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Recycling Today Conferences: Market Intelligence

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Leaders from the paper, plastics and electronics recycling sectors discuss the challenges and opportunities facing recyclers.

June 11, 2009

While the recession has had a negative impact on the paper, plastics and electronics sectors of the recycling industry, a number of opportunities remain for companies in these industries, according to panelists gathered for the keynote session of Recycling Today’s Paper, Plastics and Electronics Recycling Conferences & Trade Show, June 7-9 in Atlanta. However, a number of challenges also face these recycling industry sectors.

 

FRAGMENTED ELECTRONICS

The fragmentation of the electronics recycling industry has led to a number of players and business models that make standardization and certification difficult, according to Michael Profit, CEO of Intechra, Jackson, Miss. Profit said irresponsible brokers have given the industry a black eye and have created the need for transparency within the industry.

 

Consolidation within the electronics recycling industry has resulted in service providers with scale, Profit said, as well as industry associations with a clear voice concerning regulations and the self-policing of the industry. “A foundation for growth of responsible recycling has been fostered by industry, OEMs and government collaboration on best practices,” he said. Profit predicted further consolidation among electronics recyclers going forward, adding, “Stronger business models and sound practices will prevail.”

             

Despite the positive effects of consolidation, Profit said the electronics recycling industry remained challenged by the variety of certification standards available, from ISO 14001 and ISO 9001 to the certification under development by the Basel Action Network.  

 

Profit said he believed that the combination of the R2 (Responsible Recycling) practices as proposed by the U.S. EPA and the Recycling Industry Operating Standard (RIOS)—a quality, environment and health and safety management systems certification program developed by the Institute of Scrap Recycling Industries Inc. (ISRI) that has adopted the R2 practices—offered the strongest certifications for the electronics recycling industry. Additionally, he said the G.R.A.D.E. standard established by IDC to evaluate asset recovery and recycling service providers “will help to separate the strong players from the weak.”  He added, “Those that achieve G.R.A.D.E. certification by IDC are uniquely qualified to provide a wide range of asset disposition services to large corporate enterprises.”

 

Economics also remain a challenge for electronics recyclers, as Profit said clients are resistant to pay a fee for service, which can lead to improper behavior on the part of electronics recyclers. Additionally, secondary commodity markets have suffered as a result of the recession, as have credit and capital availability. Intechra has not forecasted for aggressive growth in secondary commodity markets going forward, he said, though the company predicts legislative efforts will continue to grow, with a federal electronics recycling law “showing some momentum.”

               

While the relatively young electronics recycling industry struggles with credibility issues and legislation, the established paper recycling industry is facing declining consumption and generation.

 

PAPER PRODUCTION

Jim Bowen, senior vice president of Sonoco Recycling, Hartsville, S.C., detailed the decline in domestic fiber consumption in his presentation during the keynote session. Domestic consumption in the first quarter of 2009 was down 18 percent, or 1.5 million tons, over the first quarter of 2008, while mill consumption of recovered paper was down 12 percent relative to the 1999 peak. Paper and paperboard production declined 10 percent over the same period, Bowen said, while production of linerboard and medium was off by 18 percent, or 1 million tons.

               

Export demand appears to be faring better. “Generally, exports of recovered paper remain strong,” Bowen said, though they are off approximately 4.7 percent, or 250,000 tons, for the year. China’s purchases are ahead of those in 2008, he said, largely because buyers there are rebuilding their inventories. He added that with the exception of India, which was up 15 percent, all other trading partners imports of recovered fiber from the U.S. were down significantly. Mixed paper has suffered more than any other grade in terms of declining export demand over the last year, Bowen added.

               

Among the issues facing the recovered fiber industry, according to Bowen, are “alternative energy” tax credits that some mills are getting for using black liquor, which provides an incentive not to use recovered fiber; ongoing issues with the quality of fiber from single-stream programs; the 66 million tons of fiber and plastics that are not diverted from municipal solid waste; decreased container availability in light of the fact that more than 250 container ships are out of service; and pricing volatility for recovered fiber.

               

However, Bowen did have some positive conclusions to draw about the long-term prospects of the recovered fiber industry, noting that new production capacity likely would be based on recovered fiber.

He said pricing volatility would continue, though there would be periods of stability. “I expect prices to creep up with a lot of variability,” he said. To remain viable, paper recyclers would have to learn how to protect the downside, Bowen said.

                The economy and corporate America’s focus on sustainability would continue to drive plastics recycling markets, according to Kevin Cronin, CEO of Nicos Polymers Group, Nazareth, Pa.

 

PLASTICS GATHER STRENGTH

“2007 through early 2008 was strong for plastics recyclers,” Cronin told attendees of the keynote session. “Closed-loop tolling was quite strong.”

               

While markets are slowly strengthening from the downturn that began in the fourth quarter of 2008, he said they were still down 15 percent to 40 percent relative to early 2008. “A strong recovery is not likely before mid-2010,” Cronin added.

               

The plastics recycling industry continues to be hampered by the downturns in the auto and construction industries. The full impact of the auto industry shakeout is not yet known, and construction markets remain weak, with few positive indications, Cronin said.

               

Sustainabilty would remain an issue that corporations cared about, according to Cronin, and their approaches would become strategic business imperatives, he predicted.

               
Among the challenges facing the plastics recycling industry, Cronin said, were bioplastics and bioadditives; collection strategies like single-stream, which greatly devalued recovered plastics; and innovative approaches to incent clean energy recovery.

               

Recycling Today’s Paper, Plastics and Electronics Recycling Conferences were June 7-9 at the Hyatt Regency in downtown Atlanta. Information on the 2010 conferences will be available at www.RecyclingTodayEvents.com.

               

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