Markets downturn is big topic for RWM

A hoped for increase in the value of secondary materials has failed to happen this month and as a consequence the reduced values of waste paper, plastics and metals is expected to feature at this weeks RWM show.

A year ago export prices for used cardboard were as much as 40 higher than they are now and there was a relatively optimistic note to the event.

Now, with China leading much of the demand, the news yesterday (September 10) that the Chinese economy was showing signs of weakness is expected to knock recycled markets further and increasing pressure particularly in the waste paper sector where lower grade mixed material is harder to move.

Scrap metal businesses are feeling the pinch according to one observer with prices down by about 10 a tonne this month.

Metals

The lower prices for ferrous material in particular is seeing lower arisings and consequently the larger firms operating fragmentisers are having to switch off their machines during the day because of low levels of feedstock.

A similar picture is being painted of the amount of scrap cars coming over the weighbridge with numbers down and affecting the non-ferrous and ferrous throughput.

In the recovered paper sector, the prices for used cardboard are expected to remain relatively firm this month with the main focus of attention being mixed papers.

Waste management companies are still moving material but quality is increasingly becoming an issue and prices paid overseas for material have reduced considerably.

Some believe that efforts need to be made to get the message over to the consumer to ensure material is cleaner when presented for recycling and that standards at materials recycling facilities continue to improve.

Paper

One senior waste paper industry figure said that merchants were under considerable pressure. Some have lost money in the past few months and there is no real hope of any upturn in the next few months, maybe not before the early New Year.

Paul Briggs of Mark Lyndon said: We are seeing weaker demand in China and the Christmas rush is already over without being much of a rush this year. We are still buying material but some mills in China will be closing for maintenance in the next few weeks.

Simon Ellin, chief executive of the Recycling Association said: It is hard-going at the moment. There are more and more people chasing less and less volume. One of the key things is that the merchants customers have gone through a sustained period when they have effectively been spoiled with revenues that they have been receiving.

Used paper is worth very little in the current environment and there is resistance among merchants customers to accepting that.

Mr Ellin added that the industry was also concerned about the price of diesel which has been creeping up.

A merchant in southern England said: Things are very tough now and prices are well below economical collection levels, if there is no collection fee involved. The whole industry needs to get the message across that waste paper is not any longer gold bars, it is waste and will need to be charged for accordingly.

Downturn

Paul Dumpleton,regional managerwith FCC, said: It is becoming increasingly obvious that the current downturn in materials pricing will continue for some while yet and those who are anticipating a rapid return to higher pricing as happened in 2008/09 are sadly mistaken.

Over the last decade we have seen an almost uninterrupted sellers market and the current downturn will provide a number of challenges to the current and proposed recycling infrastructure.

The recession in Europe is finally having an effect on the global recycling market as it has taken away the export markets for the stumbling economies in Asia and North America. This combined with higher shipping rates, growing self sufficiency in domestic raw materials and a declining demand for imported raw materials has allowed Asian buyers to drive down prices and seek a higher quality product.

Mr Dumpleton added: There is no doubt that as the world moves out of recession the market stimulation and therefore enhanced pricing will return, there are just too many demand factors for it not to, but this is all about managing the short term expectations and demands of what has been a significant infrastructure investment in the UK.

Plastics

The plastics sector is also seeing reductions although there are reports of some stability. However, there have been container price rises hitting the market as well issues with contamination and the return of some material to the UK from China.

However, domestic reprocessors will welcome any extra material although their prices could reduce as supply increases, according to one plastics sector source.