Update on Recycling Market Prices
Guest Blogger – Scott
The enormity of the global financial and economic crisis is affecting recycling commodity prices. With manufacturers in the U.S. and around the world slowing down production, all commodities - whether they are virgin raw materials or recovered materials - are seeing price drops. Industry observers think that as credit problems ease, production will return to normal and prices will rise, but this may take some time. In the meantime, how should local recycling programs react?
Here are a few suggestions:
- Focus on making collection as efficient as possible – regardless of what you are paid or not paid for materials, for many local governments there are opportunities to make sure the high fixed costs of their recycling collection operations are optimized through maximum throughput, routing efficiencies, compaction, and commingling where possible.
- Keep in mind to always budget for recycling revenues conservatively. This allows you to weather downturns and then to use any “windfalls” from higher prices to make capital improvements or pay down debt.
- Remember that the long-term fundamentals of recycling are strong, as manufacturers of products around the world have made a switch to recycled materials over virgin materials in the past two decades. This will not change, despite production being currently down.
For many local governments, regardless of payment or non-payment for materials, disposal fees are a predictable cost and can be avoided by increasing diversion over time.