US exports more than 40 million tons of scrap to 160

US Exports• US exports more than 40 million tons of scrap

to 160 countries every year.• $25 million/day of scrap exports were placed

into container ships in 2013.• Five key overseas markets from

the West Coast in 2014:– China = $4.2 billion– Taiwan = $1.1 billion– South Korea = $1.1 billion– Japan = $402 million– Thailand = $200 million

Source: American Recycler & ISRI – May, 2015

DDGS Distiller Dried Grains w/ SolublesOne commodity of many that affects

availability of overseas containers

11 million tons exported to 45 countries in 2014.

Top 5 countries as follows:China = 5.7 million tonsMexico = 1.3 million tonsKorea = 0.3 million tonsVietnam = 0.3 million tonsJapan = 0.3 million tons

Availability of Import / Export Sea Ports

• 29 Sea Ports on US West Coast, represented by one Longshoreman Union

• US Congress considering a new law to address a warning system regarding Port Work Slowdowns

China’s Green Fence

International Organization for StandardizationISO 9000/9001 Standards

Companies that ship materials to Chinamust be ISO certified!

Green Fence Parameters

• No Prohibitives– Radioactive– Explosives– Hazardous Wastes

National Standard of the People’s Republic of ChinaGB 16487.4-2005

Green Fence ParametersCarried Wastes‘restricted’ and shall not exceed 0.01% by weight and includes the following:* Asbestos waste* Burnt or partly burnt waste paper* Sensitization material waste* Sealed containers* Other hazardous wastes mixed into waste paper during the production, collection and transportation processes

Green Fence Parameters

• Carried Wastes (0.01 % in perspective)If a bale of newspaper weighs 1800 lbs,Then ‘Carried Wastes’ cannot exceed(0.0001) x 1800 lbs = 0.18 lbs

less than 3 ouncesTherefore; for all practical purposes,there can be no ‘Carried Waste’.

Green Fence Parameters• Other Carried Wastes (Residuals / Out-throws)• Referenced in GB16487.4-2005; 4.5 ‘restricted’ and shall

not exceed 1.5% by weight, includes the following:• Waste wood• Waste metal• Waste glass• Waste plastic• Waste rubber• Waste sorbent• Wall paper• Waxed paper• Wax dipped paper

• Carbon paper, Etc.

Green Fence Parameters• Other Carried Wastes (1.5% in perspective)If a bale of newspaper weighs 1800 lbs,Then ‘Other Carried Wastes’ cannot exceed(0.015) x 1800 lbs = 27 lbs

(400 aluminum cans + 600 single serve PET bottles)

While this may technically meet Chinese import regulatory % requirements, it likely will not be acceptable to the paper mill or to anyone else based on a visual inspection.

MeasurementOther Carried Wastefrom 1800 lb newspaper bale 0.65Lb = 0.036%

Paper Generated & Recovered• 2004

– 102 million tons of paper generated– 50 million tons recovered– 49% recovered

• 2014– 78 million tons of paper generated– 52 million tons recovered– 65% recovered

76% of US Paper Mills rely on recovered paper fiberRecovered paper is exported to 85 countries~40% of recovered paper exported to China in 2013Sources:American Forest & Paper AssociationMSW Management / May, 2015

PaperRecycles.orgTotal US Recovered Paper

Newspaper

Chicago TribuneNewspaper Circulation

0

100000

200000

300000

400000

500000

600000

700000654000

541000

440000 455000

CIRCULATION 1998 2009 2013 2014

PaperRecycles.orgUS ONP (Newspaper) Recovery

ISRI 2013 Guidelines for Paper StockDomestic & Export Transactions - Newspaper

• News (#7 ONP)Sorted, fresh newspapers, containing not more than a normal percentage of rotogravure and colored sections. May also include magazines.• Prohibitives: < 1%• Outthrows < 3%• Other Papers < 20%

• News (#8 ONP)Sorted, fresh newspapers, containing not more than a normal percentage of rotogravure and colored sections. Relatively free of magazines.• Prohibitives: < 1%• Outthrows < 2%• Other Papers < 10%

ONP OBM Market Index Prices

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

$180.00

OBM #8 ONP Domestic

OBM #8 ONP Export

$/Ton

Source: PPI-OBM Official Board Markets - Midwest

Cardboard

Corrugated End Use Markets

Industrial & Machinery

22%

Processed Foods22%

Drinks13%

Appliances & Electrical

Goods12%

Durable Goods & Clothing

10%

Non Food Consumables

10%

Fresh Foods/Produce

6% Other5%

ISRI 2013 Guidelines for Paper StockDomestic & Export Transactions - Cardboard• Old Corrugated

Containers(#11 OCC)

Corrugated containers having liners of either test liner or kraft.

• Prohibitives < 1%• Outthrows < 5%

• Double Sorted Old Corrugated Containers(#11 DS OCC)

Generated from supermarkets & commercial facilities having liners of either test liner or kraft, free of boxboard, off-shore corrugated, plastic, wax.• Prohibitives < ½ of 1%• Outthrows < 2%

OCC OBM Market Index Prices

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

$180.00

$200.00

OBM #11 OCC Domestic

OBM #11 OCC Export

$/Ton

Source: PPI-OBM Official Board Markets - Midwest

Mixed Paper

ISRI 2013 Guidelines for Paper StockDomestic & Export Transactions – Mixed Paper

• Soft Mixed Paper (#2)Clean, sorted mixture of various qualities of paper not limited as to type of fiber content.• Prohibitives < 1%• Outthrows < 5%

• Hard Mixed Paper (#3)Clean, sorted mixture of various qualities of paper containing less than 10% groundwood.• Prohibitives < ½ of 1%• Outthrows < 3%

Mixed Paper OBM Market Index Prices

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00OBM #2 MP Domestic

OBM #12 MP Export

Source: PPI-OBM Official Board Markets - Midwest

Plastics Exports• Green Fence driven by:– Government Concerns of pollution from imports of low

quality scrap– Government desires to see better quality of recycled

materials to help local industries to upgrade• Green Fence enforcement includes:

• Port Inspections• Point of Origin Inspections• Preventing illegal buying, selling and/or renting of

government licenses

Source: Plastic News – May 19, 2015Steven Wong, Executive President of Beijing-based China Scrap Plastics Association

Plastics Imports To China

• 2012 = 8.88 million metric tons• 2013 = 7.88 million metric tons• 2014 = 8.26 million metric tonsReduction from 2012 to 2013 attributed to Green Fence initiatives

Source: Plastic News - May 18, 2015

Plastic Imports to China

• Waste Plastic entered into Chinese ports in 2014:– Guangdong – 37%– Shanghai & Ningbo – 28%– Tianjin & Qingdao – 22%– Fuzhou & Xiamen – 13%

Source: Plastic News - May 18, 2015

US Shale & Fracking Gas to Plastics

• The lower cost availability of continental natural gas may contribute to more feedstock for the US manufacture of plastics.

• Where will the manufactured plastics be recycled after consumer use?

Plastic Resin Prices

• Resin prices remain unpredictable!• As Frank Sinatra would sing:

– Riding High in April,– Shot Down in May.– Back on top come June?

Source: Plastic News – April 27, 2015

Secondary Materials Pricing . ComMidwest Region

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HDPE-N $/LbWorld Recession

No prediction of world oil price drop

Secondary Materials Pricing . ComMidwest Region

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World RecessionHDPE-C $/Lb

Secondary Materials Pricing . ComMidwest Region

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World Recession

PETM $/Lb

Secondary Materials Pricing . ComMidwest Region

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Jul-1

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3

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World Recession

UBCs $/LB

Secondary Materials Pricing . ComMidwest Region

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World Recession

Steel Cans $/Ton

Secondary Materials Pricing . ComMidwest Region

-$15

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Clear Glass $/Ton

Brown Glass $/Ton

Green Glass$/Ton

Mix Glass$/Ton

World Recession

How Contamination Affects Value

$0.00

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$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

$80.00

16% Contamination 2% Contamination

Commodity Value of Processed Single Stream

4/1/2015

Higher Contamination =Higher Processing Cost and

Lower Net Commodities Value

($80.00)

($60.00)

($40.00)

($20.00)

$0.00

$20.00

$40.00

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$80.00

2% Contamination 12% Contamination 16% Contamination

Commodity Value Process Cost Net Value

Value of Residential Single Stream

($40.00)

($20.00)

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City of Chicago Residential Single StreamValue Tipped At Local Transfer Station - $/Ton

No movement at any price!

Recent Harris Survey

• 86% of Americans would like manufacturers to design products that can easily be disassembled for recycling.

• 62% say if a product is not easy or convenient to recycle, they won’t.

• 87% are not willing to pay more for having a product more easy to recycle.

Government Advisory AssociatesResidential Single Stream

• Average Residual Rate = 16.6%• Some as high as 25 to 30%

Based on a study of 35 curbside single stream programs.

Source: Resource Recycling / April, 2015

Aseptic Packaging73% paper, 23% plastic, 4% aluminum

75% by weight is recycled typically for tissue mills. (Source: RecyclingToday, May, 2014)

Flexible Packaging / Pouches

Kraft Foods (CapriSun) being targeted by environmental groups for limited recycling of food & beverage pouches.

Cup Recycling

• MicroGreen Polymers Inc (Incycle Brand) recycled cup maker shuts down losing production of 400,000 to 2,000,000 cups per day. Cups made with minimum 50% recycled PET content.

• Dunkin Donuts PP cup?

Source: Plastic News – April 20, 2015

K-Cup• How guilty should you feel about that K-Cup?

9.8 billion cups sold last year= 140,434 tons of waste

However, the US packs landfills every year with 34.7 million tons of food waste8.8 million tons of clothing11.5 million tons of furniture

Every cup counts, but every sofa counts more.Source: Fortune Magazine, April, 2015