While the prices for recycled commodities remain low, it’s clear that the recycling industry will persist—even in times when the consumer economy may be in recession.
There has been a growing pessimism in the wake of the Chinese National Sword Policy over the economic viability of recycling, but experts in the financial industry bet on recycling as a safe, stable investment going forward.
Although the current U.S. economy is stable and wages and employment are increasing, there are significant warning signs that there could be an economic depression in our near future.
However, the recycling industry is sure to persist and even grow in the coming years—despite a potential recession—due to ongoing consumption, adaptive strategies in the industry, and trends of domestic growth.
The recycling industry has been described as “recession proof” or “recession resistant” by financial experts because even in times of economic turmoil, people still need to consume. The consumption inevitably will lead to waste that must be disposed of in a certain way.
During an economic recession, operators may actually be put into a position of greater power to control their prices. Additionally, 80% of sales are service based, meaning they are not tied to the health of the overall economy at all.
Adaption to Oversupply
According to Michael Hoffman, a waste and environmental services sector specialist and managing director at the St. Louis based financial firm called Stifel, operators can expect the waste management industry to take an upturn despite overall economic downturn.
Hoffman notes that while depressed commodity values are related to China’s new policy and purity standards, they are also related to the overall slow of the economy and oversupply of product—especially of paper product.
Since China has tightened standards on contamination, recycled materials have flooded the U.S. domestic markets, causing prices to decrease. According to Megan Fox at the Waste Commission, in just the past year the price of paper has dropped in Scott Country from $80 per ton to a mere $5 per ton.
But in order to make up for this loss in selling price, operators have found ways to process more materials. Waste Commission has gone from processing 7,000 tons per year to a whopping 30,000.
Operators are adapting to industry changes rapidly by investing back into their facilities: adding new jobs, more shifts, and enhancing technology to increase the capacity for processing materials.
Trends of Growth in the industry
It’s possible that an economic recession will give the recycling industry the space that it needs to reestablish its stability. No matter what happens in the consumer economy, the recycling industry will stand independently with consistent demand.
Increased investments, advanced technology, and further domestic processing is starting to take hold in materials recover facilities (MRFs), and although the process will still take time, it’s making out to be a plausible solution to the United States recycling crisis.
We will continue to stay on top of the latest trends in the recycling industry and provide the timeliest updates to our readers. Berg Mill has a long history as one of the pioneers in the industry, we are here to help you navigate through all the recyclable import changes. If you handle large amounts of recycled waste and are looking for solutions, please contact our industry veterans at Berg Mill supply via our website or phone at 866-333-BERG. Talk to us about purchasing all your scrap paper, plastic, metal, textiles, glass grades, e-waste, and any other materials. Make sure to check out our new consulting department as well to help you navigate through any issues you might have.