Paper recycling costs rising 35% as export markets collapse
By Pattrick Smellie
July 18 (BusinessDesk) - The price of trying to do the right thing by recycling paper just went up, with Oji Fibre Solutions announcing a 35 percent increase in the cost collecting a binful of used paper to stem the losses it's suffering when it sends recycling paper offshore for reprocessing.
The firm advised customers today that the combined impact of China raising the standards it expects before taking the world's garbage for recycling, and the global economic slowdown caused by the US-China trade war, had "flooded all cardboard and mixed paper markets, dramatically driving recycled fibre, pulp and paper prices down".
"This time last year, we were making a US$120 margin per tonne. Now we're losing about U$80 per tonne," said Jordan Roberts, exporting customer services manager for Oji.
The firm collects some 280,000 tonnes of recycled paper annually, of which it can process 220,000 tonnes at its locally-owned pulp and paper mills at Penrose and Kinleith. However, until it expands processing capacity in New Zealand, it sends another 60,000 tonnes offshore, with Indonesia last month joining China in requiring higher standards for recycled materials.
Those higher standards would raise the cost for Oji to make recycled paper fit for export, while the Indonesian move was likely to see prices drop further on the international market, said Roberts, who expected other paper recycling firms to follow suit.
"Current prices are now not sufficient to pay the collection, processing and transportation costs. Going forwards there is also real concern around the future of exporting many paper grades."
While the monthly rental cost of a standard green wheelie bin was unchanged, the 'lift charge' would rise from $10 to $13.50, a 35 percent increase that Roberts said was typical of the increases customers would see around the country.