The economic downturn affected a wide range of U.S. businesses, including the recycling industry, which saw a slowdown in volumes and commodity prices. But promising signs indicate that the recycling market may recover from its losses in the coming year.

After a period of rapid growth in processing rates, employment and revenue, the economic recession caused the recycling industry to suffer significant losses, like most sectors of the global economy. But as recycled material commodity prices begin to stabilize and a general economic recovery enables more businesses to resume investing in “green” practices, the recycling industry stands poised to reverse some of its earlier declines and experience a market rebound.

According to the Institute of Scrap Recycling Industries (ISRI), at its peak in mid-2008, the United States scrap recycling industry was valued at $86 billion, employed 85,000 workers and processed 150 million metric tons of scrap materials annually, with exports worth $28.6 billion shipped to 153 countries each year.

The principal recycled materials included 85 million tons of iron and steel, 47 million tons of paper, 5.5 million tons of aluminum, 1.8 million tons of copper, 2 million tons of stainless steel, 1.8 million tons of electronics, 1.2 million tons of lead and 633,215 tons of plastic bottles.

In 2008, more than 50 percent of U.S. paper, 60 percent of metals and alloys, two-thirds of steel products and 33 percent of the aluminum supply were produced using recycled materials.

However, the global impact of the economic recession caused recycled-materials commodity prices to plummet, while constrained budgets forced many communities to scale back on public recycling efforts.

“Like other industries, recycling is reeling from the recession. But its dependence on the commodities market…and its relative newness have made its sudden turn for the worse unprecedented,” U.S. News & World Report explains. “For the three quarters of Americans who recycle, that means the feel-good factor of dragging a plastic bin to the curb each week could be endangered — not to mention the process’s environmental and long-term economic benefits.”

Profitability in export markets also declined during the downturn, narrowing channels for business activity and causing many recycling companies to stockpile materials for lack of viable selling opportunities abroad.

“Across the country, recyclers are being forced to warehouse the trash they used to easily sell, resulting in towers of cardboard and heaps of plastic languishing in lots. The major cause of the industry’s woes is the global economic crisis. But adding to difficulties is the specific slowdown in demand from China, the largest market for the United States’ exported recyclables,” U.S. News & World Report adds.

Although export markets play an important role in recycling industry profitability, a key part of building momentum for a recycling recovery involves increasing domestic recycling opportunities. The current push for improving energy efficiency and maximizing the country’s energy potential may strengthen recycling in the long-term.

“Even at the current low U.S. rate of 33 percent, recycling conserves the equivalent of approximately 11.9 billion gallons of gasoline, and reduces greenhouse gas emissions by the equivalent of taking one-fifth — or 40 million — of all U.S. cars off the roads every year,” according to advocacy group Recycling Works! “But the energy savings potential of what we are currently not recycling is enormous…equal to the annual output of 15 medium-sized power plants.”

Regional efforts toward maintaining or increasing recycling efforts are likely to play a major part in revitalizing the industry as certain municipalities continue to invest in recycling programs.

“Even though the U.S. recycling rate is stagnant at about 33 percent, there have been impressive state and local initiatives,” Recycling Works! explains. “San Francisco now diverts 70 percent of its municipal solid waste and is on track to reach its goal of 75 percent by 2010, while the state of California diverts 58 percent. Minnesota has reached a 40 percent recycling rate and South Carolina is at 28 percent.”

Perhaps more importantly, consumer demand for recycled goods remains robust. A 2009 survey from marketing agency EnviroMedia Social Marketing found that 82 percent of consumers continue to buy green products and services, 50 percent buy the same amount of green products as they did before the economic recession and 19 percent buy more. Eighty-seven percent of consumers recycle.

Enthusiasm for green and recycled goods can also be seen in the packaging industry, which provides and purchases much of the recycled material used in the U.S. According to Packaging Machinery Technology magazine, “Not only does more of today’s packaging contain recycled content, but percentages are trending higher, too.”

Commodity prices for recycled materials have also been rebounding strongly, improving profitability potential for recycling firms. According to the Secondary Commodity Composite Index,which tracks market prices across the recycling industry, scrap metals, waste paper, recycled plastics, recycled automotive parts and recycled electronics all hit a pricing trough in early 2009, but prices have been steadily climbing since that low point, with some approaching their 2008 peak levels. Over the past three months, the overall recycling price index has risen 9.72 percent.

As domestic recycling initiatives gain momentum, consumer demand for recycled goods increases and prices for recycled materials continue to climb, the recycling industry may soon overcome its lingering recessionary effects.

“Sophisticated recycling operations know they’re going to lose money every three or four years because of market fluctuation,” Chaz Miller, a program director for the National Solid Wastes Management Association, told Popular Mechanics. “They just plan for it and build that into their economic system.”

Resources

Scrap Recycling Industry Facts
Institute of Scrap Recycling Industries, June 25, 2009

Could the Recession Kill the Recycling Industry?
by Amanda Ruggieri
U.S. News & World Report, March 13, 2009

Federal Policy Recommendations
Recycling Works!, 2009

82 Percent of Consumers Buying Green Despite Battered Economy
EnviroMedia Social Marketing, Feb. 6, 2009

Sustainability is Here to Stay
Packaging Machinery Technology

The Secondary Commodity Composite Index
SecondaryCommodity.com, April 20, 2010

What’s the Future of Recycling After the Market’s Precipitous Plunge?
by Joe Hasler
Popular Mechanics, Jan. 13, 2009