China & the Evolving Economics of Recycling

Recycling — it’s economically important, environmentally essential, and continuously changing. When you choose to recycle, you are participating in an industry that provides raw materials to manufacturers in the most environmentally sensitive way possible. It is an industry that connects the economies of people around the globe. Invisible to many, the scrap recycling industry is a critical link in providing for the material needs of everyone.

In addition to the post-consumer materials that you recycle, the scrap recycling industry obtains from manufacturers waste material that never left the factory as a finished product, such as trimming scraps and off-specification products. These commodity materials are sorted, sold, and shipped to processors who transform them into feedstock suitable for manufacturing new products. According to the Institute for Scrap Recycling Industries (ISRI), our country recycled 130 million metric tons of material in this manner during 2015. Recycling existing commodities uses far less energy than growing and  harvesting trees for paper products or mining and refining virgin materials into metal, glass, and plastic products. Since it uses less energy, recycling reduces greenhouse gas emissions. It also preserves valuable resources, reducing the environmental impacts of both resource extraction and waste disposal.

This essential industry is a significant part of the U.S. economy. In 2017, 155,632 people were directly employed by the recycling and scrap industries, earning an average of $76,515 in wages and benefits. Once you add in jobs that supply the industry, as well as jobs resulting from industry expenditures, 534,506 are employed, earning over $34 billion in wages. The total economic impact of the scrap recycling industry is nearly $117 billion per year, making it similar in size to the book publishing, dental, or automotive repair industries. Since 25% of what is collected in the U.S. is exported, the industry is also important to our balance of trade. Approximately $17.5 billion in recycled commodities were exported to over 150 countries in 2016. This is similar to the value of other commodity exports, such as grain, corn, timber, and petroleum.

In commodity markets, as in life, the only constant is change. After 30 years of exclusively focusing on economic growth, the Chinese government decided last summer that it was time to concentrate on improving the quality of their environment. As part of this effort, limits were placed on the importation of 24 types of recycled commodities. Restrictions range from an outright ban on mixed paper and residential plastics to limiting the percentage of contamination in each shipment of cardboard to 0.5%. These restrictions have now taken effect, and implementation is reshaping the markets for recycled materials.

With China closed to mixed paper and plastics, recyclers have increased shipments to domestic users and other Southeast Asian countries, and prices have dropped across the board. The U.S. price for cardboard dropped from $160 per ton in March 2017 to $74 per ton in March 2018. Until suppliers can lower their contamination to target levels, they will redirect recycled commodities to less-stringent markets. In the cardboard market, this has benefited U.S. paper mills.

For products that were not banned by China, processors are making investments in additional equipment and personnel in an effort to reduce contamination. In order to avoid having loads rejected, recyclers need a new mindset in separating materials. Scooping up material from the bottom of the pile increases the risk of picking up dirt and rocks. Also, one valuable commodity, such as aluminum cans, becomes simple contamination in a shipment of a different commodity, like cardboard.

As always, recyclers like you also play an important role in the success of this industry. Unfortunately, an average load of mixed recyclables placed at the curb can contain as much as 25% contamination. At the curb, contamination is defined as anything that is not accepted in your local recycling program, or as acceptable materials that have been placed in the bin in an unacceptable condition. So, contamination includes placing the wrong items into the bin and placing dirty items into the bin. Remember to always empty, rinse, and drip-dry all glass, plastic, and metal food containers before placing them in the bin. Remove any wet material and place it in the trash.

For more information on the economic impact of the scrap recycling industry, visit ISRI.

Photo credit: AskinTulayOver | E+ | Getty Images

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