Attached is your PO for deliveries of recyclables during April 2020.
The overall outcome of market pricing for recyclables in April dropped compared to the past month. This drop is a result of a modest increase paper grades versus a substantial drop in plastics grades and metals. Metals saw the most significant drop in value.
This month, most residential MRFs are experiencing an overall small increase in recyclables volume, while commercial recyclers are experience a large drop in volume. Domestic mills continue their strong demand for OCC, but export demands for MIX paper has been sporadic.
COVID-19 continues to create enormous recyclable disruptions. On the supply side, the virus has shifted the consumption of recyclables from commercial consumers to residential consumers. With the exception of grocery store and warehouse sales (like Costco and Sam’s Club), the shut down of restaurants, retail, and office services has almost stopped incoming commercial recyclables. Whereas, consumer internet sales and in-home use of paper products, like tissue and bags, have created a higher residential consumption. The small increase in residential use of recyclables does not balance the huge reduction in commercial use.
Is this change in consumption temporary or permanent? Some of the increased consumer demand is temporary and did not result in a significant increase of incoming recyclables. Consumers bought and stockpiled more items than they consumed. Even after the lockdowns are lifted, many commercial businesses, like restaurants, airports, and vacation areas are unlikely to return fully for some time. To answer the question, this is a temporary shift that may have long-term impacts as consumers have shifted their shopping habits and as many commercial businesses will be slow to recover.
On the demand side, COVID-19 is even more disruptive. Many Asian countries are shutting down operations at various times. So, while China and Korea have slowly opened back up, India, Malaysia, and Myanmar have closed their ports due to virus quarantines. Additionally, plastics have been negatively impacted as U.S. companies shut down and no longer need those materials to produce carpet, outdoor furniture, and construction supplies. Metals have been more drastically impacted as manufacturers are not operating due to lack of demand in the automobile, aircraft, and home construction sectors. So, mills have reduced or eliminated production in response.
Continuing on the topic of recyclable demand, securing vessels and containers for exports remains difficult. Many Southeast Asian countries are slow to unload vessels or shut down all together. The countries who remain open persist with meticulous inspection processes which further slow vessel movement. The result is bookings to export material are constantly rescheduling or canceling. We expect the export market to be uncertain for the foreseeable future.
The spread of COVID-19 and rolling shutdowns of U.S. states and other countries is creating an unknown future for recycling market. While we remain hopeful that lockdown orders will slow the spread of the virus, it is possible that the lack of demand outlets may result in some recyclables (metals, plastics, and possibly MIX paper) not being sold and being sent to the landfill. Pioneer is doing everything possible to avoid that scenario. We will closely watch these developments and the recycling markets and continuously strive to obtain the best pricing available in today’s marketplace.
It is our pleasure to work with you to recycle material and to protect our environment. We appreciate you and thank you for your business.
Sincerely,
President, Pioneer Recycling Services