Light at the end of the recycling markets tunnel
In early October 2008 an upresedented decline in paper markets rocked the commodity world. Within 20 days the markets collapsed from a robust level to the rock bottom. Buyers of commodities retreated, then they simply dissappeared and promised news as soon as they knew anything. The reality is buyers stepped out of the market and in many cases cancelled orders for paper, and in some cases I have heard orders were cancelled in transit to recycling mills around the globe.
I have been muddling around in the recycling world for about 20 years and have never seen a decline occur with such speed and aggressiveness. Talking to some of the industry veterans who we know well, in the last 40 years (as long as the recycling markets have been tracked) there have been only four major market corrections, but this last correction was without a doubt the most severe.
With the global recession there is been a reduction of recycled paper in the market place. What does this mean? Very simply, it means that consumer goods are not selling, newspaper are thinner (less advertising and in some cases have gone out of business because of the lack of media buying), magazines or advertising medium is reduced or non existant all contributing in a reduced amount of material available for collection, processing and recycling. And quite simply reduced supply, ultimately influences the price which has been recovering from the bottom of the deep trench since about mid February 2009.
Have we turned the corner? I am not sure we have, but the markets seem more stable to me. I think have with any luck entered the back stretch and are hopefully moving along to a less volatile economy and eventually greater demand for our product and services.
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