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Downturn of the Recycling Markets: Impact on Municipal Programs State of Texas Alliance for Recycling August 2009 Copyright © 2008 by R. W. Beck, Inc.

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Presentation on theme: "Downturn of the Recycling Markets: Impact on Municipal Programs State of Texas Alliance for Recycling August 2009 Copyright © 2008 by R. W. Beck, Inc."— Presentation transcript:

1 Downturn of the Recycling Markets: Impact on Municipal Programs State of Texas Alliance for Recycling August 2009 Copyright © 2008 by R. W. Beck, Inc. All Rights Reserved. Robert Craggs Vice President and National Director

2 R. W. Beck, Inc. 2 Presentation Overview  Status of Recyclable Materials Markets  Implications for Local Government Programs  Recommended Strategies and Principles to Ensure Sustainable Programs  Texas-Focused Resources

3 R. W. Beck, Inc. 3 Status of Recyclable Materials Markets

4 R. W. Beck, Inc. 4 Status of Recyclable Materials Markets  What has been the extent of the downturn in the recycling market?  How does the recent decline in pricing compare to historical pricing for the various commodities?  Cyclical pricing (15 years)  2008 pricing volatility  2009 pricing trends

5 R. W. Beck, Inc. 5 OCC (#11) Paper Stock Prices Source: Official Board Markets (Chicago Region)

6 R. W. Beck, Inc. 6 OCC (#11) Paper Stock Prices 2008 Source: Official Board Markets (Chicago Region)

7 R. W. Beck, Inc. 7 OCC (#11) Paper Stock Prices Source: Official Board Markets (Chicago Region) 2008

8 R. W. Beck, Inc. 8 OCC # Trend

9 R. W. Beck, Inc. 9 ONP #8 Paper Stock Prices Source: Official Board Markets (Chicago Region)

10 R. W. Beck, Inc. 10 ONP #8 Paper Stock Prices 2008 Source: Official Board Markets (Chicago Region)

11 R. W. Beck, Inc. 11 ONP #8 Paper Stock Prices Source: Official Board Markets (Chicago Region) 2008

12 R. W. Beck, Inc. 12 ONP (#8) Paper Stock Prices 2009 Trend

13 R. W. Beck, Inc. 13 Mixed Paper (#1) Paper Stock Prices Source: Official Board Markets (Chicago Region)

14 R. W. Beck, Inc. 14 Mixed Paper (#1) Paper Stock Prices 2008 Source: Official Board Markets (Chicago Region)

15 R. W. Beck, Inc. 15 Mixed Paper (#1) Paper Stock Prices Source: Official Board Markets (Chicago Region) 2008

16 R. W. Beck, Inc. 16 Mixed Paper (#1) Paper Stock Prices 2009 Trend

17 R. W. Beck, Inc. 17 Aluminum Cans Source: Waste News (Midwest)

18 R. W. Beck, Inc. 18 Aluminum Cans 2008 Source: Waste News (Midwest)

19 R. W. Beck, Inc. 19 Aluminum Cans Source: Waste News (Midwest) 2008

20 R. W. Beck, Inc. 20 Aluminum Cans 2009 Trend

21 R. W. Beck, Inc. 21 Steel Cans Source: Waste News (Midwest)

22 R. W. Beck, Inc. 22 Steel Cans 2008 Source: Waste News (Midwest)

23 R. W. Beck, Inc. 23 Steel Cans Source: Waste News (Midwest) 2008

24 R. W. Beck, Inc. 24 Steel Cans 2009 Trend

25 R. W. Beck, Inc. 25 PET # Source: Waste News (Midwest)

26 R. W. Beck, Inc. 26 PET # Source: Waste News (Midwest)

27 R. W. Beck, Inc. 27 PET #1 Source: Waste News (Midwest) 2008

28 R. W. Beck, Inc. 28 PET # Trend

29 R. W. Beck, Inc. 29 Glass (Flint) Source: Waste News (Midwest)

30 R. W. Beck, Inc. 30 Glass (Flint) 2008 Source: Waste News (Midwest)

31 R. W. Beck, Inc. 31 Glass (Flint) Source: Waste News (Midwest) 2008

32 R. W. Beck, Inc. 32 Glass (Flint) 2009 Trend

33 R. W. Beck, Inc. 33 Market Pricing Summary Conclusions  2008 market pricing reflects a severe decline for all the traditional commodities (OCC, ONP, metals, plastics, and glass containers).  Recyclable materials pricing in 2008 for several commodities (OCC, ONP, mixed paper, and PET) reflects a dramatic change from historical highs to historical lows.  Cyclical nature of pricing in the past reflects a likely upturn in pricing in the future.

34 R. W. Beck, Inc. 34 Where Are Prices Trending in 2009? Paper  OCC – slowly rebounding  ONP – slowly rebounding  Mixed paper – slowly rebounding Containers  Glass – no change  Metal cans – little change  Aluminum cans – little change  Plastics – visibly rebounding

35 R. W. Beck, Inc. 35 Implications for Recycling Industry and Local Government Programs

36 R. W. Beck, Inc. 36 Implications for Industry and Programs  Methodology: Gather general feedback from local governments in various U.S. regions.

37 R. W. Beck, Inc. 37 Local Government Feedback  “Reduced revenues with revenue sharing arrangement”  Applies to multiple types of contract arrangements (i.e. processing costs, floor pricing, sliding scale)  “Request from private service provider to renegotiate the agreement”  Service agreement has no processing fees and a 50/50 revenue share up to a defined threshold of revenue  Temporary agreement reached

38 R. W. Beck, Inc. 38 Local Government Feedback  “Termination of service agreement to process and market recyclables”  Highly visible processor of wastepaper terminated an agreement to accept processed fiber from a regional waste authority because of the present lack of markets  “Temporary suspension of accepting specific material types”  Rural county with drop-off program has temporarily excluded plastics and glass from their program because of depressed markets

39 R. W. Beck, Inc. 39 Local Government Feedback  “Receiving more recyclable materials from local haulers”  Public MRF becoming market of last resort because some commercial processors in region no longer accepting plastics from haulers on spot market  “Recycling program abruptly transitioned from a net revenue generator to a net expense”  Revenues received from private MRF operator under revenue sharing agreement no longer exceed materials processing costs

40 R. W. Beck, Inc. 40 Local Government Feedback  “Our processor has chosen to warehouse materials indefinitely and we are concerned about health and safety issues”  Most recovered materials in California are exported to end users, but lack of buyers has resulted in materials being stored in warehouses and in ports in U.S. and China.  “The lack of recovery value results in recyclable materials being disposed at a landfill and/or WTE”  None reported.

41 R. W. Beck, Inc. 41 Recommended Strategies and Principles to Ensure Sustainable Programs

42 R. W. Beck, Inc. 42 Recommended Strategies to Ensure Sustainable Programs  Emphasize the importance of maintaining recycling through the economic downturn to various stakeholders  Foster development of local end-use markets for recycled materials to move away from dependence on export markets  Promote increase in recycled content requirements  Diversify recycling programs by establish or expand organic diversion

43 R. W. Beck, Inc. 43 Recommended Principles in Today’s Marketplace  Structure contracts to share market risk  Maintain the course because the markets will improve  Focus on the environmental benefits of recycling and materials diversion

44 R. W. Beck, Inc. 44 Texas-Focused Resources

45 R. W. Beck, Inc. 45 NCTCOG Recycling Contract Negotiation Guidebook  Comprehensive guide for local governments and private companies in the region  Topics include:  Procurement process description  Processing and collection contract provisions  Commodity price discussion  Detailed financial explanations  Sample contract language  Case studies from cities within region and outside of region

46 R. W. Beck, Inc. 46 Contracting Guidebook Schedule  Draft Guidebook submitted to NCTCOG  Final Guidebook by Summer 2009  Workshop on August 14, 2009

47 R. W. Beck, Inc. 47 Other Regional Studies Can be Leveraged Across Texas  H-GAC  Recycling 101 and 102 workshops  Transfer Station Best Management Practices Workshop  Organic Waste Best Management Practices Workshop  Waste Audit Workshop and Workbook  NCTCOG  C&D Waste Minimization Strategies Study  C&D MRF Feasibility Study  Regional Recycling Rate Benchmarking Study  Recycling Contract Negotiation Guidebook (current)  Recycling Ordinances and Building Design Guidelines (current)  CAPCOG  Market Analysis of Recovered Materials

48 R. W. Beck, Inc. 48 Questions? Robert Craggs, Vice President ( 651) Scott Pasternak (512)


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