Market plummets for recyclable materials12/11/08

Global markets could affect households

Dec. 11, 2008

By Tim Simard

Observer staff

Back in early October, Brian Wright, a project engineer with the Chittenden Solid Waste District, would not have believed the market for recyclable materials was just about to fall out underneath him. But as banks and investment companies collapsed, every facet of the world economy was shaken — including the market for the paper and plastic recycled by Chittenden County residents every day.

 


    Observer photo by Tim Simard
An All Cycle Waste Inc. truck empties a dumpster of recyclables into its garbage bay on Tuesday in Williston. The recyclables were bound for the Chittenden Solid Waste District’s Materials Recovery Facility in Williston. Prices for recyclable materials have dropped dramatically in recent weeks, causing the waste district to start charging hauling fees to companies such as All Cycle.

This ripple effect is due to hit recycling haulers all over the country as well as in Williston. Whether the price changes lead to increased costs for residents remains uncertain.

What was once a profitable component for CSWD — the district would pay haulers a small amount for recyclable materials and then sell those materials to manufacturers — changed literally overnight. For instance, at the beginning of October, CSWD was selling paper and cardboard for $128 a ton. Within days of the market troubles, the price dropped nearly 67 percent to $42.

“I was completely shocked,” Wright said.

Plastics also saw a large decline, Wright said. Depending on the kind of plastic, prices ranged from $400 to $800 a ton in early October. That’s now dropped to $100 to $200 a ton.

“It all happened in a matter of days,” Wright said.

Since three-quarters of CSWD’s recyclables are paper-based, the drop hit the district hard. The price declined again in November, but only by a few dollars. Wright found the minor drop encouraging, as some experts projected recyclables would be worth nothing by now.

“There was a lot of fear it would drop more because it’s all tied to the global market,” he said.

Wright said the main reason prices fell dramatically was because China, the world’s largest purchaser of recyclable materials, stopped buying. The country’s decision came as major world banks either collapsed or received bailouts, leading many economists to project that a worldwide recession would stop people from buying excess goods, much of which are made in China.

“When the Chinese stopped buying, it affected everybody,” Wright said. “It’s like shutting off the water tap.”

Even though CSWD sells most of its recyclables within North America — paper products are sold to mills in Canada, for instance — the world market still dictated Vermont would be hit.

As a result of the price drops, the district had to raise tipping fees for haulers bringing in materials. Currently, CSWD pays haulers to bring materials to its Material Recovery Facility in Williston, known as the “Murf.” Haulers from within Chittenden County receive $7 a ton and outside haulers get $2 a ton.

But starting Jan. 1, Chittenden County haulers will have to pay CSWD $20 per ton to drop materials off at the Murf. Haulers from outside Chittenden County should expect to pay $25 per ton. Wright said nearly 50 percent of materials are currently coming to the Murf from outside the county.

Wright said the price increase is to keep some sort of stability in prices for both CSWD and recycling haulers. He said the district would revisit its prices in four to five months.

“We just want to cushion the volatility,” Wright said.

He said the increases would only affect households by an average of 61 cents a month. He said it would be up to haulers to decide to raise prices for their customers.

Reactions from haulers

Jeff Myers, owner of Myers Containers, which hauls recyclables from Williston regularly, said he didn’t have any immediate plans to raise prices for customers. He said the price increase could be cancelled out with the recent drop in fuel costs.

“The market got pushed and I’m surprised it got switched around to us that fast,” Myers said.

He said he’d like the see the charges go down, but would still frequent the Murf since it remains cheaper and more environmentally sound than dropping off materials at a landfill.

At Fortin Trucking, which hauls materials from St. George and Williston once or twice a week to the Murf, owner Larry Fortin said costs are back to the way they used to be. The small payments he received from CSWD were too small to make a huge difference in his business to begin with, he said.

“They might as well have kept the check,” Fortin said.

Fortin said he expects material prices to remain low for the foreseeable future, which might affect residents. But it won’t stop people from recycling, he said.

“I think people are tuned to recycling — people seem to like it,” Fortin said.

Wright said there’s hope the recyclables market has hit bottom and will slowly make a recovery in the coming months and years. But it’s too soon to tell if prices will return to what they once were only months earlier.

“It’s very speculative right now,” Wright said.