Recycling fees may rise as demand, prices drop

Who knew the paper, pop bottles and cans tossed into your curbside recycling bin were caught up in the global economic crisis?

The drop in consumer demand is reverberating from American shopping malls to Chinese factories that turn recyclables into new products, and back again to Seattle-area recyclers.

Those local companies, and their competitors around the country, face a dizzying drop in the price for everything from paper to scrap metal to plastic bottles.

In some cases, prices are less than half of what they were a month ago.

"We've been through ups and downs before. We've never seen anything like this," said Bruce Glant, president and part owner of the Pacific Iron and Metal Company, a 101-year-old metal scrap recycler in South Seattle.

The collapse could mean higher fees for recycling pickup in much of the state, as recyclers struggle to close the gap between the cost to collect the material and what it now sells for.

Local companies are stockpiling some material in hopes they can sell it later. They also are selling at discount prices, just trying to move the huge volumes of recyclable products that people dump in their bins each week.

Waste Management's factory in a massive Woodinville warehouse sorts through mounds of magazines, plastic bottles and aluminum cans collected from more than 250,000 Puget Sound-area homes. After it's sorted and squashed into bales, much of it is loaded into containers bound for Asia.

Wastepaper gets turned into cardboard boxes used to ship computers, running shoes and other consumer products back to the United States. Plastic bottles become synthetic carpets, and the filling for winter coats and sleeping bags. Metal scrap is melted down for steel, copper wiring and aluminum cans.

Now, with the economy worsening, manufacturers don't need as much of those raw materials.

"It's all connected," said Ed Skernolis, acting executive director of the National Recycling Coalition. "It all ripples down through the system."

The price for recycled newspaper in the Northwest fell from $120 a ton to $50 a ton in the last month, the price for cardboard dropped by half, and the price for plastic pop bottles dived from more than 15 cents per pound to 6 cents per pound, said Jerry Powell, editor of the Portland-based recycling industry journal, Resource Recycling.

With prices so low, when people recycle more it actually hurts the company's bottom line, said Susan Robinson, who oversees Waste Management's municipal contracts in the Northwest.

Eventually, area residents and companies may end up paying higher recycling bills to cover the lost revenue.

Under recycling fees set by the state, residents of unincorporated parts of counties get a monthly credit on their waste-hauling bills when recycling companies get extra revenue from high prices for recycled materials. But when the prices fall below a set threshold, that can turn into an extra cost tacked onto fees, said Gene Eckhardt, of the state Utilities and Transportation Commission, which sets the rates.

People in recent years have gotten credits. In parts of King County, that has meant anywhere from $2.64 to $2.87 off their monthly bills. Any higher costs could take a year or more to find their way onto people's garbage bills, because of how it's calculated.

Commission staff is now considering whether fees could be set differently to dampen the impact, Eckhardt said.

The city of Seattle, meanwhile, faces the prospect of a multimillion-dollar revenue source becoming a multimillion-dollar expense. Under its recycling contracts, the city collects the excess revenues when prices for recycled materials rise above a predetermined benchmark. But when prices fall below that level, the city must pay the difference to companies with the recycling contracts.

This year, the city should still get $1 million or $2 million from the arrangement, because of high prices earlier in the year, said George Sidles, Seattle's recycling manager with Seattle Public Utilities.

But next year could be a different picture. Still, Sidles said even if the city loses $2 million or $4 million, it's such a small part of the budget that "it's not a big impact to our ratepayers."

If there's a silver lining to all this, the drop in metal prices appears to have put a dent in the rash of metal thefts plaguing the region. Until recently, people — often characterized as drug addicts looking for cash — were stealing everything from football goalposts to copper wire at construction sites, to sell to scrap dealers.

No more, said Powell, of the Portland trade magazine.

"It's gone away. It's absolutely gone away. Meth heads are also businessmen."

Warren Cornwall: 206-464-2311 or wcornwall@seattletimes.com