Materials moving as prices show some signs of stability

Local authorities and members of the steel, paper and plastic communities, which had been some of the most severely hit in last month's market decline, told letsrecycle.com this week that material is moving and prices are showing no further deteriorations.

However, prices still appear to be extremely low with only minimal trading on the export market, with overseas buyers using up their own stock before placing more orders. In addition, mixed grades of material, most noticeably in plastic, are said to be proving hard to trade.

Speaking about the paper sector, Ron Humphreys, managing director at paper recycling firm AbitibiBowater, said: “Generally we are finding the same as everybody else. The export market is stagnant, there is movement in regular markets but not at the volumes that there were in the middle of the summer and certainly not at the prices.

“People are still making orders but prices are extremely low and the buyers are taking advantage of a stagnant situation,” he added.

Paper

One paper recycling expert told letsrecycle.com that he believed that the price for recovered paper had now bottomed out and, although the prices being paid in the summer would not be revived, orders were being placed, which is an improvement on the situation of three weeks ago.

Despite the positivity, there are still words of caution from the industry. Nick Franks of London-based Atlantic Paper said that the paper sector in particular was still in a difficult situation, despite some price increases.

He said: “I don't think we are going to see prices drop any lower and we have seen some positive trends on grades such as news and pams, soft mixed paper and OCC but volumes are still very depressed. We are starting to see a positive trend on the price, but it could just be a ‘dead cat bounce' as the economists love to say at the moment and we still have one hell of a way to go.”

Steel

Steel is said to be showing the first tentative signs of recovery, with one operator telling letsrecycle.com that there had been something of an upturn in the recovered steel price, with a £10 to £20 rise on each tonne paid for material by the shredding sector. However, he added that it was still very early days and everyone was waiting to see whether it could be sustained.

Plastics

Members of the plastic recycling industry also claimed that there had been some early signs of stability returning to the market following the volatility that dogged the sector over the past few weeks (see letsrecycle.com story).

Jonathan Short, managing director of Newcastle-based AWS Eco Plastics said: “There are signs of stability, at least in my eyes. Certainly trading is harder work than it was two or three months ago but it is nowhere near as hard as two or three years ago and the general view is that it will be 2010 before true signs of recovery are seen.”

Another reprocessor specialising in bottles, told letsrecycle.com that there had been signs of the market improving on the continent and this could spread to the UK market.

He said: “I wouldn't be surprised if it was showing signs of improving, as in Germany the price for PET is firming up, and I got a bit of feedback from a colleague in France and he said already they are noticing that whatever the silly prices for PET were they are now a little bit more.”

However, a purchasing manager at another reprocessor claimed that the majority of companies were eager to get past the traditionally hard times of Christmas and the Chinese New Year (January 28), and hoped to see clearer signs of recovery in the sector around March.

Councils

Local authorities also reported that they had started to find outlets with reprocessors for material that would otherwise had to have been stockpiled or, theoretically, landfilled.

Mike Trim, head of street cleansing at Exeter city council, said: “We made the decision to send it out and get our recycling credits of £45, which you only get from the Government if you send the stuff out and keep it out of landfill.”

Mr Trim explained that the decision had been made for fear of other councils stockpiling the material, which would cause a “glut” when they were released onto the market once prices had recovered. However, he claimed that the decision to move the material – in the case of steel for nothing – would have no adverse effects on the council's budget.

He said: “We are very prudent when we budget forecast and this financial year we under forecast. Our financial year we will certainly be fine due to the success of the first six months and we will have to look at next year. I can assume that there are some local authorities that over estimated and will have problems and that could leave a whole in their budget.”

A spokesman for the Oxfordshire Waste Partnership raised similar concerns about the financial implications of the depressed prices for recovered materials and explained that it would be a consideration for its budget.

He said: “It hasn't affected our budget as yet but we are concerned and we may need to make a provision within our budget for next year. We haven't had gate fees rise as yet but it is a question of how long it is going to be before there is recovery.”

However, one plastic reprocessor raised concerns that some companies had attempted to take advantage of the situation by offering very little, or what he perceived as “silly money”, to councils in exchange for their recovered materials.

In light of the unscrupulous activity, he said: “Some people are trying to have a go at councils at the moment. They are trying to take advantage of the situation and are doing silly things which are damaging to the sector.”