Local authorities must find cash from existing budgets to continue steel can collections as Corus reduces its CanRoute prices to £0 per tonne.
Future producer responsibility targets for steel packaging could also be hit if councils cannot adjust to cover costs.
Prices for cans had been reduced to just £10 per tonne from £95 as recently as October 20. Corus has blamed this further reduction on the global economic slowdown, which it said was responsible for the drop in demand and the value of steel. It said it would monitor the market and review prices on an ongoing basis but added it would not accept new applications for CanRoute supplier status.
Commenting on the situation Local Authority Recycling Advisory Committee chairman Lee Marshall said: I cant imagine local authorities would turn off their collections. The impact of the prices reduction for authorities is about their ability to manage budgets and whether they can absorb the shortfall from efficiencies or find it somewhere else.
He said that once collections are set up, they are not easy to turn off. But he added: Where it may make a difference, with cans and other materials, is for the companies under producer responsibility legislation. It might affect whether they hit their targets.
He said that if local authorities cant afford to continue collections producers might have to step in and financially support collections.
But Marshall added: It would be in future years that targets would feel the impact.
Asked if he thought central Government could intervene Marshall said: Where would they get the money from to step in? You have to ask, are materials recycling prices as high a priority as the banking crisis? Probably not. But it is to our industry.
Aluminium can prices also come down...
Novelis Recycling has also announced a drop in aluminium drinks can prices, which will be the third reduction in three weeks.
Baled or densified cans fell from to £550 per tonne last week to £450p/t, while loose material dropped from £500p/t last week to £400p/t.
Novelis Recycling national manager Andy Doran said: We are reducing our can price further to reflect the current, unprecedented market conditions.
View from the MRFs
Industry insiders have told MRW that "there are no prices" in the current market as they are changing so rapidly. "These are very difficult times and much worse than they were 10 days ago," he said. "We just took an order at -£10. We are paying to have it taken away and selling at a loss."
One source said that orders made late last week have been cancelled this morning. This has put pressure on the limited storage space because the flow of materials has to keep moving. But he said that local authorities are being fairly sensible and added that it was important in the current situation to work together.
Image: Local Authority Recycling Advisory Committee chairman Lee Marshall