Recycled waste markets collapse

Recycled waste markets collapse

SYDNEY (Reuter): The Western world's penchant for recycling has produced such huge mountains of unsold waste that markets in used paper, plastic and bottles have collapsed.

Prices have fallen so far in the past year that in its latest deal with Indonesia, Australia's A$100 million-per-year recycling industry may actually be paying Indonesia to accept its refuse.

The international price for recycled plastic bottles, or PET, has dropped to about US$200 a ton from $700 late last year and the price of used paper has fallen to between $70 and $80 a ton from a peak of $200 in 1995.

Rob Campbell, general manager of Sydney's Local Government Recycling Co-operative, which has just signed a deal with Indonesia for the export of 6,000 tons of paper, said the export price is now so marginal his group will stop exporting.

Australia normally exports about 130,000 tons of used paper a year worth a total US$13 million at a price of $75 a ton.

But in the most recent deal, Australia was being required to provide financial sweeteners that will ultimately result in Australia paying Indonesia about $5 a ton to take the paper away, said Tony Nott, general manager for export and trading at Australian Paper, a pulp and paper producer owned by the big Amcor Ltd group.

"People want to recycle so they keep putting more out. (But) there is (only) a certain amount of capacity," he said.

Australian capacity might increase by one to two percent a year while the amount of recycled waste was growing by 10 percent a year, Nott said.

Asia's six-million-ton-a-year waste paper market, worth A$500 million a year at current prices, has been depressed for about a year, mainly due to a flood of waste paper from Europe.

Waste paper importing nations, including Korea, Indonesia, Taiwan, China, Thailand and the Philippines, traditionally have taken most of their supply from the United States.

But legislation in European countries requiring recycled waste recovery had not addressed where to put the salvaged materials, Nott said.

The United States was slightly less awash with recycled waste than Australia and Europe because it had cut back on collections, bringing its recycled waste market more into balance, he said.

With total world usage of waste paper at about 90 million tons a year, "in any market it does not take very much for it to get out of balance," Nott said.

The recycled PET problem has been worsened by a 1995 cotton crop failure in Asia which boosted demand for plastics for use in fiber. This led to an increase in waste PET production to meet that demand, Campbell said, but when demand eventually slackened a supply glut was left over. "This commodity is going up and down like a yo-yo" as government policy drives up production, he said.

Some in the recycled waste industry believe markets might pick up later this year. Others believe an upturn could be a year away. "(But) there's nothing in the short-term to say it's going to get better in the next three months," Nott said.

Australia alone is generating one million tons of recycled waste per year. "There are stockpiles of PET all around Sydney. Where is all that to go?" said Campbell.