Free-falling commodity prices are threatening the viability of many recycling operations, with some reports of regional councils finding little option but to landfill once-valuable material including metal, paper and plastics. The nation’s biggest recycler, Visy, is confident it will weather the storm, although smaller players are already disappearing from the market, and contract variation clauses are bringing a dose of economic pain to waste generators.-Demand for recovered paper has all but disappeared in China and southeast Asia, with prices dropping in the order of 50% across some lines, and talk of negative value – mills charging to take waste product – possible for some grades if the downturn continues. A similar story is unfolding with plastics, especially low quality mixed material, with additional pain due to the massive falls in oil prices of late. In the scrap metal game, the dramatic shift in the global economic outlook has seen traders move from fretting over metal theft a few months ago to now having no buyers for material. “The worldwide market is still falling…you get a couple of days where everyone thinks ‘maybe its settled down,’ and then you get another drop,” says Visy’s Lee Smith about the paper trade. “It’s very uncertain at the moment.” Visy has a large internal demand for material, sheltering it from the worst of the global price squeeze. However, it does export about 50% of the recovered paper fibre it collects and an even higher percentage of the plastics stream. A little known fact is Visy is actually the nation’s largest exporter of containerised material, which Smith says gives it another advantage in the current downturn of having a dedicated presence in Asia, allowing it to deal directly with mills without the middlemen. Coupled with the internal demand, it means Visy is better placed than others to weather the commodity downturn. “We’re certainly feeling it, we’re certainly aware of it. But if we’re in any pain, I’m absolutely certain there’s nobody else in the market in less pain than us … we’re probably the most insulated and protected of all,” says Smith, adding several local traders have walked away from the paper game in the last 4-6 weeks. But this is not the first time the industry has seen tough times. “We’ve seen it before, and we didn’t fall over then, although lots of other people did,” says Smith, “and we absolutely know we’ll ride this one through”. At the other end of the equation, the generators of recyclable material – primarily local councils – are feeling the pinch as material prices plummet. Many councils have gotten used to high commodity prices subsidising their waste collection operations through recent years, although many are now seeing contract variation clauses coming into play. Visy collects directly from about 40 councils, and Smith says “we reckon the material is still valuable material”. “For us to have an internal market for at least half of our material gives our councils some degree of certainty, and we’re still able to move material into Asia and other parts of the world, even if it’s at lower prices.” But there are some 700 councils in Australia, and there are rumours some have already turned to dumping material into local landfills. In the UK, there are reports of local councils beginning to buy up warehouses to store material in the hope that prices will recover. Locally, a push is on through the Waste Contractors and Recyclers Association of Queensland for that state’s regulators to ease conditions limiting the stockpiling of material, with WCRA Queensland head Rick Ralph saying rules must be tweaked so material doesn’t end up landfilled. The coming issue of Inside Waste magazine, out early December, will look in more depth at scrap metal prices.