Attached is your PO for deliveries of recyclables during July 2022.
The value of recyclables is down significantly this month. While fiber prices are up slightly, both plastics and metals dropped substantially.
Recycled paper was up slightly this month. All Pacific Northwest (PNW) mills are pulling strong, creating a high demand for OCC and mixed paper. This month, one PNW mill is running test on newly installed equipment which is further increasing demand. Additionally, rising consumer prices has created less generation of inbound supply, further adding to the imbalance of supply and demand. This new capacity and reduced inbound generation predict a good near-term trend in paper pricing.
Recycled plastics saw the most volatility this month. Every plastics grade saw tremendous price drops. These drops are due to three main causes: (1) an imbalance between virgin resin prices
and recycled plastic prices and (2) reduced construction and home projects, and (3) reduced consumer spending due to inflation. First, for months, recycled plastic prices have been higher than virgin resin. As CPG companies committed to higher levels of post-consumer recycled (PCR) content, they were willing to pay these higher prices. As inflationary pressure reduced consumer demand, the CPG company’s appetite for high PCR content dropped. They are no longer willing to pay this difference in price. Secondly, reduced construction and home projects means less demand for recycled plastics. The new construction market consumes much of the recycled plastics demand with things like pipes and carpet. Finally, a general reduction in consumer spending decreases the demand for recycled plastics.
PET deserves its own conversation among the plastics discussion. You may remember that over half the demand for recycled PET (rPET) is from carpet and clothing. The remainder of the rPET goes to make new bottles (water, soda, etc.). Carpet production is at an all-time low in recent years, lower than during the COVID lockdowns. These drops in carpet and clothing demand created over a 60% drop in rPET prices compared to last month.
Metal prices again saw a large price drop this month. Markets are impacted by continued news about a global recession, primary production shutdowns in the U.S., and projections for further drops in the near future. UBC pricing was over-inflated in early 2022. With inflation and low construction levels creating less demand, we expect to see continued movements in pricing and an over correction on the downside as the market aim to reach some sort of equilibrium.
During these challenging times, we will always strive to obtain the best pricing available and to provide you the best possible service. It is our pleasure to work with you to recycle material and to protect our environment. We appreciate you and thank you for your business.