Local authorities which collect commingled material, especially paper, from the kerbside will face difficulties if the UK goes into recession, according to industry experts.
Paper and waste management firm AbitibiBowater managing director Ron Humphreys said that the paper industry is in a hiatus period. He warned that there is more supply than there is demand and that there is no confidence in the market.
Humphreys concerns reflect a significant drop in paper prices this week. As MRW went to press, ex-work cardboard prices had dropped by half from between £70-74 per tonne at the beginning of the month to £25-35 per tonne.
He said in the worst case scenario, material recovery facilities (MRFs) that sort paper from commingled collections will have a backlog of material because of the lack of demand from China and India. This may cause blockages in the system.
In the light of this price drop, Humpreys said: Essentially those local authorities who have opted for commingled collections may be in for a rough ride. Those collecting materials, particularly paper in the UK, need to be assessing their situation carefully. Especially in the light of the current collapse of the export market which will put pressure on them on where the material will end up.
Humphreys said that councils who have set up systems of single segregation will find it easier to sell their materials and paper mills will cherry pick for the best quality.
He said unlike the glass industry, the paper industry is more reliant on outside markets rather than UK markets.
Local Authority Recycling Advisory Committee chair Lee Marshall added: Any loss on material price can have a huge impact on local authority income. It is worrying.
He explained that the current financial crisis may affect local authorities negotiating private finance initiative contracts because if they get delayed it could have serious impacts for authorities trying to meet their landfill allowance targets.
Marshall said that ultimately the financial situation may hit local authorities and this may lead to changes in waste services.