Canton Repository

December 2008

“Recycling Market Crashes”

By Robert Wang

An immense, expanding pile of baled cardboard by the Cherry Avenue Bridge is another sign of how severely the economy is sinking. Occupying about 2,500 square feet of a lot off Savannah Avenue SE, the bales of flattened boxes reach as high as 12 feet. Brian Slesnick, vice president for recycler S. Slesnick, which owns the bales, said it’s the largest he’s ever seen the pile grow, after prices for cardboard dropped during the last five months.

In July, Slesnick said, his company was paying retailers such as Best Buy and Wal-Mart for their discarded cardboard boxes, which could fetch $100 to $110 a ton, as mills in Asia frantically bid for the recyclable material to make into new boxes. By December, the price had fallen to $25 a ton, as consumers and businesses abruptly slashed spending, resulting in paper mills temporarily shutting down.

With fewer boxes needed to ship products and the reduction of demand for other raw materials, the market for cardboard and other recyclable waste such as plastic, glass, cans and paper has ground nearly to a halt, Slesnick said. And with local recyclers’ revenue slowing to a trickle, the crash in the recyclables markets raises the possibility that eventually some residents and businesses may find it less costly to dispose of recyclable material in landfills.

Local recyclers have seen unexpected, precipitous price drops. For a high grade of discarded newspaper, the rate was about $150 a ton in September, said Slesnick President Robert Slesnick, Brian Slesnick’s father. This month, it had fallen to $30 a ton. Mixed paper has declined from $85 a ton in July to between zero and $5. A ton of scrap metal was $300 a few months ago. It’s now $50. The standard plastic water bottles, which could be converted into pellets bought by manufacturers such as Rubbermaid, garnered 47 cents a pound in July. Now a pound will sell for 15 cents, said Slesnick account executive Sandy Sayre. “It’s never been this bad,” Brian Slesnick said. “It just tanked, absolutely tanked.”

Earnings Evaporate
While many residents are motivated to recycle by a desire for a greener Earth and less dependence on landfills and incinerators, others have recycled for a different type of green – profits. In recent years, the voracious demand for raw materials by overseas companies, many in China who made cheap products and shipped them to the U.S., raised prices for paper, plastics and other recyclables.

Prices rose so high that David Held, executive director of the Stark-Tuscarawas-Wayne Joint Solid Waste Management District, thought the district’s recycling program would one day pay for itself. That hope is now dashed, as the economic crisis caused rates for commodities including gas, to plummet taking incentive to recycle. “All of the things we recycle have dropped through the floor,” said Keith Kimble, president of Dover-based Kimble Transfer and Recycling and J&J Refuse, which has a recycling plant in southwestern Canton.

It’s having a big impact. We’re trying to weather the storm.” Kimble was selling plastic from detergent containers and other bottles for about 35 cents a pound six months ago. It’s now about 2 to 3 cents a pound. While he said the company will avoid layoffs, it will tap existing credit lines to help continue operations.

Waiting For Higher Prices
With buyers scarce, Kimble and Slesnick are stockpiling recyclables in hopes prices will rebound. Besides the large pile of cardboard, Slesnick has put 200 tons of discarded newspaper in one warehouse. Slesnick still is picking up unwanted cardboard for free from recycling programs and businesses, but it has stopped paying for it. However, the company is taking a loss because it costs $35 to $45 a ton in equipment and labor to transport material and bale it.

Residential recycling programs throughout the county will operate normally – at least for now, as communities signed contracts with recyclers months ago, locking in rates for a year to three years. This year, Slesnick, through its subsidiary Alliance Recycling, paid $56 a ton for paper from the Stark County recycling program, operated by the waste district.

In October, Slesnick submitted a bid to pay $40 a ton in 2009, in contrast with some competitors who bid much less. Now, Slesnick is taking a big loss on it. “We had already put in our bid for 2009 before the market totally collapsed, but we honor our commitments,” Robert Slesnick said. “It will bounce back. It’s just a question of whether it takes six weeks, six months or six years.” Kimble says his company will honor its contract to accept recyclables from Canton’s new recycling program. Meanwhile, Republic Services is committed to a two-year contract to pick up recyclables from homes in North Canton, said Held, the waste district executive director who also is that city’s mayor.

Held said the district is working under a state-mandated recycling plan from the Ohio Environmental Protection Agency. It can’t deviate from it, even though recycling programs are expected to bring in less revenue. The district has its own drivers and trucks who pick up recyclables from drop-off locations throughout Stark County. “Keeping this material out of the landfill is still our No. 1 priority,” Held said. “Just because the economy is struggling doesn’t mean we have to stop protecting our environment.”

The district’s recycling coordinator, Linda Morckel, expects the Stark recycling program to get about $200,000 from the sale of recyclable materials such as paper and metal in 2009, a drop from an estimated $275,000 this year. But she expects collections of materials to rise by 12 percent in terms of tonnage. The program’s 2008 expenses totaled about $500,000. While the district enjoys a fixed rate at which it sells paper to Alliance Recycling, the rate for steel and aluminum cans varies. In November, the district got $40 a ton for steel, in contrast to about $70 a ton from January to September, Morckel said.

Aluminum fell from $920 a ton in September to $500 a ton in November. While the district in 2008 paid Kimble about $31 a ton to accept its plastic and glass, Kimble agreed for 2009 to take all material for free, if the district transferred its metal cans contract from Alliance Recycling to Kimble’s J&J Refuse subsidiary in southwestern Canton, said Morckel.

With less income from recyclables, the district will have to rely more on a conventional revenue stream of tipping fees of $1 to $2 a ton, which are levied on all waste disposed at local landfills. However, the economy is doing what anti-landfill activists failed for years to do – reduce the amount of trash generated. The district, which took in about $5 million in 2007 in tipping fees, received $476,000 less during the first 10 months of 2007, Morckel said.

For now, the cost of disposal at landfills, about $25 a ton, is still more than the cost of handing the waste off to a recycler. But Brian Slesnick said if the situation doesn’t change, his company will be forced to charge businesses to take away unwanted boxes, plastics and paper. Then “some people might say, ‘The heck with it, I’ll stick it in the landfill,’ “ he said. “Then you’ll see how green people will (be).”