Editor's Focus

As prices for ferrous metals, various paper grades and other materials start to fall from the record levels seen during past months, we are once again seeing evidence that recycling markets are basically cyclical in nature – a lesson that traditional scrap recyclers know well, but that recyclers newer to the industry are still learning.

Recyclers of post-consumer materials, particularly paper and plastics, who have benefitted from record prices for those materials are, no doubt, watching prices fall with some concern. After suffering through some lean years in the early 1990s during which municipal recyclers were mandated to collect numerous grades of paper and plastic containers but were hard-pressed to find sufficient demand for those materials, the recent strong demand and high prices must have been a relief.

But recyclables, even those mandated for collection, are commodities, and commodity markets are always changing. Hopefully, recyclers of post-consumer materials have made an effort to pare down accumulated debt and even create some savings so they will not suffer unduly – or be driven out of business – during the next market downturn.

On the positive side, even in the face of falling prices, industry analysts forecast a brighter, more secure future for plastic containers – particularly PET, but also HDPE, as the infrastructure for using these materials in manufacturing has grown and developed. "You now wear the red badge of courage if you use PET to package your product," remarked one Midwestern processor of the enthusiasm with which some manufacturers are switching to plastic packaging.

There has also been talk of a shortage of some paper grades, especially mixed office paper, as increasing numbers of mills have come on line expecting to use the grade, and those on the collection side are scrambling to find new supplies of the material. The switch to more home shopping, as well as an already high level of office recycling programs, makes this a challenge.

Nevertheless, recyclers in all segments of the industry, from industrial to municipal, have to remember that operating efficiently in all economic climates is key to survival.

David Dougherty, executive director of the Clean Washington Center, Seattle, has likened the development of municipal recycling to any other new invention – first it does what it needs to, more or less, but in an ungainly, somewhat inelegant fashion. The second generation is a little more graceful, though perhaps still awkward. Finally, after several tries and learning from past mistakes, the invention does what it is intended to do, in the most streamlined, elegant manner possible.

One aspect of reaching that goal of elegant operation is figuring out how best to navigate cyclical recycling commodity markets, profiting from strong demand and high prices, while withstanding weak demand and lower prices.