EM- ?03-t?~ 95-O17
Recycling Markets, Marketing
and Market Development
A Primer For Government Officials
Successful
Recycling
Printed on Recycled Paper-10% Post-Consumer Waste
Published and
Distributed by
United States
Environmental
Protection Agency
Region III Office
Philadelphia, PA
1993
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TABLE OF CONTENTS
INTRODUCTION
PART I: MARKETS
Essential Terms .'
Types of Markets
Status of Domestic Markets
PART II: MARKETING
Marketing Defined
Market Needs
Market Forces
General Specifications for Recyclables
The Marketing Process
Marketing Tips and Other Considerations
PART III: MARKET DEVELOPMENT
Market Development Defined
Purpose and Need
Market Development Studies
Market Database
Market Development Incentives
CONCLUSION
APPENDIX
Sources of Information and Assistance
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INTRODUCTION
It's been said that the three key elements of successful recycling programs
are Markets, Markets, and Markets. The importance of markets and
marketing to recycling cannot be overemphasized. If you can't market a
material, no matter how plentiful and high-quality it may be, you can't recycle
it. It's as simple as that.
Markets Unlock the Door to Recycling
In fact, it's strongly recommended that the place to start in establishing any
recycling program is with markets. Identify the markets first and design the
recycling program around those markets. Experience has shown that to
collect certain materials and then to look for markets is going about the,
process backwards. Start with markets and go from there.
We often view recycling as solely an environmental issue or program. But as
anyone who has been in the recycling business for some time will tell you, it's
increasingly becoming an economic issue or program. Recycling is truly a
business venture subject to the free market laws of supply and demand.
Government officials who undertake recycling programs may find
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nHff Prepared (unleSS they have considerable business
experience) to effectively, market their recyclables. The marketing of
recyclables can be very challenging, indeed, so the more we understand
about recycling markets, the better prepared we will be to meet that
challenge.
This brings us to the purpose of this primer - which is to present a
comprehensive review of the business of recycling markets. It is written for
mumcipal officiate and designed to cover all of tht major aspects
wuh
Part 1 Markets:
with
^1______
Examination of the different types of markets categorized by
location, activity and material
Assignment of markets for each major recyclable material
Part 2 Marketing:
Explanation of the lengthy and often complex process of
marketing recyclables
Major needs of marketplace cited
Tips to keep in rnind
Part 3 Market Development:
Description of the nature and scope of market studies
Identification and description of several economic
incentives designed to strengthen and expand
markets
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In Part I we examine MARKETS - the different types of markets categorized
by location, activity, and material. We also present a general assessment of
the markets for each major recyclable material.
MARKETING is the subject of Part II in which we explain the lengthy and often
complex process of marketing recyclables. We also cite some major needs
of the marketplace and some tips to keep in mind.
Part III focuses on MARKET DEVELOPMENT in which we describe the nature
and scope of market studies, and identify and describe several economic
incentives designed to strengthen and expand markets.
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PART I: MARKETS
ESSENTIAL TERMS
When talking about recycling and markets, it's easy to get very confused if
one doesn t understand the language. So let's begin with the definitions of
some key terms, ,
First, there's the word MARKET. Simply stated, a MARKET is a customer (or
group of customers) who is willing and able to accept the product or
commodity that is being offered. When we add the term RECYCLING to the
term MARKET, we are referring to those customers that accept the
recyclables that are collected from the municipal solid waste stream
Sometimes the term is extended to also encompass the procurement of
recycled products, but for the purpose of this primer, the term will apply only
to recyclables. y
Recycling markets may be POSITIVE or NEGATIVE, that is, the customer may
pay for the recyclables (POSITIVE MARKET) or the collector of the recyclables
may pay the customer to accept them (NEGATIVE MARKET). And this leads us
to another term which is often applied to recycling - ECONOMIC MARKET
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Market
Recycling
Recycling Markets
Positive Market
(Customer Pays)
Customer
(Pays)
-Vendor
\
Negative Market
(Customer Gets Paid)
$$
Vendor **^ Customer
(Pays) .
Economic Market
In ideal market situations, the provider of a service or a product must be able
to sell the service or product for a profit. If not, no real market exists.
However, in-the world of recycling,, profitability is not necessarily measured
by the revenues received. Profitability often may be a measure of the
"avoided costs," that is, the additional expenses or costs not incurred by
having to bury the recyclables in a landfill or burn them in an incinerator.
Whenever the cost of recycling is less or no greater than the cost of landfilling
or incinerating recyclables, an ECONOMIC MARKET is said to exist. However,
to accurately assess these costs, it is essential that there be full accounting of
all solid waste management costs, including those for collection and disposal.
i '',
MARKETING, the subject of the second part of this primer, is just a fancy word
referring to the process of identifying recycling markets and making
arrangements for those customers to accept the recyclables. The process
involves several important steps and parties, can be quite complicated, and
demands considerable skill and savvy. (This process is described in detail in
Part II).
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Marketing: Process of identifying recycling markets and arranging for
acceptance of recyclables.
Finally, there is the term MARKET DEVELOPMENT (which is addressed in Part
111). Like marketing, MARKET DEVELOPMENT is a process whereby we
attempt to establish, enhance, strengthen, and expand recycling markets.
Because we primarily utilize economic incentives to do this, MARKET
DEVELOPMENT is essentially an economic development (rather than an
environmental) activity.
Market Development: Process that attempts to establish, enhance,
strengthen and expand recycling markets. '
Another term often used relative to markets is VENDOR. This is a generic
term that may be applied to either a party or company that seeks to acquire
recyclables for subsequent processing or manufacturing, or to a party or
company that seeks to sell.commodities such as recycled products
Vendor:
A party or company that acquires recyclables for processing
or manufacturing. A party or company that sells recycled
products.
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TYPES OF RECYCLING MARKETS
There is a tendency among recyclers to think in terms of "The Recycling
Market" as if there was only one market for recyclables. In reality, there are
many markets not only for recyclables in general but for specific types and
grades of different recyclables. A term that is often used as a synonym for
markets is vendor.
Recycling Markets *,, f>£
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.There are three ways to look at recycling markets - by activity or service
performed, by geographic location of the market, and by the specific type of
recyclable or commodity being marketed.
Recycling Markets Examination
GEOGRAPHIC
LOCATION of
MARKET
ACTIVITY/
SERVICE
PERFORMED
TYPE of
RECYCLABLE
BEING
MARKETED
Let's start by examining markets according to activity or service performed
^irst there are the collectors or haulers and the processors These
companies include those that collect the recyclables at curbside or at drop-off
sites and subsequently prepare or process them for the end-user Processing
may include sorting, baling, crushing, cleaning, chipping, or other physical
activity. These companies are often referred to as intermediate markets
The end-user markets are manufacturers that use the recyclables to make
new products. These end-users include paper mills, metal smelters, glass
factories, and plastics fabrication plants. Another type of market are the
brokers who handle all of the financial and shipping transactions involved in
moving recyclables through the marketplace, but who don't necessarily ever
own or physically handle the recyclables.
We can also classify recycling markets by location or geography One such
category is "domestic" which refers to markets located within the continental
United States. These domestic markets may be local, that is, located within
or immediately adjacent to the communities in which the recyclables are
collected. Other domestic markets, based on location, may be regional (up to
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a couple of hundred miles from the community). Terms generally applied to
domestic markets include local, regional, and national. Those markets
located beyond the boundaries of the United States are referred to as
"export" markets. They range from our neighbors to the north and south
(Canada and Mexico) to countries in Europe, South America, and the Far
East (the Pacific Rim countries are major markets for American
recyclables).
Market Classifications
Domestic
Markets
Finally, we can classify markets by the specific types of recyclables or
commodities collected. In most communities, the recyclables include waste
paper, metals, glass, and plastics.
Common grades of waste paper include old newspaper (ONP), old
corrugated cardboard (OCC), high-grade paper (bond and ledger paper,
computer printouts) for de-inking, and other mixed papers (including
telephone directories, magazines, catalogs).
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Recyclable glass usually consists of clear (flint), amber (brown), and oreen
bottles and jars that contained foods and beverages. Plate glass can also be
recycled but is a totally different material from bottle glass.
Aluminum beverage cans, steel/tin cans that contained food, and heavy metal
scrap (such as major household appliances called "white goods") are their
most commonly collected metals for recycling.
Of the six major plastic resins and the dozens of different formulations the
most common plastic materials recycled are soda bottles, milk bottles' and
certain other containers made of polyethylene terephthalate (PET) or
high-density polyethylene (HDPE). In some communities, packaging made
from polyvinyl chloride (PVC), polystyrene (PS), and polypropylene (PP) may
^obfcollected for recyclinS as are other types of containers made of PET
and HDPE.
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Market Classifications:
Recyclables Collected-
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STATUS OF DOMESTIC MARKETS
Sflook fiHfp gTLf summar^ of current market conditions and
,n£ ft v jor recyclables recovered from municipal solid waste. It is
important to keep in mind that many of these markets are cyclical in nature
exhibiting considerable fluctuations in demand and prices. Further^or^ex'port
markets are very significant outlets for some of the KcyclaU^^hT
waste paper and scrap metals. Some of the markets are suppl^limited L is
^ °f a rec^lable for the mills, whTotosa7e '
§ ^ madeqUate demand f°r the Pr°ducts made from
Waste Paper Markets
^r«
( ?' *fd high-Srade mixed office paper in recent years. In other
AM Hf suPP1y°5wastePaPer has been driving the market rather than the
demand for recycled paper products/This has caused imbalances in markets
and has contributed to the decline in the prices formerly paid by interm^fate
and end-user markets for these materials. Poor quality of the^w.aseTDer
collected in some recycling programs has also caused the decline in prices.
1.
2.
new^nrinf f^^f °f °NP ** paper mills that manufacture
newsprint, paperboard, tissue products, molded pulp products
cellulose insulation, animal bedding, and hydraulic mulch. Although
all of these users may increase their demand for ONP newsprint
production is the primary sector of the paper industry capable of
absorbing large supplies of ONP in the future. Some new domestic
newsprint mills have gone on-line recently and several more are
being planned and/or built in the United States and Canada Key to
the future demand for ONP is the use of recycled newsprint by . -
oeMpSPar?ehPUbllSherS PlUS a Steady.' rdiable' high-quality supply of
thP Voorkf *** miCt' ^efdomestlc market outlook for ONP during
the 1990s is favorable. In fact, some marketing analysts predict
regional shortages of ONP by the mid-90s.
OCC: Most of the OCC is consumed by recycled paperboard
manufacturers for use in unbleached Kraft linerboard. Some is also
used to make paperboard and boxboard, tissue products, packaging
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and construction board. Domestic demand for OCC is increasing
gradually and a few new mills that use OCC are being planned and/or
constructed. The future domestic market outlook for OCC looks
generally favorable and capable of absorbing the supply of OCC that
will be generated by recycling programs.
3. High-Grade Mixed Paper: This category includes several types of
waste papers generated primarily in offices. The major end-users of
such mixed papers are the manufacturers of recycled paperboard and
boxboard and of construction board. Some mixed paper is also used
to make tissue products and printing papers. While there has been an
increasing demand for mixed papers on the export market, there has
been a decline in the domestic market. The demand is highest for
well-sorted, uncontaminated white bond and ledger and for computer
printouts. The outlook for the domestic market over the short term is
quite uncertain.
4. Other Mixed Papers: In recent years, there has been little or no
market for such other mixed papers as telephone directories and old
magazines (OMG). However, the market for telephone directories is
emerging as is also true for OMG. Pre-consumer OMG have been
used for years to make tissue products, but post-consumer OMG
have not been acceptable to most mills. With the expansion of paper
mills to de-ink ONP, however, a market for post-consumer OMG has
emerged. One type of de-inking process uses clay to facilitate the
separation of ink particles from the cellulose fibers. A major,
relatively inexpensive source of the clay is OMG, of which clay is a
major ingredient. Thus, the future domestic and Canadian market
outlook for OMG is favorable.
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Old Newspaper (ONP):
End-Users = Paper Mills
Manufacture
-Newsprint
-Paperboard
- Tissue Products
- Moled Pulp Products
- Cellulose Insulation
- Animal Bedding
- Hydraulic Mulch '
1990's Domestic Market = Favorable
Waste
Paper
Markets
'Old Corrugated
End-Users = Recycled Paperboard
J. Manufacturer
Manufacture
- Unbleached Kraft Linerboard
- Paperboard
- Boxboard
- Tissue Products
- Packaging
- Construction Board
Future Domestic Market = Favorable
High-Grade Mixed
End-Users = Manufacturers of
J/ Recycled Boards'
Manufacture
- Paperboard
- Boxboard
- Construction Board
- Tissue Products
- Printing Paper
1 Short-Term Domestic Market =
Uncertain
Other Mixed Paper: Magazines
End-Users = Paper Mills in Need of
" - Clay
Use
- Drinking Process - Clay Facilities
. Separation of Ink From Cellulose
Fibers
Future Domestic/Export Market =
Favorable
Waste Glass Markets
The major end-users of glass bottles and jars are glass factories that use the
ground glass (called cullet) as a raw material. There are numerous glass
factories with the combined capacity to absorb much of the glass collected in
recycling programs. However, the glass must be color-sorted and free of
contaminants. Another domestic market for cullet is the fiberglass industry
Although it can use mixed colored glass, this industry's specifications relative to
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contaminants are very stringent. Poor quality mixed glass can be crushed and
used for glassphalt (mixed with asphalt used to pave roads) and roadbed
construction. Recently, the market for green glass used primarily for wine and
beer bottles has declined significantly since'the domestic glass factories cannot
use the colored cullet. Most of the green glass bottles are imported from other
countries. The future domestic market outlook for clear glass is quite favorable,
although the market for colored glass is uncertain.
Clear Glass:
End-Users - Glass Factories
Manufacture
- Glass Products
Future Domestic Market
Favorable
Quite
Mixed Colored Glass:
End-Users = Fiber Glass Industry
Manufacture
- Glassphalt
' Future Domestic Market = Uncertain
Waste
Glass
Markets
Scrap Metal Markets
The most common scrap metals collected in municipal recycling programs are
aluminum beverage cans, steel/tin food and beverage containers, and large
household appliances collectively called white goods.
1. Aluminum: Historically, the market for scrap aluminum has been
strong. The major end-users are can sheet manufacturers and mills
that make aluminum construction products such as siding for houses.
Although the prices paid for scrap aluminum have dropped recently,
the future market outlook is favorable.
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2.
.Steel (Ferrous Scrap): Steel cans and white goods are categorized by
the steel industry as "obsolete scrap." With the recent growth of
mini-mills equipped with electric' arc furnaces, which use mostly
obsolete scrap, the demand for ferrous metals has increased
dramatically. Steel/tin cans may be marketed directly to steel mills,
however, since the tin is a contaminant, the amount of cans which
steel mills may accept is limited. This has created renewed interest
in detinning plants which remove the tin and prepare the steel for the
mills. However, detinners may require that paper labels be removed
from the cans. The white goods market has declined in response to
the concerns about the presence of PCB in some electrical
components. Unwilling to handle materials that might subsequently
be considered hazardous, many scrap metal dealers have refused to
accept white goods although they pose only a minimal hazard when
baled (rather than shredded). A new federal law now requires- that
the freon and other ozone depleting chemicals in refrigerators must
be removed in a manner that prevents its escape into the atmosphere.
Despite all of these concerns and restrictions, the future market
outlook for ferrous scrap metal is strong.
Aluminum:
End-Users = Can Sheet .
Manufacture Mills
Manufacture
- Aluminum Construction Products
Future Market = Favorable
Steel:
End-Users'
' Mini-Mills with Electric
Arc Furnaces & Steel
Mills
Manufacture
-Steel
; Future Market = Strong
Scrap
Metal
Markets
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Waste Plastics Market
Since the recycling of post-consumer plastics is a relatively new activity, the
market for such plastics is in its infancy. The market is growing rapidly,
especially for certain high-value resins. Although most plastic resins can be
recycled, the two that are most commonly collected are PET (Polyethylene
Terephthalate) and HDPE (High Density Polyethylene).
1. PET: Soft drink bottles are the most common PET product in
municipal solid waste, although certain other foods also come in
containers made of this resin. The major end-users of PET are
manufacturers of carpet fiber and fiberfill used in clothing. The
market demand for PET resin appears strong in several geographic
areas and.the future market outlook is generally favorable.
2. HDPE: Milk and liquid detergent bottles are the most prominent
HDPE household containers although several other types of products,
such as motor oil, are also sold in such bottles. Recycled products
manufactured from post-consumer HDPE include drainage pipes,
traffic barrier cones, flower pots, and other low-grade plastic
products. The market demand for HDPE is potentially substantial.
3. PS: Polystyrene is another very common plastic resin used in both
foam and rigid forms. The foam form is used extensively as
packaging to protect products and also for food containers (cups,
plates, clamshells, etc). The rigid form is used extensively to make
food containers. Because PS is quite common in municipal solid
waste, many communities have targeted it for recycling. The
polystyrene industry has responded by constructing a few major PS
recycling plants and manufacturers are making insulation board and
other products from the reprocessed PS. In those geographic areas
where such plants are located, the market outlook for PS is quite
favorable.
'
I '.';'
4. . Mixed Plastics: The major use of mixed resins is in the production of
plastic lumber. Virtually any and all of the resins may be incorporated
into the lumber, depending on the desired characteristics of the final
product. Where strength is important, the lumber may be made solely
of HDPE or a mixture of PET and HDPE. Plastic lumber may be used
for docks, bulkheads, outdoor furniture, and fence posts. There
appears to be a growing market for plastic lumber and the future
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'. ' '
market is potentially very favorable, pending research on the
economic and environmental aspects and on product development.
,'
PET:
End-Users = Manufacturers of Carpet
Fiber and Fiberfill
f
Manufacture
-Carpet
- Clothing Fiberfill '
Future Market = Generally
Favorable
Low-Grade Plastic
Products Manufacturers
f
Manufacture
- Drainage Pipes
- Traffic Barrier Cones
- Flower Pots
Future Market = Potentially
Substantial
Waste
Plastics
Markets
PS:
End-Users = Polystrene Industry
Manufacture
- Insulation Board
-Other Reprocessed PS Products
Future Market = Quite Favorable
Geographically
Mixed Plastics:
, End-Users = Plastics Industry
Manufacture
- Plastic Lumber
» Future Market = Potentially Very
Favorable
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PART II: MARKETING
MARKETING DEFINED
As previously stated, MARKETING refers to the process of identifying
intermediate and end-user markets and making arrangements for those
markets to accept recyclables. This process can be quite complex and
time-consuming.
MARKET NEEDS
While we may be primarily concerned about meeting our own market needs, it
is essential that we also understand the needs of the marketplace which we
hope will accept our. recyclables. Seeing the other side of the process can help
us meet both our own needs and those of the market.
Upon entering the marketplace, we must understand that we are no longer
dealing in "garbage" or "waste." We are now offering "commodities" or "raw
materials" which must meet industry specifications. In essence, the market
needs a reliable, adequate supply of high quality material ,on a consistent basis.
If we cannot assure that, then the market may not accept the recyclables we
have collected.
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Market Place
COMMODITIES/HAWMATERIALS
Market
Acceptance of
Recyclables
The projected quantity of recyclable*.can be estimated by conducting a waste
stream analysis and then calculating the generation and recovery rates fo^he
different recyclables in the municipal waste stream.
Quality standards can be met by ensuring that extraneous and non-recyclable
materials are not mixed in with the recyclables that we seek to m^
Recv^hT110111S ^ °f ^ WggeStimPediments to successful marSng
Recyclables must compete with virgin raw materials, therefore the higher the
quality of the recyclables, the better they can compete in
Contaminated Commodity
Market
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Therefore it is imperative that information about industry specifications be
conveyed to the generators and collectors of recyclables. Complete, easily
understood printed instructions to all generators (households, businesses,
institutions, etc.) coupled with careful collection and handling of recyclables are
essential to minimizing contamination problems.
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MARKET FORCES
There are many factors or forces that drive markets in general and recycling
markets in specific. The following are some major factors that must be
considered when developing a marketing plan.
1. Supply: The quantity (tonnage) or supply of a recyclable that is
available is of critical importance. If there is too little available, there
may be no market even if the material is of high quality. Conversely
if there is an overabundance of a material, the market may be
overwhelmed which, in turn, may "kill" the market.
MARKET PLAN
2.
Demand: There must be a need or demand for the material by the
industries that might use it as a raw material. If an industry already
has an adequate supply of the material, then demand for additional
material will be limited despite the adequacy and quality of the supply
On the other hand, if there is an unmet demand for the recyclable
material, the market will be strong, provided the industries have the
ability and willingness to pay appropriate prices for the material.
DEMAND
bu.
MARKET PLAN
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3. Quality: Post-consumer recyclable materials must meet the
specifications of the end user industries. Since recyclables compete
with virgin raw materials in the marketplace, the quality of the
recyclable materials must be of sufficiently high quality that they may
be used as substitutes for the virgin materials.
QUALITY
MARKET PLAN
Substitutability: Recyclable materials must have characteristics that
permit them to be readily substituted for their virgin counterpart. If
not, there may be no market for them.
SUBSTITUTABILITY
JTY I
Unl
t
MARKET PLAN
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5.
6.
Handling costs: For some recyclables (such as plastics), the cost of
collecting and processing them may be such that it is not technically
or financially feasible to market the material. It may be less costly to
use virgin materials.
HANDLING COSTS
MARKET PLAN
Transportation costs: The distance to some markets and the
associated transportation costs may be such that it is not feasible for
a municipality to recycle a material. Plastics, for example, may be so
lightweight that the value of the material may be less than the cost of
transporting it in an unprocessed and undensified form. As a general
rule, the closer the markets are to the source of recyclables the more
cost-effective it will be to transport the materials.
TRANSPORTATION COSTS
MARKETPLAN
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7. General economy: The general economic climate of a region or the
nation can significantly affect, positively or negatively, the markets
for recyclables. For example, many products used in the construction
of housing (roofing shingles, tar paper, wallboard, siding, insulation)
are made in whole or part from recyclables. If the housing market
hits a slump and new construction declines, the demand for these
recycled products also declines, affecting the markets for
recyclables. Conversely, as home heating fuel prices rise, more
insulation may be sold as homeowners seek to conserve energy.
This could create a great demand for cellulose and fiberglass
insulation made from recyclables.
GENERAL ECONOMY
MARKET PLAN
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GENERAL SPECIFICATIONS FOR RECYCLABLES
If municipalities are to find stable markets for their recyclables, they must meet
the specifications of the industries that will use the recyclables in their
manufacturing processes. Always keep in mind that we are not dealing in
waste or garbage. The recyclables are the raw materials of industries.
Specifications may be different for processors and for end-users. Furthermore
the specifications of processors may be less stringent than those of the
end-users, and specifications may vary among end-users in the same general
industry.
As a general rule, municipalities should strive to meet current market
specifications, yet maintain sufficiently high quality to permit easy switching to
other markets if that should become necessary.
Rules For
Marketing Recyclables
Meet Market Specifications
Maintain High Qualify
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There are certain specifications or quality standards that are generic for all
recyclables and markets. For example, materials must be clean and free of
contaminants. "Clean" means not soiled with food, chemicals, or other similar
substances. "Contaminants" refer to grades and types of materials that differ
from the recyclable being marketed (such as newspaper mixed with high-
quality office papers or plate glass mixed with bottle glass).
The following is a brief summary of the general specifications for each of the
major recyclables as stipulated by both processors and end-users. Keep in
mind that these are only generic specs and that each market may have more
precise standards.
1. ONP: Processors usually accept newspapers in paper sacks or as
bundles tied with cotton twine. They usually do not want the glossy
inserts and do not want the paper placed in plastic bags or tied with .
nylon twine. Furthermore, there should be no cardboard, phone
directories, magazines, and non-paper materials. End-users usually
stipulate the same and usually want the paper baled (although some
paper mills prefer to have the paper loose for ease of inspection).
2. High-Grade Office Papers: Processors may specify only selected
grades of white paper such as white bond or ledger and computer
printouts. Other grades of paper, including colored ledger, telephone
directories, books, newspapers, and chemically treated papers may
be excluded. End-users usually prefer well-sorted high-grade papers
that are baled.
3. Glass: Processors invariably accept only bottle and jar glass free of
plate glass, light bulbs, crystal, and ceramics. The glass must be
color-sorted (clear or flint, green, and brown or amber). Labels need
not be removed but lids and metal neck rings should be. End-users
have the same specifications and may also require that the glass be
crushed so that particles are no greater than a certain size.
4. Aluminum cans: Processors stipulate that aluminum cans be clean
and free of contaminants (such as soda straws). They usually do not
require that the cans be flattened. End-users, which are usually
secondary aluminum smelters, have the same cleanliness standards
and may require that the aluminum be shredded or baled (the small
bales are referred to as "biscuits").
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6.
Steel cans: Processors stipulate that the cans be clean and free of
other contaminants. As for paper labels, processors that sell directly
. to steel mills don't require that the labels be removed since the paper
is consumed in the furnaces. However, cans that are shipped to
detmning plants where the tin is removed first, require that the paper
labels be removed. Cans that are shipped to steel mills are usually
baled (although some may be shredded). However, cans shipped to
detmning plants must be loose or loosely baled so the individual cans
can easily be separated. '
PET and HOPE: Processor and end-user specifications for these two
plastic resins are similar. Processors stipulate that containers must
be clean and free of contaminants (such as metal neck rings). Paper
or plastic labels may be left on. Containers which held toxic or
hazardous products (such as pesticides, solvents, and motor oil) may
not be accepted. Containers may be delivered loose or baled
depending on how far the material must be transported (it is usually
too costly to ship loose containers long distances). End-users usually
require that the different resins be kept separate (some will accept
only one resin). They may also specify that the containers be
shredded or chipped and washed (to remove labels) and the chips
placed in large corrugated cardboard boxes called gaylords.
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Generic Specifications
Commodity
Old Newspaper
Processor Standards
In Paper Bags or Tied with
Cotton Twine
No
No Nylo
No Cardboar
No Phon
End-User Standards
Standards of Processors
Baled paper
High-Grade
Office Paper
Selected Grades of White Paper
- e.g., bond, ledger, computer
»Colored Paper
No Phone Books
NoBooK
No Newspap
No Chemically Treated
Paper
Well sorted High-grade
papers
1 Baled paper
Glass
Bottled and Jar Glass Only
Color Sorted (Clear, Green, Brown)
Plate Glass
Nought Bulbs
No CryS
No Ceramic
No Lids
No Mefal Neck Ring
Standards of Processors
Crushed to specific
particle size
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Generic Specifications
Commodity
.Aluminum Cans
Processor Standards
Clean
No, Contaminants
EndrUsers Standards
Standards of Processors
1 Shredded or baled
aluminum
Steel Cans
Clean
'No Contaminants
Steel mills -
Labels okay
and cans baled
Defining Plants -
No labels and cans
loose/loosely baled
PET&
HDPE
Clean
Labels okay
Loose or Baled Depending on
Transportation Distance
"No Contaminants
No"Go.ntainer Formerly..--"
HoldingHa^ardous-'"'
Products >
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THE MARKETING PROCESS
The many individual steps in the marketing process can be grouped into two
major phases - the market analysis phase and the market implementation
phase. . . ,
Marketing Process
Phase 1
Market Analysis Phase
/p fp ^ ^ ^
Supply
Quality
Demand
Identity
of
Markets
Assessments
of Marketing
Options
Phase 2
: s
Market Implementation Phase
L-\
IFB _
X
Contract
Agency to
« oversee
contract
RFP Issued
X
Proposals reviewed
by municipality
X
Selection of best
proposal
The market analysis phase is essentially a data and information gathering
activity. The following information needs to be acquired and documented.
Supply (quantity) of each recyclable collected: This should include
both current and future anticipated tonnages. The supply available
per week, per month, and per year should be estimated.
Quality (condition) of each recyclable collected: This should
stipulate whether the recyclables will be commingled or separated
and whether the recyclables will be totally unprocessed or partially-
processed (such as baled).
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Demand for each recyclable collected: This Should include the
quantity (tonnage) that can be accepted by each market per week,
, _ per month, and per year.
Identity of Markets: These should include brokers, processors, and
end-users located locally and in the region. The name and address of
each company plus the name of a contact person should be obtained.
This type of information can be found in marketing studies, trade
publications, market databanks, and telephone directories.
Assessment of marketing options: Decisions,must be made from
among many options including the following:
* - -work with one-single market for all recyclables or work with a
separate one for each recyclable;
- deal with brokers, intermediate processors, end-users, or all three
types of markets;
- sign long-term contracts with one or a few markets or play the
open market;
- negotiate your own contracts or hire a professional marketing
firm to do so; ,
- market your recyclables independently or in cooperation with
other municipalities through a cooperative marketing agreement.
In assessing these many options, it is always helpful to consult with several
markets. All of the information acquired should be compiled in a report to
facilitate its analysis.
When the market analysis is completed, the market implementation phase
can begin. This phase involves the selection of one or more markets and the
negotiation of marketing agreements.
The municipality begins this phase by publishing an Invitation For Bids (IFB).
This should fully describe just what services the municipality needs such as
processing and transporting, the quantity and quality of the recyclables that
must be achieved, dates or schedules that must be met, and the cost of all
services. To ensure the legality and fairness of the competitive bidding process,
municipalities must comply with all procedures stipulated in state and local
laws. Upon receipt, opening, and review of bids by the municipality, the best
offers can be identified and the bidders invited to discuss contract terms. Once
the parties reach agreement, the bidder should submit a letter of intent which
summarizes the services to be provided.
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Next, a formal agreement or contract is drafted. The terms of such an
agreement or contract typically address the following:
the parties to the contract;
the responsibilities of the contractor;
i , '
the price to be paid or received for the recyclable and the means by
which this will be determined (if variable);
the types and specifications of materials that will be accepted by the
contractor; .
how,' when and where the contractor will collect and transport the
recyclables, or how, when and where the municipality will deliver the
materials;
the effective date and duration of the contract and procedures for its
cancellation.
Once the wording of the agreement is acceptable to both parties, the contract is
signed. The municipality must then assign a responsible party or agency to
oversee implementation of the contract. This will ensure that the contractor
complies with all of the contract terms and will facilitate any adjustments that
subsequently may be necessary.
If a municipality wants to avoid all of the work involved in the preceding
process, it can simply issue a Request For Proposal (RFP). Such a RFP would
describe the type of service or program desired and allow the potential markets
to suggest how they would establish and implement such a service or program.
In other words, the'municipality describes what is needed and the potential
markets present their plan for meeting that need. The municipality then:
reviews each proposal and selects the one that best meets its needs.
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MARKETING TIPS AND OTHER CONSIDERATIONS
There are many things to consider and decide when marketing recyclables
The following are a few tips to keep in mind.
Always seek stable, reliable markets. These can be identified by
studying past, present, and future market trends.
Collect only those materials that can be readily marketed. If you
can't market the materials, you can't recycle them.
Keep materials clean and free of contaminants. Quality of
recyclables is the key to successful marketing. The generators of
recyclables must be educated about quality and constantly reminded
of specifications.
Consider marketing recyclables in conjunction with other
municipalities. Cooperative marketing is becoming fairly common.
Don't overlook the .small local end-user markets. Don't automatically
seek the big manufacturer.
Always write clear, complete agreements and contracts with
markets. Well-drafted contracts can prevent a lot of future problems.
Reassess existing markets and other potential markets regularly and
monitor their status. Always be on the lookout for new markets.
Consider turning over the entire marketing component of your
program to a private company. Privatization of marketing can have
advantages such as alleviating the municipality of many
time-consuming administrative duties.
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Keys to Marketing Recyclables
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In addition to these tips, the following should also be taken into consideration.
The supply of and demand for recyclables should be in balance to
f avoid over-supply and under-demand.
Markets must be within relatively short distance of the supply of '
recyclables. It is usually not cost-effective to ship low-value and
low-density recyclables long-distance.
A complete, efficient infrastructure must be in place to collect,
process, and transport recyclables.
The technology and facilities^ needed to process and use recyclables
must exist and be readily available.
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Other Keys To Consider
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PART III: MARKET DEVELOPMENT
MARKET DEVELOPMENT DEFINED
Like MARKETING, MARKET DEVELOPMENT is a process - the process of -
implementing various economic and legislative/regulatory incentives which will
facilitate the strengthening and expanding of existing markets and of creating
new -markets for recyclables,
PURPOSE AND NEED
Although recycling markets have existed for decades, the markets have
handled primarily commercial and industrial scrap and waste. With the crrowth
of municipal solid ,waste recycling, several of these markets have been ?
periodically inundated with vast amounts of new materials that often do not
meet established industry specifications. This flooding of existing markets has
in some cases, created an oversupply which has, in turn, forced prices to
plummet. As a result, municipalities may have to pay to have the recvclables
removed.
If recycling is to succeed over the long run, there must be adequate domestic
markets for the bulk of the recyclables collected by municipalities. There is a
very large export market as well, especially for waste paper and scrap metals
and many marketers currently rely heavily on these export markets because
the domestic markets cannot absorb all of the materials. Therefore, market
development initiatives are designed to strengthen and expand the capacity of
domestic markets.
MARKET DEVELOPMENT STUDIES
, . , i
The initial step in market development is (or should be) to conduct a study of
Existing markets; and, -
Present and Future Market Trends.
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One must have a considerable amount of information before pursuing a market
development strategy.
Usually, market development studies are conducted by state governments or by
regional authorities and made available to counties and local municipalities.
However, the latter may also choose to conduct more detailed, small-scale
studies in lieu of or as a supplement to a state or regional study.
A market development study should, at a minimum, achieve the following.
Obtain accurate estimates of the different types and quantities
(supplies) of recyclables available currently and in the near future.
Identify major local and regional existing markets for the recyclables
and to identify industry plans for future markets.
Assess market trends during the immediate past, at the present time,
and in the near future, including the capacity to accept various
recyclables and the prices paid or charged.
Identify existing regulatory and economic incentives that might be
used to strengthen and expand markets and to identify additional
incentives that might be implemented.
A review of numerous published recycling markets studies reveals that most
are essentially similar in that they include at least the following basic
information.
Geographic and demographic information about the study area. Data
may be categorized by county, by municipality, by planning region,
and even by school district. The population information usually
includes age distribution, individual and/or household income,.housing
categories, and household size.
Waste stream, including recyclables, data. This includes estimated
tonnages1 of each recyclable in the waste stream currently and in the
near future. Estimated recovery rates projected into the future are
also included.
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Description of the status of existing markets for recyclables including
the current and near-future capacity or demand of each. The historic
performance of such markets may also be summarized.
Future market projections and their capacity to absorb recyclables.
Economic incentives that are designed to stimulate the recycling
markets. This would include incentives already in place plus others
that might be employed.
Summary of major findings and of recommended actions that might
be implemented.
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MARKET DATABASE
Much of the information acquired about recycling markets can and should be
made readily available to potential users such as municipalities. Several states
have established market databases available in one or a combination of.formats.
One format, and probably the most common and least expensive, is the printed
directory. The information listed usually includes the names, addresses, and
phone numbers of recycling centers, processors, and end-user industries that
accept recyclables. Some may also identify a contact person and hours of
operation. Detailed information about the types and minimum quantities of
various recyclables accepted may be provided in the more comprehensive
directories. :....'
The other major format, and the one that is becoming essential for quick and
easy access to market data, is the computerized system. Data about recycling
brokers, processors, and end-users is computerized. This data can then be
transmitted from a central databank by modem to distant locations and
subsequently viewed both on a screen or computer printout.
To obtain printed lists of recycling markets and/or market directories, or to
access the computerized market databases, please contact your state recycling
office.
Market Databases
Printed Directories-
Names
Addresses
Phone Numbers
Recycling Centers
- Processors
- End-Users
Contact Person
- Hours of Operation
To Obtain List Of Printed
Directories:
Call Your State Recycling Office
Market Databases
Computerized System:
- Recycling Brokers
- Processors
- End-tlsers
Can Be Transmitted By Modem:
« On Screen
- Computer Printout
To Obtain List of Computerized
Market Databases:
- Call Your State Recycling Office
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MARKET DEVELOPMENT INCENTIVES,
State and local governments, through legislative and financial channels, can do
much to shape the economic climate within their jurisdictions. Actions can be
taken which help the economy in general or which can be targeted to assist
specific businesses such as the recycling industry. The following are the most
common types of incentives used by states and municipalities to stimulate
recycling markets.
Economic Incentives
1. Tax relief
Businesses must pay a wide array and large amount of taxes which can place a
heavy economic burden on them. Providing relief, even if only temporarily is
one thing that government can do to reduce this burden. They may take the
form of property tax relief on land and buildings or sales tax exemptions on the
purchase of recycling equipment and supplies. Another potential measure is
the use of tax credits for major capital investments. Industries, by applyin^
such credits, may reduce their corporate income taxes. &
2. Grants and Loans
In addition to such indirect financial assistance, states may also provide direct
assistance to industries in the form of loans, grants, and bonds. Grant programs
usually require that eligible companies provide matching funds. Low-interest
loans with extended repayment terms and guarantees by the state may also be
used to underwrite certain risky business ventures. The use of industrial
development revenue bonds is also a common economic development measure
wherein the businesses may receive up to 100 percent financing at below
market interest rates. Both the business and bondholders also receive
tax-exempt benefits. . .
3. Job Training Funds
Another avenue for indirect financial assistance is through job training Several
states help pay for the cost of training and employing low-skill workers in
certain industries. This benefits both the businesses arid society in general
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4. Enterprise Zones
Several states have designated economically distressed areas for special
economic development assistance. Industries that locate in these "enterprise
zones" may be eligible for a package of incentives such as those cited above
plus regulatory relief and utility bill reductions.
5. Business Incubators
Another form of economic assistance is the business incubator for fledgling
companies. States and local governments may provide assistance in the form
of low-cost or rent-free space, professional business counseling services, and
access to investment capital. Companies remain in the incubator until they are
self-sufficient (usually no more than three years).
6. Recycled Product Procurement
Another, but often overlooked, economic incentive is the procurement by
government (as well an institutions and businesses) of the products made from
the recyclables collected. This involves identifying recycled products that
might be substituted for the virgin materials currently in use, assessing the
specifications for these products, modifying the bidding and other procurement
documents to remove any discrimination against recycled products, and
buying/using the recycled products that meet performance standards.
Government, because it is such a large purchaser of products and materials
(federal, state, and local government purchases account for about 20 percent of
the Gross National Product), can be a major factor in strengthening and
creating markets for recyclables.
Market
Development Incentives -
Economic
t
Tax Relief
I Grants I Job i cntpmrjQp I
& I Training I Ent7e!J"se I
Loans I Funds | Zone |
Business
Incubators
Recycled
Product
Procurement
I
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Legislative Incentives
1 Mandatory Recycling Laws: Most states and large municipalities have
enacted mandatory recycling legislation and have established minimum
recovery rates for recyclables. Such laws ensure that large quantities of
certain recyclables will be collected and this, in turn, sends a message to
industries that the raw materials will be available. This encourages industries
to make capital investments in processing and manufacturing facilities.
('
2- Minimum Content Standards: Some states have enacted laws requiring that
a minimum content of secondary materials (recyclables) be used to
manufacture certain products. A notable example is newspapers which must
contain at least a certain minimum percentage of fiber from waste paper.
Such minimum content standards ensure manufacturers that there will be a
market for their recycled products, encouraging them to make the necessary
capital investments to produce the products.
Market
Development Incentives -
legislative
I
Mandatory
Recycling
Laws
Minimum
Content
Standards
Technical Assistance ' - .
State and local government may also offer a wide array of technical assistance
including business development and management counseling, plus help in
locating appropriate sites, complying with government regulations, and solving
problem related to utilities, environmental protection, and site planning.
Assistance may also be provided in identifying and contacting markets.
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CONCLUSION
This primer summarizes the basic elements of recycling markets, marketing,
and market development. Understanding these three aspects of recycling is
essential to anyone who is involved in establishing and operating recycling
programs.
The future of successful recycling programs depends largely on the existence
of adequate markets, especially domestic ones, for the many recyclables being
collected from the solid waste stream. The development and strengthening of
such markets must be of the highest priority in the forthcoming years.
Market development is the task not only of state and local government
recycling officials but of economic development professionals as well - for
recycling is as much an economic issue as an environmental one.
It is hoped that this primer provides the reader with both an understanding of
the mechanics of recycling markets and an appreciation of the importance of
markets and economics in the recycling process.
Markets Unlock the Door to Recycling
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APPENDIX
SOURCES OF INFORMATION AND ASSISTANCE
The purpose of this primer has been to present general information on recycling
markets, marketing, and market development. Obviously, considerable detail
and specifics have been omitted. Therefore, it may be necessary to consult
with various agencies and resource materials to obtain additional information'.
The fallowing is a listing of agencies and a bibliography of some publications
that we recommend.
Source of Information and
Assistance
£edemLStai££<^^
U.S. Environmental Pr
District of Columbia
Department of Public Works
Office of Recycling
65 K Street, NW
Washington, DC 20002
202/727-5872
State of Delaware
Environmemai comro1
89 Kings Highway
Dover, DE 19903 .
302/739-3822
State of Maryland
t of the Environment
Commonwealth of Pennsylvania
SSBBSSnSBB"
r.U. Box 8471
Harrisburg, PA 17105-8471
717/787-8685
Commonwealth of Virginia. '
Department of Environmental Quality
Division of Waste Management
Monroe Building/nth Floor
101 North 14th Street
Richmond, VA 23219
804/225-2525
State of West Virginia
Division of Natural Resources
1900 Kanawha Boulevard East
Building 31, Room 732
Charleston, WV 25305
304/558-3370
Bibliography of Useful Reports and Journals
EPA Publications; a bibliography of publications on
source reduction, recycling, solid waste management,]
and education. To obtain a copy, call
800/424-9346 or 215/597-2842 ' -
Market study reports sponsored by the Northeast
Recycling Council: includes studies of markets for
paper, plastics, and other materials. For more
information, contact NERC, 139 Main Street,
Suite 401, Brattleboro, VT 05201
802/254-3636 .
RESOURCE RECYCLING, North America's Recycling
Journal: a monthly magazine for recycling
professionals; many articles devoted to recycling
markets and market development. For information,
contact RESOURCE RECYCLING, 1206 NW 21st
Street, P.O. Box.10540, Portland, OR 97202
800/227-1424
RECYCLING TIMES: a bi-weekly newspaper on
recycling markets. For information contact
RECYCLING TIMES, National Solid Waste
Management Association, 1730 Rhode island Ave.,
NW, Suite 1000, Washington, DC'20036-3196
202/861-0708
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