Industry Wise

The Recycling Today Media Group’s three co-located conferences—the Paper Recycling Conference & Trade Show, the Plastics Recycling Conference & Trade Show and the Electronics Recycling Conference & Trade Show—held in Chicago June 22-24, resulted in record attendance. Each conference brought in top executives from each recycling industry segment to discuss some of the key market issues.

Along with a number of sessions on topics ranging from export markets, trends in domestic demand and quality issues, workshops Sunday, June 22, addressed many pertinent operational and managerial issues, such as financial planning, transportation trends and material recovery facility (MRF) automation.

For the second year in a row, futurist and economist Don Reynolds of 21^st Century Forecasting, South Orange, N.J., addressed attendees off all three conferences during the joint keynote session, Monday, June 23.

The creation of new capitalist economies and the power of demographics were combining to place the United States in the "twilight" of its global economic dominance, according to Reynolds.

Just 15 years ago, the United States, Japan, Germany, the United Kingdom and France were among the world’s largest economies, Reynolds said. Today, China and Brazil have muscled their way into the top five, while Russia and India were also striving to reach one of the top spots, he said. Reynolds described the income growth in these nations as "geometric" rather than linear.

Latin America represented "a great growth area," Reynolds said. He noted that the region had switched from a ratio of 25 dictatorships and four democracies to 25 democracies and four dictatorships.

As well as this region is performing now, it could further benefit from oil deposits located off the coast of Brazil, according to Reynolds.

Oil prices currently were tied into China’s activity more than anything else, said Reynolds, a long-time Texan who watches the industry closely. "Peak capacity is what we’re experiencing, not peak supply," he stated, referring to production and refining capacity.

Prices may have been artificially high by about 10 percent because of commodity fund investing, said Reynolds, pointing out that some $200 billion was invested in commodity indexes today vs. only $2 billion just four years ago.

But prices were likely to remain high, he cautioned, because even as production and refining capacity is able to ramp up, "China’s demand will soak up what little capacity is left [to be grown]."

Reynolds predicted that the world had "entered a prolonged era of high energy prices," predicting a floor price of $90 to $120 per barrel for oil with plenty of spikes and volatility.

New technologies were needed not just to supplant oil, said Reynolds, but also to combat global warming. Reynolds said he foresaw as much as a 6 degree average annual temperature increase occurring. "When I tell you I believe in global warming, that means something," said the self-described Texas oil-patch conservative Republican.

Global warming and other environmental concerns could help to boost the profile of the recycling industry and usher in growth opportunities.

One of the fastest growth segments in the recycling industry has been electronics recycling. However, according to speakers during the Electronics Recycling Conference session titled "Rising Tides for Collections," the electronics recycling message has not effectively penetrated the consumer market.

Jake Player, president of TechTurn, Austin, Texas, addressed the area of computer recycling, noting that 70 to 80 million computers were retired each year in the U.S., a figure that was growing at a rate of 45 percent annually. He added that only 10 percent of computers were going to asset recovery companies like TechTurn at disposition.

Player noted that the Microsoft Authorized Refurbisher (MAR) program was a key component to the reuse of personal computers and laptops in that it allowed the use of such a product to be extended by enabling the installation of Microsoft operating systems on these devices at a reduced cost.

Player also noted the divide that exists between consumer and corporate attitudes about computer recycling. "There is a huge divide between the business side of retirement disposition and the consumer side of retirement disposition," Player said. On the business side, customers were essentially interested in data erasure, asset level reporting and environmental metrics, he said. Because of these concerns, corporations often performed compliance audits of their recyclers.

Consumers, however, were looking for convenience and low cost, Player said. "Consumers are not [always] willing to pay to recycle responsibly," he added.

During the same session, Edo Cohen, vice president of business development for Flipswap, Torrance, Calif., addressed the issue of the rapid refresh of cell phone technology in the United States. Cohen said of the 180 million cell phones retired yearly in the U.S., less than 10 percent were recycled.

Citing data from CTIA The Wireless Association’s 2006 E-Waste Survey, he said four out of 10 Americans held on to their old cell phones because they didn’t know what to do with them. However, these discarded phones hold nearly $100 million worth of gold, which is comparable to the output of a mid-size mine, Cohen said, citing Earthworks data.

While some states, such as California, have legislation mandating that cell phone retailers provide free recycling to consumers, Cohen said consumers are often unaware that such recycling options exist.

Cohen added that demand for refurbished phones was expected to increase, reaching $6 billion in sales by 2012.

It’s widely known that paper is recyclable, however, that doesn’t mean that the industry is without its problem.

The longest-running portion of Recycling Today’s conference is the Paper Recycling Conference & Trade Show, which celebrated its ninth year in 2008. Conference sessions ranged from export challenges to the changing dynamics of the paperboard industry.

Three speakers discussed the challenges confronting U.S. exporters during a session titled "New Export Algorithms."

Mike Belus, director of international trading for Harmon Associates, Jericho, N.Y., a large paper broker and a business unit of Georgia-Pacific, noted that shipping patterns and priorities had changed. While in the past Chinese merchandise poured into the United States via sea containers, providing many containers to be shipped back to China filled with recovered fiber, today’s markets are far different. "The drastic change in trade flows [means] fiber tonnage once coveted by shippers is now competing for space," Belus said. In addition to searching for space, recyclers also faced rates three or four times higher than what they were paying just one year ago, Belus said.

Market-oriented reasons have contributed to this shift. Scott Krohn, director of transpacific trade for shipping company OOCL U.S.A. Inc., Rosemont, Ill., noted that despite flat import-export activity at the Port of Los Angeles-Long Beach in 2007 and 2008, the U.S. Department of Transportation had predicted growth in volumes returning, with container activity possibly tripling by 2020.

Krohn noted that recent shipping woes for recyclers had been caused by a shift in the U.S.-to-East Asia route "from 65 percent to 120 percent industrial load factor." This quick shift from excess capacity to overcapacity was caused by the weak dollar, overall global market growth and the maxing out of bulk shipping vessels spilling over into increased container demand, Krohn said.

The rising cost of bunker fuel, used by large ships, also has increased freight rates, Krohn noted. While a 6,000-TEU (20-foot equivalent unit) ship used to be able to sail for $33,000 per day, that cost had escalated to $110,000 per day today, he said.

"West-bound costs will increase during 2008," Krohn predicted.

While it is becoming more of a challenge to move material from the United States to China, demand overall still is strong. Byron Luo, purchasing manager for Ralison International, Diamond Bar, Calif., noted that despite concerns with markets, the continued growth in the Chinese gross domestic product (GDP) would likely translate into a 7 percent to 10 percent growth for paper.

Luo said the Chinese government continued to encourage mills near Shanghai and Guangzhou to source recovered fiber from overseas through its ocean ports.

Spiking oil prices and renewed interest in recycling have positively affected the plastics recycling industry. But not everyone has embraced plastics.

One of the most topical issues for the plastics industry has been the push to eliminate retailers’ use of plastic bags. Addressing this subject during a session titled "In the Bag or On Film," Donna Dempsey with Progressive Bag Affiliates, part of the American Chemistry Council, Alexandria, Va., said the plastic bag producing industry supported the responsible use and recycling of plastic bags. "If you take one product away, another will have to take its place, and you have to consider the environmental consequences of that," she said.

Echoing these remarks, Katie Walker, the Midwest buyer for Trex Co., Winchester, Va., said bans were only a short-term fix. "It’s not the bag itself that is the problem, [it’s] more the behavior of the consumer," she said. "We are trying to get the word out that we want this material. There are end users."

Recycling Today’s 2009 Paper, Plastics and Electronics Recycling Conferences & Trade Show will be in Atlanta June 7-9. More information about this year’s conferences, including podcasts of a number of the presentations, is available at www.RecyclingToday.com

The editorial staff of Recycling Today contributed to this feature.