Attached is your PO for deliveries of recyclables during May 2020.
The overall market for recyclables in May improved significantly compared to last month. This improvement results primarily from higher paper pricing and a considerable increase in OCC demand.
COVID-19 continues to disrupt the recyclable market, and most other economic markets. It is the driving force behind the increase in May pricing. There are two COVID-19 factors to consider related to the recyclable market. First, panic buying from consumers created a huge demand for paper products. As consumers rushed to buy toilet paper, paper towels, and other fiber products, paper mills struggled to keep up. The resulting rebound effect is that paper mills ramped up production to fill the empty shelves created by this instant surge in demand.
Secondly, while demand increased, there was a simultaneous drop in supply from the shutdown in retail and commercial industries as stay-at-home orders went into effect across the U.S and throughout the World. The paper mills lost a large supply of recyclables from shutdown construction sites and retail stores. So, they turned to MRFs to make up this supply shortage, which has increased pricing for now.
As we look to the future, the COVID-19 effect is undoubtedly temporary. As states gradually relax the stay-at-home orders, many businesses are likely to experience a sluggish recovery to pre-COVID-19 levels. Numerous companies may not survive the economic slow down. We will most likely be in a recessionary economic environment with unemployment improving slowly as businesses recover.
After the “catch-up” demand is satisfied, the sluggish recovery is likely to yield lower packaging demand. Simultaneously, as retail and other industries open and begin generating more recyclables, the total supply should increase. As a result, it seems likely that pricing will decline later this year.
In the midst of these challenging times, we will be constantly watching these developments and will always strive to obtain the best pricing available.
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.
President, Pioneer Recycling Services