Scrap, recycling market takes hit as demand shrinks

By DAVID LESTER, YAKIMA HERALD-REPUBLIC

YAKIMA -- Earlier this summer, Rich Kallenberger could count on making $200 a month by recycling items that came to the Habitat for Humanity thrift outlet he manages.

Copper tubing and brass fixtures were big-ticket items among the aluminum window frames, cardboard and other items that came into the store.

The outlet also provides a place for the public to pick up building supplies that would otherwise go to the landfill.

That rosy picture and the market now have changed.

The bottom has dropped out of the recycling market. Although it is always cyclical, the decline in prices for recycled goods since summer has been dramatic. It is a sudden turn that those in the industry say they have never witnessed before.

Everything is down: paper, plastic, cardboard, aluminum cans and other metals.

In some cases, buyers aren't even taking items like plastic strapping because no market exists.

Recycling earnings are half of what they were, and Kallenberger, who has managed the store for eight years, is playing the waiting game by stockpiling some items until the market improves.

He used to get $1.80 per pound for copper. The market now is about 70 cents.

"We were enjoying high prices for brass and copper. Overnight, that collapsed," Kallenberger said.

The decline is related to the worldwide economic crisis. Overseas markets in China and elsewhere have slowed down because the financial squeeze has limited demand for their finished goods and tight credit has made it difficult for them to maintain financing.

R.S. Davis Recycling of Clackamas, Ore., is feeling it too.

In the scrap metal business since the 1960s, the firm has a contract to buy appliances disposed of at the Yakima County landfill system.

Mick Doane, president of the firm, said Davis is now stockpiling appliances at the landfill in Terrace Heights until April 1. Picking up the materials would be a loser from the start, Doane said.

Scrap metal prices have dropped since Labor Day to about $100 per ton. The Davis contract with Yakima County, which expires in a year, calls for Davis to pay the county $130 per ton for scrap metal.

"It was unprecedented. Basically, no one wanted it," said Doane, whose current work force of 30 is down 30 percent as a result of the slowdown. "We had scrap already heading for Asia and the buyers went out of business or said they couldn't pay what they had promised. What do you do? You can't turn the ship around."

He said Turkey also is a big consumer of scrap metal, as are companies in the United States.

"When demand is down, the steel mills are running about 50 percent of capacity. No one wants to buy cars or washing machines or spend money building," he said.

Wendy Mifflin, the county's solid waste manager, can attest to the impact of an economic slowdown. Since late 2006, Mifflin said the landfill has noticed a drop-off in the amount of garbage delivered there.

Total tonnage is projected to be down about 5 percent this year, to 234,000 tons.

"People aren't buying anything. They have less to throw away," Mifflin said.

She has not, however, seen a decline in the amount being recycled.

No mandatory recycling exists in Yakima County, only a voluntary program available in the city of Yakima through Yakima Waste Systems, suggesting that those who do recycle remain committed and aren't affected by what happens to markets.

In addition to metals, prices for recycled paper and paper products also have taken a hit. Cardboard has fallen from $68 per ton in May to $15 per ton late last month, a 78 percent drop.

Mixed paper, which often becomes packaging material, is off 90 percent because the demand for packaging is down.

Michelsen Packaging of Yakima, one of the largest recyclers in the region, is a little bit different than other recycling companies because the firm processes newsprint into packaging supplies for apple boxes.

Vic Valdez, warehouse and recycling manager for the firm, said Michelsen's recycling division, Central Washington Recycling, also is storing some recycled items due to the low prices.

He said buyers are still taking most items like opaque milk bottles, pop bottles, aluminum and cardboard, but prices are low.

Valdez said commodity prices had become inflated because demand for recycled items rose with product in short supply.

"The exports create the shortages. Then the demand rises, the price goes up and things move faster," he said. "It's a pretty simple formula of supply and demand."

Doane of R.S. Davis said his firm has been around a long time and plans to survive the price swoon.

"We are planning on riding it out. We have been in business since the mid-1960s. We are planning to be here when this is over," he said.

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Monday, Dec. 22, 2008

Scrap, recycling market takes hit as demand shrinks

By DAVID LESTER, YAKIMA HERALD-REPUBLIC