Commodity Report

Looking at 2008 as a whole, the year offered some sharp contrasts. The first half of the year saw recovered paper commanding stable, high prices. The market was plagued by skyrocketing operating and shipping costs thanks to the high price of fuel. Recyclers also struggled with a container shortage that cramped their ability to ship to lucrative export markets. While those costs chipped away at margins, steady demand, particularly from China, kept prices high and the industry robust, even in the face of worsening economic news in the United States and around the world.

However, the worldwide economy caught up with the commodity markets in the fourth quarter of 2008, and recovered paper suffered falling prices, as did its fellow recyclable commodities. The market seemed to anticipate China roaring back to life following its Olympic hiatus, but the expected surge in productivity never came. With the export destinations quiet and domestic capacity shrinking, demand and prices fell for all grades.

Most people inside the industry said they expected a downturn, but the speed with which the market contracted seemed to catch everyone by surprise.

The fallout from the global economic problems has many in the recycled paper industry operating in a sort of "wait and see" mode. As of early December, one Midwestern recycler reported that material was coming in, albeit at a slightly slower pace than typically seen during the holiday season. "Pricing is very weak, and movement is weaker yet," he reported.

Some recyclers are reporting push back from some customers in cases where they have to charge to take material for recycling. Some customers—particularly haulers with their own landfills—might opt to landfill material if it becomes financially advantageous, according to some sources.