And, a view on the current situation in the UK has been offered by Paul Dumpleton, director of materials management for Shanks.
Since prices have dropped dramatically, some buyers fail to pay their invoices or request substantial discounts, although they are legally bound by the prices fixed in their contracts
BIR
BIR view
The Bureau of International Recycling, which has 700 members globally from across the recycling industry, has warned that the situation – especially in the scrap metal market – is increasing the impact of the financial crisis on the sector.
In a statement published today it said: “The situation is worsened by the unprofessional behaviour of some buyers who completely ignore the terms of the contracts they signed some weeks ago with their sellers.
“Since prices have dropped dramatically, some buyers fail to pay their invoices or request substantial discounts, although they are legally bound by the prices fixed in their contracts.”
“This unprofessional and unethical business behaviour seems to have mushroomed throughout the international recycling community and is causing serious financial difficulties for many sellers,” it added.
The topic, which is particularly thought to be affecting the scrap metal sector, is now set to be one of the key items on the agenda at the Bureau of International Recycling (BIR) Trade Council's meeting which will be held in Dusseldorf, Germany, next week.
BIR has also said that it is looking into ways member companies can avoid the situations occurring, as well as offering its arbitration service to them.
UK perspective
As the effects of the economic slowdown are felt across the industry – from plastics (see letsrecycle.com story) and paper (see letsrecycle.com story), to metals (see letsrecycle.com story) , Paul Dumpleton, director of materials for waste management firm Shanks, has called for the sector to react in the right way to the problems caused by the crisis.
Giving a UK sector viewpoint, he told letsrecycle.com that he believed the current situation faced by the recycling and waste management sector was one that was expected; even though the effect it had had further along the supply chain had been harder to predict.
“The market realignment currently affecting world recycling demand and price was always going to happen. It was only ever a question of when,” he explained. “We have, on the back of close to ten years of consistent increasing demand fuelled by the growth in Asia, become very used to a consistent off-take of material.
“For those of us who have been in the industry for some years just see this as a return to peaks and troughs of supply and demand that typified this industry in the 70s and 80s. The major difference between then and now is the scale and speed of the reaction to falling demand by end users,” he added.
And, he argued that the situation could create opportunities for some companies, provided they approached the problems being created in the right way.
“What we have to do is react to the situation in a way that allows us to cope with the stop start supply and demand situation that we are going to experience in the coming months,” he said. “This will be a time when the serious players in the market develop an infrastructure that can cope with the changing situation we now find ourselves in.
“The ability to hold material; the ability to negotiate flexible supply contracts and the ability to supply high quality product will all be crucial in providing a workable solution to the current problems we are all facing.”
“As the world moves through and out of recession, demand and then price will provide the necessary momentum to ease the supply chain and what we have to do is manage the commodity risk going forward,” he added.
Positive
Mr Dumpleton also claimed that the growing relation between the fortunes of commodities, such as oil and metals, and the recycling sector could also be seen as representing a positive for the market as a whole.
“There is some degree of comfort to be had from the fact that the industry is at last starting to track the fortunes of other more recognisable commodities such as oil and metals and that the current problems will provide in many ways a market credibility that has not been in evidence before,” he said.
He concluded: “There is no doubt that the current market problems will provide many challenges and difficulties but we have seen them before and we will see them again.”
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