From Ohio to Nebraska, fields of corn and soybeans gently roll along. In the towns and cities, recycling markets are rolling along the same way.
This year, there are fewer high peaks or deep valleys. Material flows and margins are reasonable, if not spectacular, and 2005 likely will be remembered as a decent year.
The Midwest is quite capable of generating, processing and shipping scrap within the general confines of the Heartland. Most recyclers in the area can fill their orders for material, and nobody seems to have serious concerns about finding markets at the melt shops or pulpers.
MATERIAL DIFFERENCES. "There is no big sucking sound of material going out of the region for export," says Tom Krughoff of Central States Fiber, Shelbyville, Ind.While he says levels of material generation—paper, in the case of Central States—can be a bit sluggish, overall the market has been decent. "Things were off a little this summer. There was a bit of a lull. Corrugated and even office grades are down a bit," Krughoff says.
Several other companies have noted a seasonal slump in newsprint and corrugated. But the dip in office-grade production is somewhat surprising, given the widespread concern about security. Document shredding has been a boom market. Those selling shredders, providing shredding services or recycling the shredded material have been quite busy throughout the past 12 to 18 months.
"That business is somewhat seasonal," Krughoff says, noting that most companies dispose of documents at the end of the year or the first of the year. "That’s when they do most of their document purging," he says.
"Scrap is moving slowly but surely here," says Josh Joseph, vice president at Muskingum Iron & Metal, Zanesville, Ohio. While several mills stopped buying during July, that was mainly in light of seasonal production shutdowns, not a lack of interest in the market. "They will be back melting," Joseph says, adding that he is looking for a pickup in business in the second half of the year.
"The month of June started slow, and July slowed more," says John Marynowski, executive vice president at OmniSource, Fort Wayne, Ind. Pricing of ferrous material was weak. Industrial shutdowns for vacation cut material flow, but that can be expected seasonally. "Obsolete grades were cut back. That was due to the downturn in pricing," he adds.
Despite the bumps, OmniSource was able to sell the material it got.
One non-scrap indicator of how the Midwest recycling market is faring is the level of interest in state recycling associations.
"Our membership numbers are up," says Dewayne Johnson, executive director of the Iowa Recycling Association. "Folks are doing well. They continue to be involved in the industry," Johnson says happily. Last fall’s Iowa conference was the biggest in recent memory. If pre-registration numbers are any indicator, this year’s conference, set for Des Moines Oct. 17-19, is showing signs of record attendance.
Regarding the purchase of recycling equipment, Johnson says, "For a while, people were not buying as much. Now they are looking. Markets are better, so people are looking at equipment."
Carrie Hakenkamp, director of WasteCap Nebraska, deals with commercial recycling in that state. With the exception of glass collection (a problem in many regions), she feels recycling from her base is strong.
"We track 75-80 businesses here in Lincoln. It looks like volume is rising slightly," she reports.
That contrasts somewhat with the slight decline in volume brought into the city drop-off sites in Lincoln. But the business pattern is mixed.
"Electronics recycling is up. We’ve focused on electronics and have seen a good increase in recycling of computers and office equipment," Hakenkamp says. Recycling of fluorescent tubes is off by 15 to 20 percent, but she credits that to a move by businesses to green tubes.
Glass is off. "The big problem is glass," she says. "Glass is not being accepted in a lot of programs."
She reports an increase in plastic collection. Film—plastic shrink wrap—and plastic bag recycling is up. That is thanks mainly to local balers who will handle the material.
STAY-AT-HOME SCRAP. Recyclers are noting good movement of material throughout the region from pickup to consumption. "Flow for us remains constant," says Matt Kripke of Kripke Enterprises, Toledo, Ohio. As brokers, Kripke Enterprises sees a net in-flow of material to the Midwest. However, Kripke points out that the company’s point of view might be solely because of its location. "We are located in the Midwest, so our customers are here," he says.The consuming markets for scrap—paper, ferrous and nonferrous—in the Midwest are reasonably healthy. Many contacts report that material generated in the region is staying within the region, although some moves afield.
"For the most part, anything we have in the Midwest stays in the Midwest," Marynowski says. "Down South and on the East Coast they look at export prices."
| Madison Avenues |
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The municipal recycling program in Madison, Wis., has made a commitment to new equipment . . . in fact, to a whole new way of collection. "We are undertaking a big change. We’ll be going to a single-stream, automated collection system on Sept. 12," says George Dreckmann, recycling coordinator for the city. Madison has been distributing carts throughout the summer in anticipation of the switchover. Dreckmann says the city’s recycling program has been doing well gathering material. Yet the collection has been labor-intensive. However, when it comes to getting money for change, there always is the friction between the short-term capital costs of a project vs. the long-term savings. "We’ve been looking at automation for six to eight years," he says. "We finally were able to work with the new mayor who shares our enthusiasm for automated collection." The public has supported the city’s recycling efforts. It is only in the multi-unit area that the Madison program is weak. They typically serve the eight-unit and under buildings. One reason, Dreckmann acknowledges, is the old program required students and others to get bags for recycling. Since bins were not used, the bags required people to take another step to use the system. "By and large, we have good public support. This should improve things," Dreckmann says. |
"We are keeping everything that is generated in the Midwest here in the Midwest," agrees Krughoff. "Overall, we are seeing decent demand. We’re not setting the world on fire, but when there is downtime at one mill, another mill seems to pick up the slack."
With the exception of recyclers who have easy barge access to a port like New Orleans, little material goes out of the region. An exception would be in some municipal programs like Madison’s. The city is getting good prices for its paper and plastics, but the material goes well beyond Wisconsin. "It pretty much stays in the domestic market, but mainly on the East Coast," George Dreckmann, recycling coordinator for Madison, Wis., says. He says there is no margin in moving material west.
Kripke figures roughly 80 percent of the material the brokerage purchases within the Midwestern region stays within the region. "Of the material we buy outside the region, 50 percent [is shipped to] the Midwest," he says.
Joseph says that the ferrous material his company handles tends to stay pretty close to home. The nonferrous market, while staying at a steady pace, is more likely to move out of the Midwest region.
"Pricing is getting back in line," Joseph continues. Especially in the ferrous markets, things were quite askew for a considerable amount of time. "It was off for a while," he says, adding that the better price picture bodes well for the overall business picture with regional consumers.
While few mills are in Nebraska, several processors bale and ship. "Cardboard pricing is stable," Hakenkamp says, although there might be a slight drop-off in the amount of fiber collected. "The same is true with office paper," she adds.
SUPPLY AND DEMAND. Other factors play a role, too. State and municipal programs in the Midwest are doing well. Part of the reason for the strength of municipal recycling in areas like Iowa is the solid footing of the programs. "I am not aware of a single curbside program that we have lost," Johnson says, thinking back over the past several years. Since the state’s legislation provides for penalties if diversion goals are not met, the "pay-as-you-throw" programs are doing well."Cities and towns can determine their own route to meet the numbers," Johnson says. "The numbers continue to grow. The need for education about the energy and economic benefits is still there, but I’m pretty optimistic."
One Iowa town took the conservative approach to its recycling program and signed a fairly restrictive contract. "They are not doing as well (financially) as they might have done if they played the market," Johnson says.
Throughout the region, however, material is finding a home. While most stays close by, some is hauled a fair distance despite the trucking charges.
Some of the scrap brokered by Kripke Enterprises gets moved considerable distances. "We find that, sometimes, there is not sufficient demand," Kripke says. "That forces us to move the material some distance to get the highest price for the material. That’s our job as brokers."
Krughoff says he expects things to stay fairly steady for the remainder of 2005. Over the next five years, he says he expects to see something of a decline in domestic demand and a greater pull from the export markets. But for the next six months, he sees little change in the supply-demand picture.
Hakenkamp notes a bit of irony in the solid, long-standing aluminum recycling programs. Businesses typically provide containers for workers to toss aluminum drink cans. The cans go to a good cause, like Habitat for Humanity. "But the vending machines are moving more to plastic," she says. "A lot of that part of the market is not in the loop."
Dreckmann is quite pleased with the prices plastic and other materials are fetching in Wisconsin. Although late summer saw some downturn in light of seasonal factors, he says he had little reason to complain.
"Plastic stayed extremely strong," he says. Madison is getting $540 per ton for PET and $390 for HDPE. Newsprint and corrugated were fetching prices in the $90 per ton range.
"We’re in a fairly steady time," Krughoff says.
Joseph says he is pretty positive, too, given no shocks from the news. The mini-mills and the foundries in the region have been buying regularly.
"I think it will be good in the second half," Joseph says. "The only thing that might turn that around is if we have something disastrous happen like a terrorist attack on our soil."
Marynowski sees short-term steadiness on the ferrous scrap side. "Over the next few months you will see a recovery in prices," he says. He notes this is part of normal rise and fall. "This year we dropped too much," he says. "Last year, the prices went too high. It’s all rebounds and swings."
Through August and September, he says he expects prices to firm and get stronger. But he says he has no clue six months down the road. "The world market we deal with today has too many factors to predict what will happen that far out," he says.
The author is a Recycling Today contributing editor based in Cleveland. He can be reached at curt@curtharler.com.
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