Why is some plastic recycling no longer cost-effective?
Blame fracking, raw materials, among other world events
DALLAS — The past couple of years relatively cheap crude oil and natural gas has up-ended the industry with the greenest image — recycling.
It’s still an advantage for many businesses and municipalities to recycle rather than have the junk hauled to a landfill. But only a few years ago there was plenty of cash in reselling that trash — paper, plastics and metal — to provide a profit for the recycling companies and give money back to the cities and companies producing the waste.
No longer. And if that doesn’t turn around, it may mean some people will pay relatively more for trash pickup than if the market for recycling were better.
The problem is not only about the cheap oil and gas made possible by fracking in America’s shale fields, and particularly in Texas. It’s also linked to a slump in the world demand for raw materials.
A used plastic water bottle than once might have been turned into a few threads of polyester in a pair of Chinese-made jeans, woven into a carpet or become part of another bottle is now struggling harder to find a new home.
Nationwide, around 200 of more than 7,000 scrap recycling companies have gone belly-up over the past couple years, said Joe Pickard, chief economist for the Institute of Scrap Recycling Industries. Many others have throttled back operations, he said.
“Our customers are telling us it is cheaper to buy virgin material than recycled content,” said Brent Bell, vice president of recycling for Waste Management in Houston.
Across the board, as recycling companies work through new contracts, these new economic realities are getting baked in. So cities and companies that once expected a significant return on their waste stream are getting less — or even facing the possibility of paying fees.
Texas Recycling, based near Dallas, was one company that got the message early about being more efficient. The family-owned company only takes in post-commercial already separated materials: Truckloads of plastic arrive relatively uncontaminated with paper, and loads of plastic have little metal to pull out. A huge pile of cans needs only to be loaded into the monstrous baling machine to be ready for resale.
But the downturn in prices has meant the company had needed to be more selective with the kinds of materials it takes in. Some grades of plastic the company once accepted are now virtually unmarketable, said Kathy DeLano, who handles the plastics end of the business.
Last year, the company moved from several buildings to what was once a Ford plant. That made processing cheaper, company President Joel Litman said. And that helps with the bottom line in an otherwise tough market.
As with people in the oil and gas business, leaders of this industry talk hopefully about an eventual return to higher prices. But, said Waste Management’s Bell, “We don’t think we will see the return levels we saw in 2011. We think the world looks differently now and will look differently in the future. We are preparing our customers for that future.”