Editor's Focus

Can recycling markets maintain their strength into another new year?

After two generally strong years for most recyclable commodities, market watchers are wondering how 1996 will play out. So far, the U.S. economy, although it has faced reduced growth rates, has not shown signs of a recession. Some predict that politicians will have a strong incentive to keep the economy healthy in 1996, as it is a presidential election year.

Many agree the demand for ferrous scrap will remain firm in the new year, with additional minimills coming on line and the manufacturing sector relatively strong. New uses for steel, such as residential framing, will also provide demand.

Most nonferrous metals also have strong fundamentals leading onto 1996. Both aluminum and copper enjoyed a strong 1995, with only a little softening at the end of the year. Demand for both metals looks good for next year.

Paper, which rode the roller coaster from record high prices down into much lower levels, is expected to slowly pick up again as more new paper mills come on line in the coming months and prices even out. On a similar course was post-consumer plastics, which reached record high prices that later plummeted mid-year, but has since picked up somewhat.

Municipal recycling programs, many of which made a profit for the first time in 1995 due to the high prices for materials such as paper and plastics, have already seen those prices fall. These programs are slowly learning how to deal with market fluctuations, and many are wondering what affect the Chicago Board of Trade's new Recyclables Exchange will have on post-consumer recyclables.

Even the relatively new markets for construction and demolition debris are beginning to boast both ample supply and healthy demand, and glass cullet markets are stable.

So with markets looking generally favorable, is there any reason to be concerned about 1996? Just a look back at historical cycles, and the knowledge that what goes up must come down – even if it doesn’t happen until 1997.

The moral is to be prepared.