The waste and recycling industry’s notable events and key trends

By Swaliha Shanavas

As 2015 draws to a close, we look back and reflect on the events that have shaped this year including the major developments, challenges and achievements and consider what might be in store for the sector around the world and the region in 2016. Overall, it has been a tough year in news worldwide, but there have been some interesting news and moments of inspiration as well. Here are some highlights of 2015, and insights from waste management and recycling industry leaders on significant developments and the outlook for 2016!

The current business climate is tough worldwide, with a majority of the business leaders in the Middle East admitting that the markets are volatile with low oil prices, government spending cuts, reduced consumer spending and intense competition being highlighted as some of the biggest challenges. The dynamics of business have been changing rapidly and the waste recycling industry has been feeling the pressure throughout 2015, with most of the commodity headlines dominated by fluctuating oil prices, continued economic slowdown in China and downward trend in construction and related activities in the region. “It is without question that 2015 was a very challenging year for the global recycling industry. The year started with the West Coast ports slowdown in the U.S.; commodity prices declined throughout the year; and the efficiency and feasibility of U.S. recycling was questioned in the media,” says Robin Wiener, President, Institute of Scrap Recycling Industries (ISRI).

One of the ways in which the industry has responded to the challenging market conditions is through improvements to operational efficiency and quality, along with a renewed commitment to safety, she notes. “In 2015, ISRI marked the first full year of the Circle of Safety Excellence and established an agreement with the U.S. Government’s Occupational Safety & Health Administration to provide guidance and training to protect the health and safety of industry workers.”

Indian scenario

The metal industry in India passing through a severe crisis, struggling for survival, says Sanjay Mehta, President, Metal Recycling Association of India (MRAI) and Director, MTC Group. “The secondary steel sector (recycling of metals) is currently operating below 50% of their installed capacities, the reasons being high cost of electricity; high interest rates; increased production by primary steel sector due to lower production cost as coal/iron ore is at historically low prices now compared to secondary steel production cost; more imports of finished material to India, etc.”

Demand for steel from key sectors like infrastructure, construction and so on has reduced a great deal this year compared to last year, he comments. “Again, the finished products from secondary sector are not accepted in the Government projects as they are of the view that quality of steel produced by primary sector is superior to secondary steel, which is absolutely wrong.

”Primary steel is getting 10-15% higher price than secondary steel products in government projects, he says, adding that the government should allow the use of steel produced from secondary sector also in their projects, “only then will the secondary /metal recycling sector improve”.

“Last year has been a meltdown period for all the metals; nearly 35% erosion was too big to be handled but with no choices. The GDP figures still displaying a 7+ board is a big question mark. I am still not hopeful that we have seen the bottom but believe that it is in sight now. Nonferrous metals had dual factors playing on the pricing front LME meltdown and premiums over LME slashing. Hope the worst is over,” says Dr. Kishore Rajpurohit, Chairman, SFC Metallurgical Ltd; Executive committee Member of MRAI; BMR Ambassador for Indian Sub-continent; Founder President ANMA (Ahmedabad Nonferrous Metal Exim Association).

UK viewpoint

Dr Adam Read, Practice Director – Resource Efficiency & Waste Management, Ricardo Energy & Environment UK, says in Europe the economic crisis has continued to impact front line waste services “with municipalities having to cut budgets by up to 30% by 2020, impacting on service provision, quality and in particular consumer engagement and communications,” says Dr. Adam Read,Practice Director - Resource Efficiency & Waste Management, Ricardo Energy & Environment UK.

There has been a continuation of amalgamation and mergers of the waste industry with an increasing number of acquisitions by the larger operators, and the sector has seen new entrants from public realm services expanding into waste management and recycling from ground maintenance and street cleansing backgrounds, he notes. Again, a growing interest from Spanish operators in the UK “is a reflection of the better state of the UK sector than the Spanish one,” Dr. Read remarks.

Middle East perspective

The UAE has made great strides in recent times with Dubai adopting specific measures to ensure they are on track to achieving the ultimate ‘zero waste’ goal and attaining 75% waste diversion by 2021, and Abu Dhabi and Sharjah progressing to achieve their goals in line with their environmental programmes. Apart from residential programmes, the Dubai Municipality is also targeting industrial and commercial establishments and putting in place necessary infrastructure including sorting and recycling facilities, etc.

Atul Kaul, Director Pulp & Paper, Waraq (Arab Paper Manufacturing Co) says, “The Middle East is the centre of action due to its importance as an oil exporter. We found that it was indeed challenging to handle business successfully in the fast changing geopolitical arena. Syria, Iraq, Yemen continued to draw focus as areas of key interest and impacted business in a quantifiable way.”

Though the paper recycling market was more or less quiet it saw and suffered a shift in buyer patterns in terms of volume and prices, with lower demand and constant corrections in prices, he comments, adding that the paper industry in general is not doing well in the packaging grades. “Both containerboard and FBB grades showed reduced demand and excess supply and unless demand for these grades pick up we will see pressure on supplies and prices,” he opines.

Again, constant correction in prices downwards “shook buyer confidence in Asia and purchased lots lost value while still on the high seas. Reduced appetite for risk, shorter sailing time and availability of smaller batches has increased Asian appetite for Middle East materials and reduced the demand of US/European materials, he states.

“Middle Eastern material is cleaner, drier and qualitatively better than European material, so preferred.”“Unless there is a paradigm shift in the business future of the packaging grades which we do expect mid 2016 onwards this will drag on the same way. Political stability in the region is a key contributor for the industry to succeed and prosper,” Kaul remarks.

Manjit Kahlon, International Business Manager – Resource Efficiency & Waste Management at Ricardo Energy & Environment, says some significant infrastructure projects within the Kingdom of Saudi Arabia (KSA) particularly in ArRiyadh have fuelled waste management thinking and started to bring this more onto political agendas, e.g., Riyadh Public Transport Project (RPTP).

“Rapid industrialisation within the capital and KSA is fuelling the rate of waste generation but associated management systems are failing to meet international best practice approaches,” he comments.

ArRiyadh is one of the fastest growing cities in the world with a projected total population in the city that could reach some 8 million by 2030 (MEDSTAR, 2009). “The volume of solid waste that reaches the dumping areas at present is about 6,700 tonnes/day and is expected to reach 25,000 tonnes/day by 2020,” Kahlon says.

In his view waste management is becoming a big challenge for the private sector and municipalities alike for many reasons including: Lack of standards/proper enforcement of regulations; Indiscriminate dumping of solid waste is still prevalent, particularly C&D and C&I waste; Lack of robust systems for waste disposal and tipping fees; Recycling, reuse and energy recovery are still at an early stage of development within KSA; Poorly developed treatment facilities, irrespective of waste streams; Recycling markets are restricted within KSA with few commodities being recycled and most materials going to UAE, India, Pakistan and China.

In contrast, Oman has been making rapid progress in the sector. Xavier Joseph, CEO, Middle East, Veolia sees Oman as a very interesting market and says the waste management sector in the country is evolving in the right direction. It has a strong public entity be’ah. “I think they have the best approach in the region; they have the structure and the right method to have collection, transfer and landfilling operation region by region. They are also taking a stricter approach with regard to hazardous waste.” So he says Oman will achieve a good level of professionalism with regard to waste management.

Outlook

Moving forward into 2016, Dr. Read says the Circular Economy package and associated targets will impact national, regional and local decision-making on budgets; COP and the increasing influence of carbon and climate change agendas will encourage decision-makers to focus on these issues in designing their new services and infrastructure; The continuing bounce back from the economic recession will see an upward trend in more mergers & acquisitions, particularly focused on the security of material flows.

“I expect to see more interest from the big logistics companies and the larger retailers who will try to close their materials loops by investing in waste management, collection and reprocessing infrastructure – most notably plastics, organics, cardboard, etc.,” he opines.

Weiner comments, “There is much uncertainty as 2016 begins, but recycling remains a vibrant activity and the first link in the global manufacturing supply chain. Those that understand how to maximise limited resources and strategically invest in the future will thrive over the long term, and ISRI will be there to support its members and the industry to make that happen.” Sanjay Mehta says steel demand in 2016 will not improve for various reasons. But, production of steel around the world especially in developed countries like Japan, Korea, etc. is not down in proportion to lower demand “due to which developing countries like India are suffering because of dumping of their finished products. India’s overall exports have gone down, which also affects this sector’s growth in India.”

“It is also imperative to state here that Indian Government is mulling over introducing minimum import price (MIP) for steel scrap imports to India to safeguard domestic primary steel sector. If this is implemented, the secondary (recycling) metal sector will be badly affected, as the importer will have to pay MIP for their scrap, even if the buying price is less, which is nothing but anti-dumping duty,” he emphasises.

In Kahlon’s view, increasing urbanisation will continue to lead to the movement of people into the cities in KSA and the desire to provide modern cities with world-class infrastructure and services would also mean focusing on environmental protection. “This will stimulate the need for ‘Environmental Maturity’ to become a top political agenda. Waste generation rates in the medium term will continue to increase and the need to move to engineered landfills will also be critical in the short term. Recycling, recovery and treatment systems will not become real agenda items for at least another 5 years+,” he predicts.

With prices almost touching the lowest levels with a near shutdown situation for smelters and “premiums balloon bursting”, Dr. Rajpurohit feels it is time to take positions. “Big corporate giants are pushing hard to get a similar import duty structure for scrap and primary metals. With a majority of the industry using recycled metal, wish government treats scrap and virgin metals differently. With India still at a very low level of Aluminium usage compared to other countries, I hope that government’s ‘Make in India’ programme would promote the use of aluminium and transform 2016 into a marvellous year.”

Kaul says this has been “a very testing year for the Middle East geopolitical scenario”. Traditional sales channels either reduced or suffered partial or temporary closures. Excess dumping of finished paper and 25% erosion of market demand also impacted the industry (Q3 & Q4). “We know that quality recovered fibre is and will always be in short supply.

Once the market conditions improve, RCP prices will shoot up. Middle East typically generates OCC, ONP, BBC and mixed grades. Industry patterns, consumer and industry preferences will dictate supply and demand (water bottles being packed in plastic for instance). Once there is political stability markets will recover. Whether it will happen in 2016 is anybody’s guess!”