops Transfer Station Best Management Practices Workshop Organic Waste Best Management Practices Workshop Waste Audit Workshop and Workbook
NCTCOG C&D Waste Minimization Strategies Study C&D MRF Feasibility Study Regional Recycling Rate Benchmarking Study Recycling Contract Negotiation Guidebook (current) Recycling Ordinances and Building Design Guidelines (current)
CAPCOG Market Analysis of Recovered Materials
R. W. Beck, Inc. 48
Questions?Questions?
Robert Craggs, Vice President
(651) 994-8415
rcraggs@rwbeck.com
Scott Pasternak
(512) 651-6405
spasternak@rwbeck.com
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