The sessions at last week’s ISRI2018 Convention & Exposition in Las Vegas covered the latest on China, fiber recovery, contamination and more, with speakers providing a number of perspectives on recycling’s future.
Below is a rundown of some of the most compelling talking points from the gathering at the Mandalay Bay Resort and Casino.
‘Past trends don’t matter’ on China
Conference attendees packed the session on Chinese recycling market trends.
Chad Hansen, the national sales manager at Sealink, has intimate experience with offshore markets, as the firm moves 5,000 to 6,000 containers monthly of scrap metal, paper and plastics. He offered a discouraging view, saying this is an “extremely difficult period because past trends don’t matter at this time. I cannot predict the future.”
Hansen contends plastics scrap is being hit the hardest. “The difficulty in plastics is to get a booking from a shipping line” he noted, “and I don’t see anything getting better in terms of shipping plastics. I don’t know what will happen, but my seatbelt is on.”
In terms of moving material to non-Chinese markets, Hansen sees problems in finding space on vessels serving these new markets, as they are typically served by smaller ships.
Shen Dong, the director of international marketing at Omnisource, offered the attendees a long view on the current situation. “China will not disappear” as a recycling market, he noted, “but they are going through a transformation stage. This is a structural change.” Shen says one major change is already underway: Chinese processors are moving to other nearby countries. “If they want to stay in business, they may want to move.”
A modestly optimistic view was offered by Vinod Singh, outreach manager at Far West Recycling, an operator of MRFs in Oregon. Far West is looking at capital expenditures, undertaking changing how the firm sorts recyclables, and is working with local governments in terms of the added costs due to export restrictions. “We’re going forward and will survive,” he concluded.
“China will not disappear [as a recycling market], but they are going through a transformation stage. This is a structural change.”
– Shen Dong, Omnisource
A major issue raised in the session was the abandonment of full containers in China. Some U.S. recycling firms are refusing to take back containers which were rejected by Chinese officials.
“This is harming everyone,” said Steve Gilbert, general manager of Queen Steel Metal.
Hansen of Sealink pointed out some countries, such as Vietnam, are now requiring shippers to pay a deposit of as much as $3,000 per container to assure abandoned containers will be shipped back to their source if the load is rejected.
Fears in fiber market
The issue of container rejections in China is affecting the global fiber export market says Ketan Mamtora, vice president at BMO Capital Markets, who spoke during the convention’s paper session.
The paper industry analyst noted 15 percent of import license volumes are not met because North American suppliers “have a fear of rejection.” Even though they might be able to secure a purchase order, these North American recovered paper shippers are unwilling to take the order in fear of having to pay to ship the load back.
Greg Rudder, the lead editor for RISI, provided his view of the impact of China’s trade effort and also described the changes in the RISI price indices that have occurred because of the Chinese actions. RISI is a leading price reporting an analytics firm in pulp and paperboard, with the posting of 2,200 monthly prices.
Rudder noted that six other Asian countries have picked up only about 58 percent of the volume previously sent to China so far this year. As a result, the value of export OCC has been halved since last summer, with mixed paper seeing a price decline of 90 percent.
Rudder was slightly optimistic because new recycling capacity is coming on-line globally. He suggested the new Pratt paperboard mill in Ohio will add about 250,000 tons per year of mixed paper consumption when it opens in the summer of 2019. In addition, a joint venture involving Grupo Gondi and WestRock will open a 400,000 ton per year paperboard mill in Mexico. And an Appleton Coated mill in Wisconsin is being converted over to producing paperboard.
Growth is also occurring outside of North America. Paperboard producers in areas of Asia other than China will add 2.2 million tons per year of containerboard capacity by 2022, and India will boost output by about 400,000 tons per year of new capacity in the next three years.
RISI has made eight changes it its export pricing index due to China. This has taken some time, as “we need to be careful” in making alterations, noted Rudder.
Insight from transport experts
Recycling executives are deeply concerned about their current ability to get processed material to buyers. A session at the ISRI convention focused on this critical issue.
Mike Peters is a senior vice-president at Genesee and Wyoming Railroad, a publicly traded firm that owns 122 railroads in 41 states, Canada and elsewhere, moving 1.6 million carloads annually, with 6 percent of them carrying recyclables. GWR is only one of many shortline railroads (there are more than 500 shortlines in the U.S.).
Peters said the industry is working to serve recycling processors better. “Doing business with a railroad is hard.” he admitted, but the industry is trying to be more responsive to current and potential customers, given current issues in the trucking industry.
Bill Sullivan, an executive vice president at American Trucking Association, focused on similar concerns in over-the-road transportation. More drivers are needed. “The average age of drivers is 50 to 51 years old, and we have a shortage of 50,000 drivers,” he noted. And this comes when the median salary is $55,000 annually.
“China appears to be on the path to eliminate imports of all post-consumer recyclables by 2021.”
– Susan Robinson, Waste Management
The lack of drivers affects thousands of firms. Jack Van Steenberg, chief safety officer, Federal Motor Carrier Safety Administration, pointed out there are more than 500,000 motor carriers (trucks and buses) in the U.S. Sullivan described a new initiative to attract existing military members because of their work skills, training and personal attributes. He also described efforts in Washington to change rules regarding young drivers whereby those who pass a rigid training course would be eligible to be a truck driver.
Sullivan pointed out another problem. A number of trucking firms are rejecting loads due to slow turnaround at shipping sites. Recycling firms that take three or four hours to load a trailer will find it hard to secure future bookings. Peters noted that railroads are doing the same for firms that do not load a railcar within 24 or 48 hours.
‘A new world’ when it comes to contamination
Susan Robinson, the federal public affairs director at Waste Management, outlined the impact Chinese import restrictions are having on the nation’s largest materials recovery facility (MRF) operator.
Because of the Chinese situation, “supply is high and commodity pricing low … [so] MRFs have had a bad year.” And she sees the situation as worsening. “China appears to be on the path to eliminate imports of all post-consumer recyclables by 2021,” she concluded.
“The average age of drivers is 50 to 51 years old, and we have a shortage of 50,000 drivers.”
– Bill Sullivan, American Trucking Association
When asked what communities can do to lower contamination, Robinson said some cities can do better in enforcement of existing standards. And she says some communities in the Pacific Northwest, Minnesota and elsewhere have used continuous resident education to get contamination below 10 percent.
Bob Cappadona, the recycling vice president at Casella Waste Systems, manages about 800,000 tons per year of recyclables. He is seeing some industry changes in response to the new export market. “Folks are slowing sorting lines down and adding labor to extract the prohibitives,” he noted, “because the cost of having a rejected container returned from China is $10,000.”
Therefore, he is firm: “We have to clean up the stream; it’s a new world.” As a result, Cappadona feels the MRF industry needs make more investments.
Initiatives are underway to reduce the contamination brought into the MRF. Dylan DeThomas, vice president of industry collaboration at The Recycling Partnership, described the industry-funded group’s anti-contamination campaign.
A number of pilot projects have been completed of late by the group, with some seeing a reduction in in-bound contamination by as much as 50 percent.
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