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Prices plummet for recycled materials

| Tuesday, Nov. 25, 2008

Even the scrap business is down and out these days.

Fallout from the credit crisis is affecting scrap yards and recycling centers, where prices for copper, steel, aluminum, newspapers and cardboard have dropped dramatically. Recycled goods fetch, on average, about 75 percent less than they did in August -- if buyers can be found.

"It's just further testimony of how interconnected everything is in the world economy," said John Frederick, director of Professional Recyclers of Pennsylvania, a trade organization based in Blair County with 625 members.

Particularly hard hit are large businesses that ship plastics and cardboard to Asia, where the materials are reconfigured into packaging materials for which demand falls when consumer sales slump.

Some recyclers are hoarding much of what they collect, industry officials say.

"There's a limit as to how much can be hoarded," Frederick said. "If your 401(k) loses value, you can just wait for it to go up again. But there's only so much cardboard and scrap metal anyone can hold onto."

Tom Adamek, general manger of Green Star North America on Neville Island, the region's largest recycling company and one that has a contract with the city of Pittsburgh, said his company is storing some of what it collects.

Prices fell at the end of October, Adamek said. "This is the biggest slowdown since back after 9/11."

Recycled newspaper sells for $60 per ton, compared with $175 per ton in the summer. The value of tin dropped from $510 per ton to $50 per ton. And cardboard, which sold for about $80 per ton, is worth almost nothing.

Although scrap and recycling companies are accustomed to sharp and frequent price fluctuations, the recent drop is the most dramatic in years. Company officials worry there's no turnaround ahead.

"I have seen ups and downs. This is the worst I have ever seen. Prices have come down so fast," said Marcus Power, assistant manager at AAA Scrap Iron and Metal in the Strip District, in business since 1927. The company sells most of the metal it buys to steel mills.

Bill Pack, sales manager at Pittsburgh Recycling Service in Hazelwood, another large recycler whose clients include Alcoa and Washington Hospital, said it's difficult to offset costs.

"Right now, we are just counting on this not going on forever," he said.

A prolonged price slump could affect municipalities that rely on revenue from recycled goods, said Dave Mazza, Western Pennsylvania director for the Pennsylvania Resources Council, an environmental advocacy group founded in 1939.

"A municipality could be in trouble if they are counting on this money. They may either get much less back or see their collection rates go up," he said.

The city of Pittsburgh receives about $500,000 for recycled goods each year, an amount unlikely to change until its contract ends in 2010, said Sean Wigle, the city's recycling coordinator.

"We are trying to make the city's recycling pay for itself," he said.

Recycling is mandated by state law in communities with more than 5,000 residents. Some communities, such as Cranberry, opt to get nothing in exchange for the value of recyclables.

"If you are going to share the profit, you share the risk and then may face higher rates," said Lorin Meeder, Cranberry's environmental programs coordinator.

Some in the recycling business say the price bust is the result of overreaction and panic.

"It will rebound. China is shut down right now; there are boats sitting in the water there. But the prices of all of these things, paper, aluminum and glass, always fluctuates," said Bob Shea, area manager for AbitibiBowater, which operates 1,407 PaperRetriever bins in Southwestern Pennsylvania.

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