As World Demand Falls, Prices for Recyclables Go in Dumper
November 11th, 2008Even the salvage economy is going down.
Via: Sacramento Bee:
A sudden collapse in worldwide demand for re-cyclables, particularly from China, has scrap dealers from Sacramento to San Diego stockpiling curbside collections as never before and charging walk-in customers for their throwaways.
Stacks of baled paper, plastic and metal are mounting at the Sacramento Recycling & Transfer Station plant on Fruitridge Road because market prices are too low to turn a profit or, worse, no buyers can be found, its operators said.
Five miles to the west, Ming’s Recycling Corp. recently posted a sign at its entrance on 47th Avenue: “Ask for prices before you unload.”
“We got fed up reloading everybody’s pickup,” said Kevin Luong, the company’s marketing director, now in his seventh consecutive week of meager sales. “People are so shocked by the low prices. They think they are being ripped off here, but that’s not the case. It’s not us. It’s the market.”
If the scrap market doesn’t recover anytime soon, homeowners could see their garbage rates rise. Most recyclers pay for the materials cities and counties collect from residents’ blue curbside bins and then sell it for a profit. The proceeds help offset the government’s costs of collection.
“It helps keep our recycling rates low,” said Jessica Hess, a Sacramento city spokeswoman.
Local officials also see the buildup of unsold rubbish as a potential public health hazard. State waste regulators anticipate that dealers will ask that limits on the volume of stockpiled bales be relaxed.
“We’re wondering what can we do to provide some relief,” said Jon Meyers, spokesman for the state Integrated Waste Management Board.
Devalued recyclables easily could end up in the dump, making it harder for municipalities to comply with a state mandate to divert at least half of their waste from landfills, Meyers said.
As far as Sacramento County officials know, recyclers “are not landfilling it as yet,” said Paul Philleo, county director of waste management and recycling.
The scrap market took a nosedive in late September. At first, industry analysts thought they were seeing a short-term “Olympics effect” from the shutdown of Chinese paper mills and other big polluters during the Summer Games in Beijing. But as the weeks of rock-bottom prices wore on, the cause became clear.
China, a voracious consumer of West Coast scrap, has all but stopped buying used paper and plastic because international demand for Chinese products made from these recyclables has diminished. Much of the material goes to making cardboard and plastics for packaging everything from iPods to eyewear, computers and cars.
“A lot of the material was going to China to make boxes for all the things they were shipping back to the United States,” said Bruce Savage, spokesman for the Institute of Scrap Recycling Industries in Washington, D.C. “When they aren’t producing products, they don’t need the packaging materials.”
When the cavalcade of collapses in housing, credit, stocks and commodities hit the recycling industry, it plummeted.
On Oct. 1, for example, baled newspapers in Northern California were going for $140 to $150 a ton. By Nov. 1, the market price had dropped more than 60 percent to $55 to $60 a ton.
Research Credit: ottilie
This is a temporary phenomenon. Once commodities start rising again, trash turns back into treasure!
I hope I’m not straying too far off the topic here, but as I said in a recent comment, I used to work in the restaurant industry. Since that industry is not exactly crucial to the necessities of everyday life, I’ve been wondering how this “heart-attack patient” economy has been affecting my once-upon-a-time source of employment. This post makes me think that if even the salvage industry is being affected, it won’t be very long before restaurants in the US start falling like the proverbial dominoes! And this will also be true of any area of the economy that depends on people having large amounts of discretionary income for its well-being.