HAZELWOOD, Mo. -- From aluminum cans to plastic and paper, mountains of material get crunched into bales after winding through a $9 million maze of sorting equipment at Republic Services' recycling facility in Hazelwood -- one of two major processing centers for the St. Louis region's recyclables.
Paper makes up about a third of the plant's recycling stream, and for years, selling it had essentially been as reliable as the hum of the equipment. About 90 percent of it went to a paper mill in China, said Brent Batliner, the general manager of the facility.
But a few months ago, that steady market for recycled paper evaporated when China enacted much stricter standards for the quality of paper that it accepts. Commonly tarnished by plastic bags, American paper streams were too dirty, and the new requirements -- which would only allow a contamination rate of a half-percent or lower -- effectively cut off China as a destination for the material.
"Quite frankly, a half a percent is almost impossible," Batliner said. "They basically shut the world off at the beginning of May."
Almost overnight, the economics of global paper recycling shifted, creating disruption that has caused consequences for the bottom lines of recycling companies and municipalities as they scramble to adjust.
The St. Louis area is no exception.
In University City, for instance, the economic benefits from the city's recycling program used to make it a no-brainer, said Jennifer Wendt, project manager in the Department of Public Works and Parks. Now, China's change in policy has at least temporarily dulled the profitability.
"It is costing us more than it has in a long time," Wendt said.
"It's not as profitable as it once was, but it's getting better," she said. "Now that they're finding markets, it's starting to level out."
Batliner said that, for months now, mixed paper has even had to be sold at a loss. Not long ago, the material could fetch $80 per ton, but has plunged to a net cost of negative $18 a ton, because of freight costs -- meaning that recycling companies might get $10 per ton, but need to spend $28 to ship it to its destination.
"We've got to keep it moving," said Batliner, explaining the reasons for shipping at a loss. "We're making 500 tons a day. If we're not shipping it, this place would be closed in three days."
As painful as the losses are now, prices were even worse a couple of months ago, when Batliner said recycling companies were taking a hit of $50 or $60 per ton on mixed paper in May and June -- immediately after China hit the brakes on importing the commodity.
Places like Indonesia, Malaysia, South Korea and Vietnam have since emerged as new markets in China's stead, Batliner said. He said more mixed paper is being sold for recycling domestically, but it's "a very small percentage."
Though there's no end in sight to China's strict new guidelines for accepting paper, Batliner speculates that, at some point, the country could relent.
"They have to feed the beast. They have to make boxes," he said. "When they see that they're buying these boxes from other countries now, they'll ease up a little bit. They have to."
China's actions are outside of anyone's control. But both Batliner and Wendt see opportunities to improve the behavior and recycling savvy of U.S. consumers. They hope that ramped-up education campaigns set to start in the area will help reduce contamination of recycling streams, improving their quality -- and marketability.
"That's our pitch right now: Help us by giving us what we want," said Batliner. "Empty, clean and dry material. That's kind of our slogan right now."
"It really comes down to 'wish-cycling,'" said Wendt, referring to the bad practice of wishfully tossing confusing but nonrecyclable materials, like garden hoses, into the mix and hoping for the best. "The biggest thing is just trying to get people to stop contaminating the streams."
Ultimately, though, it's economics -- and not simply well-intentioned environmentalism -- that determines the success of recycling programs. With that in mind, Batliner and Wendt are looking to the future to further stabilize prices for mixed paper, and to help the market climb back out of its hole, one step at a time.
"Getting better was from negative $30 a ton to negative $18," said Batliner. "Hopefully we get closer to zero in August."
SundayMonday Business on 08/05/2018