Ferrous metals markets have dived after the iron ore price fell. In paper, the value of used newspapers and magazines has reduced and this has also knocked the price paid for lower quality mixed papers.
Plastics is a material facing particular difficulties with its close link to the oil price which has again this week moved downwards, even though there were signs of a recovery in value during the first part of March.
How much should we worry about these developments? Well the answer has to be to a measured extent for metals and paper but to be extremely concerned in the plastics sector.
History shows us that the recovered paper or waste paper market usually bounces back relatively quickly after a price fall. It may not see prices leaping up again in the near future, but stability returns and this appears to be the case at the moment for most grades.
Newspapers and magazines may well remain difficult till the end of year but the market will level out as readership reduces and arisings start to fall. Overall, as one sector expert said recently, paper is like water – it will always find a home.
Metals too will almost always find a home, and it is a material which can be more easily stored in the face of weaker demand. The lower prices will, however, put pressure on cash flows within the sector and there will undoubtedly be some changes within small and larger businesses as companies seek to maintain efficiencies and competitiveness.
Where metals will impact on the recycling sector is that local authorities and their contractors will see a notable fall in value of civic amenity site material. However, there are indications that the price paid for light iron is starting to stabilise, but again hope of an upturn will be linked to world markets such as Turkey and China where economic development is still at a lower level than expected, although China recently signalled it could see higher economic growth levels this year.
Plastics
The plastics sector is where the real negativity lies. For local authorities and contractors it is still one which is relatively immature. Plastics recycling faces pressures still from the virgin plastic producers, with some observers feeling that some of the producers and their representatives would still rather see plastics sent for energy recovery rather than recycling. Plus, it is the material hardest hit by the fall in value of oil.
Alongside this, plastics is the most confusing and challenging material for local authorities to get their residents to recycle and for contractors, especially MRF operators, is a relatively expensive material to sort. The challenge is here for the Waste & Resources Action Programme which has promoted plastics recycling to help ensure that the reprocessing side of the industry within the UK does not fall away. The worst case scenario is the retail and packer/filler sector back away from using recyclable materials simply because they can save a very, very small amount by using virgin material. Perhaps the voluntary Courtauld Commitment scheme should have had some teeth.
The advantages of a domestic reprocessing market are clear. There is transparency in environmental standards, transport costs are minimised and companies can work more closely with their customers. Jobs are also created on home soil and the concept of plastics recycling as a message to the public is also better spread with the use of domestic reprocessors. This is an infant industry and recycling activity which should have great potential for further growth and development.
Retailers, government, producers and WRAP all have their part to play in securing the future of the plastics sector. There has been a lot of focus on food waste in recent years – if as much attention was now applied to plastics, there will be benefits all round.
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