Dramatic price drops for recyclate that started last October have captured the national medias attention and led to claims of mountains of recyclables, unable to be sold, being stockpiled around the country
In this special MRW web feature, Waste & Resources Action Programme director of market development Marcus Gover speaks to MRWs Andrea Height about the current situation
How does WRAP see the current situation?
Our view on the situation at the moment is that [the market] is still quite fragile but is stabilising. The situation is really about commodities rather than recyclates. Recyclates are really just commodities and the global economy has driven a fall in demand in prices for raw materials generally. So this [situation] is not really about recycling, although recyclers and reprocessors have to deal with it.
What is the key concern?
One of the key questions is whether material is getting through to end markets and there has been a lot of talk about storage in the wider press. That is really the question that we are trying to get at.
In terms of storage, we carried out a survey before Christmas of local authorities and only 5% of the local authorities said they were storing extra materials. Local authorities didnt seem to have an issue with storage, similarly the Environment Agency have to give a permit to anyone who wants to store extra amounts of waste and there has been no significant increase in the number of requests for those facilities over previous years.
So were not really seeing any evidence of storage and the ESA and a number of waste management companies have put out press statements saying they are not storing materials and they are still selling materials.
We think materials are still getting through but thats not to overlook the situation it is big drops in prices so it is difficult times.
How do you think the industry is coping?
The industry seems to be coping very well with it and really I think we need to congratulate householders, local authorities and the reprocessing industry on managing to keep recycling going in these difficult times.
What about the export market? Is this coming back?
Our message here is that prices in the market have been holding for higher quality materials. Newsprint, for example, has been holding at about £40/tonne which is still a good price to get for it. Its much less than it was but it is still a getting a price. Lower quality mixed papers were about £5/tonne in December - so you can see the price differential there for quality.
Will there always be a spectrum of quality or will this episode help eradicate lower quality materials?
There will always be a spectrum but those that can produce the higher quality materials are going to be more resilient to changes in the economy - they are going to have the most valuable materials. Mixed papers, for example, have to be further sorted or go into a lower value product. If you can get out the highest quality newsprint you will do better. High grade paper is over £100/tonne so it really is all about quality.
Should the UK be building more reprocessing capacity to reduce reliance on export markets?
We have been trying to invest in UK capacity. For example WRAP put money into the Shotton Mill and we are trying to provide support to SMEs, which is very important. Its not just about financial support but practical business support, helping companies through periods of change. But commodities are global issues and paper mills, for example, are large investments, often owned by multinational companies who will make multinational decisions.
What would your final summary of the situation be?
The markets are stabilising and materials are getting through to markets. Householders, local authorities and reprocessors should keep up the good work.