1. Recyclable Paper Futures Market By John McQuade

2. Recyclable Paper Futures Market Market Information Market Information US paper market in 2004: $101 Billion in sales US paper market in 2004: $101 Billion in sales In the US in 2000 In the US in 2000 105.3 million tons of paper produced 105.3 million tons of paper produced 47.3 million tons of paper recycled 47.3 million tons of paper recycled 45% Recycling rate 45% Recycling rate In the US in 2003 In the US in 2003 50.3% Recycling rate 50.3% Recycling rate The market is growing larger each year as paper usage and recycling are both consistently increasing. The market is growing larger each year as paper usage and recycling are both consistently increasing. Recovered paper consumption growth rate of 2.1% annually through the year 2000. Recovered paper consumption growth rate of 2.1% annually through the year 2000.Source: American Forest and Paper Association http://www.afandpa.org/Content/NavigationMenu/Environment_and_Recycling/Recycling/Recycling.htm Recycling Today http://www.recyclingtoday.com/articles/article.asp?Id=5342&SubCatID=26&CatID=3 TAPPIhttp://www.tappi.org/index.asp?rc=1&pid=31230&ch=1&ip=

3. Sellers: Recyclable waste paper gatherers Sellers: Recyclable waste paper gatherers Waste Handlers, Municipalities Waste Handlers, Municipalities Want highest price they can get Want highest price they can get Naturally Long Naturally Long Buyers: Paper/paper product producers Buyers: Paper/paper product producers Paper Producers, Recycled paper users (insulation, storage filler, packaging) Paper Producers, Recycled paper users (insulation, storage filler, packaging) Want to buy at lowest prices Want to buy at lowest prices Naturally Short Naturally Short Market Participants

4. Price Volatility Influencing Factors Influencing Factors Supply/Demand discontinuities Supply/Demand discontinuities Quality Issues: no universal standards Quality Issues: no universal standards Competing primary supply (wood pulp) prices Competing primary supply (wood pulp) prices Exports: foreign orders are often made and cancelled sporadically Exports: foreign orders are often made and cancelled sporadically Recycled content legislation Recycled content legislation 1990s 1990s Price fluctuations damaged industry: hurt both sellers and buyers of recyclable waste paper Price fluctuations damaged industry: hurt both sellers and buyers of recyclable waste paper Early 1990s Early 1990s Oversupply of waste paper caused prices to drop significantly. Bad for suppliers. Oversupply of waste paper caused prices to drop significantly. Bad for suppliers. Mid 1990s Mid 1990s Foreign demand drove prices up. Bad for buyers. Foreign demand drove prices up. Bad for buyers.Source: North Carolina Department of Environment and Natural Resources http://www.p2pays.org/ref/02/0162218.pdf

5. Benefits Futures Market Futures Market Futures market will help control price volatility Futures market will help control price volatility Enforce contracts Enforce contracts Create shipment & quality standards Create shipment & quality standards Recycling paper Recycling paper Less paper in landfills Less paper in landfills Less trees cut Less trees cut Savings in manufacturing process Savings in manufacturing process 74% Less air pollution is generated 74% Less air pollution is generated 35% Less water pollution is generated 35% Less water pollution is generated 58% Less water is required 58% Less water is required 64% Less energy is required 64% Less energy is requiredSource: Institute of Scrap Recycling Industries http://www.green-networld.com/tips/paper.htm

6. Risks Paper cannot be recycled indefinitely Paper cannot be recycled indefinitely A small percentage is lost each time recycled A small percentage is lost each time recycled Prices of substitute inputs to paper production (such as wood pulp) may fall significantly Prices of substitute inputs to paper production (such as wood pulp) may fall significantly Would make recyclable waste paper less attractive as input to producers Would make recyclable waste paper less attractive as input to producers

7. Questions?