Firms urged to re-think recycling approach as prices plummet

Businesses are being urged to think carefully about how best to dispose of their recyclable materials, following the recent collapse in prices for materials such as paper, cardboard and plastics.

The spot price for many recyclable materials plummeted last month after recycling plants in China largely stopped buying material from Europe, amid fears that the global economic slowdown would dampen demand for their end products.

The price of a tonne of cardboard, for example, slumped from £40 a tonne to being virtually worthless, leaving many waste and recycling firms in the UK having to stockpile material they could no longer sell on.

The collapse in prices left some firms with recyclable material that their recycling collection company has refused to collect, according to Bill Swann, managing director of London-based waste management firm Paper Round, a recycling specialist that provides firms with a zero-waste-to-landfill service.

"We have had businesses calling in recent weeks saying their recycling is piling up, as their supplier has stopped collecting," he said. "If you are getting your waste collected for free or are expecting to get paid for the material you hand over, there is a risk with some deals that the supplier could turn round and say: "That offer has finished" – in our experience that happens with zero notice."

Swann advised that firms should look to sign longer term deals with their waste management providers that offer greater guarantees that material will be collected and recycled, regardless of the price of recyclable materials at the time.

"The paper market goes up and down all the time, so when you sign a deal where you get paid for the material you provide, there is greater risk of disruption to the service," he said. "You are better off signing a long term deal."

However, Philip Mossop, director of Intelligent Waste Management Solutions, argued that while it made sense for large scale producers of recycling, such as local councils, to sign long term deals with waste management firms, smaller companies risked missing out on a potentially valuable revenue stream by signing long term deals that did not incorporate an element of revenue-sharing from materials that are sold on.

He said that while prices had collapsed, they had since recovered somewhat following the launch of an economic rescue package from the Chinese government and businesses should still be seeking to generate revenue from their waste management policies.

"Businesses should keep to the spot pricing market for their recycling," he said. "You can get commercial gain from recyclable materials and it makes sense to try and get the best price. As long as you have a good contract with your waste management firm, there should be no risk of the waste not being collected and you should still be able to share some of the proceeds from its sale."