Richard Stegner knew there was trouble when people stopped stealing his junk.
Stegner has a contract to gather empty water bottles and other recyclables — which he sorts and sells — from John F. Kennedy International Airport. His chief competitors are thieves who sneak off with the scrap plastic before his trucks get it. Lately, however, the crooks have disappeared.
"Prices for recycled plastic are so low now, it's not worth stealing anymore," lamented Stegner, president of Regency Recycling in Rosedale, N.Y. "I'm happy there's a decline in thefts, but there's another side to it."
Stegner is facing an unusual conundrum: In the past few months, new plastic has become cheaper than used. For the people who make a living doing the environmentally friendly work of unearthing recyclable treasure from mountains of trash, that makes for challenging times indeed.
Virgin PET typically costs about 10 percent more than the recycled kind. But since the start of the year, prices for the virgin materials have fallen to 67 cents a pound from 83 cents, according to Plastics News pricing data. Meanwhile, recycled PET has held steady at 72 cents.
Much of the decline stems from the plunge in oil prices. Consumers understandably rejoiced last year when the price of gasoline fell by half, but oil's drop all but obliterated the economics of pulling out the plastic from the 23,500 tons of trash produced by New Yorkers every day.
But plastic recycling is also a victim of its success. Most recycling programs around the country started modestly, targeting plastics used to contain soda or milk. But in recent years, recycling has grown more ambitious and now includes lower-quality plastics, such as those used for shower curtains, shopping bags and takeout containers. Expansion was good environmental policy, but when high- and low-quality plastics are collected together, they have to be separated by hand, which significantly raises the cost of recycling.
"There was nothing but the best of intentions, but what we're left with is the perfect plastic storm," said Wayne DeFeo, founder of DeFeo Associates, a Warren Township, N.J., firm that advises municipalities on recycling.
Last month, industry leader Waste Management said it is losing money in recycling and is shutting down facilities around the country. "We haven't seen any indication of a bottom," said the Houston-based company's chief executive on a conference call.
Closer to home, Jersey City, N.J.-based Galaxy Recycling filed for bankruptcy earlier this year. At the time, it owed about $1 million to Somerset County, N.J. — the equivalent of nearly 10 percent of Somerset's annual recycling budget. County Counsel Bill Cooper said Somerset has maintained its recycling program and is fighting in court to collect what it is owed.
New York City's program of picking up recyclables on curbsides doesn't appear to be in jeopardy. The city has a long-term contract with Sims Municipal Recycling that obligates the vendor to process residents' plastic, glass, cardboard and other items at a Brooklyn waterfront factory that opened 18 months ago. Sims wouldn't comment but told Crain's New York last year that it was struggling to find markets for rigid plastics, a new addition to the city's recycling program. Some had to be shipped to landfills. CNY is a sister publication of Plastics News.
Bury or burn them
It's an anomaly that new plastic has become cheaper than old, but one thing nearly all recycled products have in common is that they fetch significantly lower prices than a year ago. Scrap metals are down by 14 percent, while used tires and rubber are down more than 20 percent, according to market tracker Recycle.net. The main reason: China's slowing economy has cooled its appetite for commodities of all kinds.
Environmentalists worry that if prices stay low, it could reverse the painstaking progress New York City has made in recycling.
That's because the majority of the city's trash isn't collected by the Department of Sanitation, but by 260 carters who haul away trash and recyclables for about 150,000 offices, restaurants, retailers and factories around the city.
Some of these private haulers now find themselves in the unhappy position of paying their customers above-market prices for recyclables that they're contractually bound to pick up. Stashing the recyclables in warehouses in the hope prices go up later is too expensive, so environmental experts fear the carters will get rid of recyclables the old-fashioned way — by burying or burning them.
"When prices fall like they have, plastic doesn't get recycled, just landfilled," said Gavin Kearney, director for environmental justice at New York Lawyers for the Public Interest. Kearney helped prepare a report released last month by a coalition called Transform Don't Trash NYC, which called for reforming the carting industry.
Carting and waste-transfer station executives insist recyclables aren't often being sent to landfills or incinerators. Because by law their contracts can't last more than two years, they don't have to wait too long to reset terms to align with the new market rates. The fact that oil prices have bounced off their lows in recent weeks also offers some plastics recyclers hope that the hardest times may be coming to an end.
"We just have to take the heat for a while," Stegner said. "In the meantime, some are praying prices will go up."
