Commentary: Is recycling headed for a sweet spot?

Conditions for recycling company owners and managers have been as difficult as for those in any other sector during the turmoil caused by COVID-19 and subsequent restrictions on activity.

Revenue and jobs have been lost as the amount of recyclable material generated dwindles, and some material that is still generated (largely on the post-consumer side) is deemed unsortable until the virus subsides.

Metallic commodity prices have been hit with a vengeance, and most secondary commodities have no choice but to go along for the ride.

On the municipal side, state and local budgets that already were tight are now in complete disarray, painting a potentially bleak scenario for government-supported collection and sorting of recyclables.

Is this a time when any case for optimism can be made in the recycling sector? There are some indicators to answer “yes.”

As dismal as April was for the United States and global economy, there is little doubt that succeeding months will be incrementally better. That alone is good news.

A roaring V-shaped recovery may not be in the offing, as governments, corporations and individuals all weigh the possibility of second and even third waves of COVID-19 infections. However, what is clear is that some double-digit percentage of manufacturing and construction activity is going to return in May—even if a lot of office workers choose to work from home and largely shelter in place.

By early in the first full week in May, negotiations between ferrous scrap sellers and buyers were pointing to a rebound in that market, as EAF steelmaking has remained relatively healthy. Recovered fiber pricing, meanwhile, has tracked upward during COVID-19 partial shutdowns. Packaging remains in demand, as does demand for tissue and other hygiene products.

With the away-from-home economy beginning to show itself again, the demand for raw materials is going to increase sharply, and secondary commodities will be part of that rebound.

As a rebound ensues—even a medium-speed one—recyclers will struggle to secure adequate supply. Their challenges, however, may be minor compared to those faced by operators in the virgin raw materials sector, particularly in metals production.

Recyclers will have to bring back laid off workers, reconfigure routes for industrial scrap generators that are back in business, and convince peddlers that their scales offer pricing that is worth the collectors’ efforts.

That “to do” list can almost certainly be enacted faster than restarting the global supply chains faced by consumers of iron ore, bauxite, copper concentrates and virgin polymers. These producers will need to sort out labor contracts, trans-oceanic bulk shipping arrangements, longer-term price settlements and potentially negotiate with government agencies in many different nations.

For recyclers, one more intangible is in play: Whether the global pause button that was hit in March and April has slowed down sustainability momentum or provided it with a boost.

There is reason to believe the latter. The Internet has been abuzz with “before and after” air pollution photos. Prominent online discussion topics during the shelter-at-home phase involved reinvigorating domestic manufacturing and shifting to shorter global supply chains. Recycling advocates were quick to note that some or all three of these trends tie in to developed nations using their scrap resources effectively.

The first four months of 2020 provided little in the way of good cheer to people in most economic sectors. It is possible, though, that collectors, processors and sellers of scrap metal, paper, plastic and other materials have promising reasons to keep planning for the future of their businesses.