PPRC 2019: WM shares ways it’s cleaning up quality
PPRC 2019: WM shares ways it’s cleaning up quality
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Postconsumer recycling of recovered fiber has been challenging in 2019: recovered fiber prices have dipped to near all-time lows, processing costs are rising and demand for quality recovered fiber has also escalated. A lot of factors are working against the recyclers.
Dynamics are changing as well—recyclers shipped the majority of their recovered fiber grades to China in 2017 yet that number is dwindling to near zero in 2019. Thus, there is an oversupply of recovered fiber in the U.S. All these factors have caused prices to drop for recovered fiber in the past two years.
“In 2017, we shipped 27 percent of our fiber materials to China,” said Brent Bell, president of Waste Management Recycle America at Houston-based Waste Management, during the PSI Session: Why Quality Counts presentation at the 2019 Paper & Plastics Recycling Conference Oct. 24 in Chicago. “That number today is less than 3 percent. We had to really scramble to find alternative markets, primarily Southeast Asia and India. Finding these homes wasn’t easy; it also created an oversupply situation where prices started falling—and they have fallen nearly every month since [China announced the National Sword Policy].
“If you look today, the average price of cardboard across the indexes is roughly $25 a ton, which is really scary when you think about it because for so long the residential side was impacted by lower prices, but when you are working with retailers who for years depended on this cardboard stream coming in, well now the cost to collect the material including cardboard exceeds the value of that material today,” Bell continued.
He added that it’s unlikely China will return as a buyer to help alleviate these conditions. Chinese paper mills are making investments in paper mills in Vietnam and other parts of the world rather than in that nation.
During the presentation on quality, Bell reported that conditions are starkly different when comparing 2017 with 2019. In 2017, the average value of blended postconsumer commodities collected at single-stream material recovery facilities (MRFs) was about $120 to $130 per ton in the U.S. In 2019, that average price is about $40 per ton in the U.S. “This is some of the lowest prices that we have seen in a long time, and it’s really devastating to the programs when you look at the rough economics of it,” he said, adding that there has been about an $82 decline in the value of material in the last two years.
When contrasting processing costs from 2017 to 2019, costs have escalated slightly. Bell reported that in 2017, a lot of plants were processing materials for about $80 per ton at most. Now, he said that cost is closer to $90 per ton, likely due to increased contamination and increased demand for quality at the same time by end users.
And when considering profit-loss in 2017 versus 2019, Bell said in 2017 most single-stream MRFs had about $40 left over to share with municipalities. Today, he said that number is -$52—and a lot of that cost has to be charged to municipalities.
Although some end markets are coming online in the near-term future—several paper mills have made announcements that they will consume old corrugated containers (OCC) and mixed paper in the U.S.—Bell said a lot of that capacity won’t be needed until late 2020 or 2021. So, in the meantime, he said it’s key that recyclers address quality. And to make improvements in quality, he said communication and collaboration with municipalities and customers is critical. The following are some ways he said recyclers are making changes to help with quality:
• Changing contracts: Recycling has its processing costs, and it’s important for recyclers to make the investments needed in technology, labor and rent. A lot of that can be done in changing contracts, Bell said. “We have to first make sure we cover that $80 to $90 processing cost, and that we share that message with our customers and that’s a service model we have to have.”
• Educate about contamination: Contaminated materials are very costly to MRFs, Bell said. A lot more contamination occurs as a result of wishcycling. Bell said most people clearly want to recycle—as they are putting a lot of odd things in collection bins—so recyclers should communicate with these individuals on what is expected for their particular recycling programs. “Make sure folks understand there is a cost to recycling, but that it is also a valuable service that we need to continue to offer them,” he said. He mentioned that Waste Management’s Recycle Often, Recycle Right program has helped with community education. He added that, “There is no silver bullet, but keep pushing education to make sure people know the right items to put in the bins. We have to continually remind folks what goes in the bins.”
• Invest in infrastructure: Bell added that Waste Management is investing in new technology as well to clean up its quality. He said the company plans to add four more robots at some of its facilities this year, so the company will be operating a total of eight robots by the end of 2019. He added that the company also has four new facilities under construction this year, including the MRF of the Future facility in Chicago.
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Source: Recycling Today
PPRC 2019: WM shares ways it’s cleaning up quality
<![CDATA[Postconsumer recycling of recovered fiber has been challenging in 2019: recovered fiber prices have dipped to near all-time lows, processing costs are rising and demand for quality recovered fiber has also escalated. A lot of factors are working against the recyclers. Dynamics are changing as well—recyclers shipped the majority of their recovered fiber grades to China in 2017 yet that number is dwindling to near zero in 2019. Thus, there is an oversupply of recovered fiber in the U.S. All these factors have caused prices to drop for recovered fiber in the past two years. “In 2017, we shipped 27 percent of our fiber materials to China,” said Brent Bell, president of Waste Management Recycle America at Houston-based Waste Management, during the PSI Session: Why Quality Counts presentation at the 2019 Paper & Plastics Recycling Conference Oct. 24 in Chicago. “That number today is less than 3 percent. We had to really scramble to find alternative markets, primarily Southeast Asia and India. Finding these homes wasn’t easy; it also created an oversupply situation where prices started falling—and they have fallen nearly every month since [China announced the National Sword Policy]. “If you look today, the average price of cardboard across the indexes is…