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 volatility2009 pricing trendsThe first question we want to examine is what is the extent of the downturn in the commodities marketsNot only that, but how can we compare the downturn to historical pricingNext slides, we are going to look graphs that describe at 1) pricing for recyclable commodities over the last 15 years 2) Compare that against what occurred in ) Take a look at how markets have rebounded, or not, in 2009
5 OCC (#11) Paper Stock Prices 1993-2007 The first material that we are going to take a look at is OCC. The blue line represents a 6 month average of the OBM yellowsheet price for OCC for the Chicago Region. The red line is the trend line.OCC, even more than some of the other commodities, is an example of the extreme volatility of the commodities markets. However, over the roughly 15 year period, the price has trended upward.Source: Official Board Markets (Chicago Region)
6 OCC (#11) Paper Stock Prices 2008 This graph shows the month by month pricing for the material in At the beginning of 2008, the indices were consistently above 100 per ton, up to 120 per ton. However, you can see that in the last 3 months of 2008 there was a severe decrease to around $20 per ton.This is just index pricing. You may have heard, and we heard, of situations in which recyclers and local governments were unable to move material at all. But, for the purposes of this, we are looking at index pricing.Source: Official Board Markets (Chicago Region)
7 OCC (#11) Paper Stock Prices 2008What this graph has done is overlaid the historical pricing with the 2008 month by month pricing in order to illustrate that in the same year, OCC experienced both near historical highs and historical lows. That was part of what made this particular downturn so severe is the magnitude of the price change in such a short period of time, a 3 month period of time.Source: Official Board Markets (Chicago Region)
8 OCC # TrendThis slide shows what pricing for OCC has done in the first 7 months of As with some of the other fibers we are going to look at, pricing has steadily rebounded to right around $55 to $60 per ton range.
9 ONP #8 Paper Stock Prices 1995-2007 The next few slides show a similar analysis for other recyclable commodities. This is ONP, old newspaper, and the overall upward trend that has occurred over the last 13 years.Source: Official Board Markets (Chicago Region)
10 ONP #8 Paper Stock Prices 2008 This graph shows 2008 pricing and the particularly drastic price decrease in the last three months.Source: Official Board Markets (Chicago Region)
11 ONP #8 Paper Stock Prices 2008Again, we see historic highs and near historic lows of the commodity within the same year, really within 3 months.Source: Official Board Markets (Chicago Region)
12 ONP (#8) Paper Stock Prices 2009 Trend As with OCC, ONP has slowly and steadily begun to rebound in the first half of 2009
13 Mixed Paper (#1) Paper Stock Prices 1993-2007 Mixed paper tells the same story as OCC and ONP – 15 year upward trend in pricing, with much volatilitySource: Official Board Markets (Chicago Region)
14 Mixed Paper (#1) Paper Stock Prices 2008 Severe price decrease in the last three months of 2008Source: Official Board Markets (Chicago Region)
15 Mixed Paper (#1) Paper Stock Prices 2008Comparison showing 15 year highs and lows in the same year.Source: Official Board Markets (Chicago Region)
16 Mixed Paper (#1) Paper Stock Prices 2009 Trend Also for mixed paper a slow and steady rebound for 2009, but still definitely not pricing at the level that was seen in 2008.
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 Where Are Prices Trending in 2009? PaperOCC – slowly reboundingONP – slowly reboundingMixed paper – slowly reboundingContainersGlass – no changeMetal cans – little changeAluminum cans – little changePlastics – visibly rebounding
35 Implications for Recycling Industry and Local Government Programs
36 Implications for Industry and Programs Methodology: Gather general feedback from local governments in various U.S. regions.
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 revenueTemporary agreement reached
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 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 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 Recommended Strategies and Principles to Ensure Sustainable Programs
42 Recommended Strategies to Ensure Sustainable Programs Emphasize the importance of maintaining recycling through the economic downturn to various stakeholdersFoster development of local end-use markets for recycled materials to move away from dependence on export marketsPromote increase in recycled content requirementsDiversify recycling programs by establish or expand organic diversion
43 Recommended Principles in Today’s Marketplace Structure contracts to share market riskMaintain the course because the markets will improveFocus on the environmental benefits of recycling and materials diversion
45 NCTCOG Recycling Contract Negotiation Guidebook Comprehensive guide for local governments and private companies in the regionTopics include:Procurement process descriptionProcessing and collection contract provisionsCommodity price discussionDetailed financial explanationsSample contract languageCase studies from cities within region and outside of region
46 Contracting Guidebook Schedule Draft Guidebook submitted to NCTCOGFinal Guidebook by Summer 2009Workshop on August 14, 2009
47 Other Regional Studies Can be Leveraged Across Texas H-GACRecycling 101 and 102 workshopsTransfer Station Best Management Practices WorkshopOrganic Waste Best Management Practices WorkshopWaste Audit Workshop and WorkbookNCTCOGC&D Waste Minimization Strategies StudyC&D MRF Feasibility StudyRegional Recycling Rate Benchmarking StudyRecycling Contract Negotiation Guidebook (current)Recycling Ordinances and Building Design Guidelines (current)CAPCOGMarket Analysis of Recovered Materials
48 Questions? Robert Craggs, Vice President Scott Pasternak (651)Scott Pasternak(512)