Recyclable Paper Futures Market

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Recyclable Paper Futures Market

• By John McQuade

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Recyclable Paper Futures Market

• Market Information
• US paper market in 2004 101 Billion in sales
• In the US in 2000
• 105.3 million tons of paper produced
• 47.3 million tons of paper recycled
• 45 Recycling rate
• In the US in 2003
• 50.3 Recycling rate
• The market is growing larger each year as paper
  usage and recycling are both consistently
  increasing.
• Recovered paper consumption growth rate of 2.1
  annually through the year 2000.
• Source
• American Forest and Paper Association
• http//www.afandpa.org/Content/NavigationMenu/Envi
  ronment_and_Recycling/Recycling/Recycling.htm
• Recycling Today
• http//www.recyclingtoday.com/articles/article.asp
  ?Id5342SubCatID26CatID3
• TAPPI

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Market Participants

• Sellers Recyclable waste paper gatherers
• Waste Handlers, Municipalities
• Want highest price they can get
• Naturally Long
• Buyers Paper/paper product producers
• Paper Producers, Recycled paper users
  (insulation, storage filler, packaging)
• Want to buy at lowest prices
• Naturally Short

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Price Volatility

• Influencing Factors
• Supply/Demand discontinuities
• Quality Issues no universal standards
• Competing primary supply (wood pulp) prices
• Exports foreign orders are often made and
  cancelled sporadically
• Recycled content legislation
• 1990s
• Price fluctuations damaged industry hurt both
  sellers and buyers of recyclable waste paper
• Early 1990s
• Oversupply of waste paper caused prices to drop
  significantly. Bad for suppliers.
• Mid 1990s
• Foreign demand drove prices up. Bad for buyers.
• Source
• North Carolina Department of Environment and
  Natural Resources
• http//www.p2pays.org/ref/02/0162218.pdf

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Benefits

• Futures Market
• Futures market will help control price volatility
• Enforce contracts
• Create shipment quality standards
• Recycling paper
• Less paper in landfills
• Less trees cut
• Savings in manufacturing process
• 74 Less air pollution is generated
• 35 Less water pollution is generated
• 58 Less water is required
• 64 Less energy is required
• Source
• Institute of Scrap Recycling Industries
• http//www.green-networld.com/tips/paper.htm

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Risks

• Paper cannot be recycled indefinitely
• A small percentage is lost each time recycled
• Prices of substitute inputs to paper production
  (such as wood pulp) may fall significantly
• Would make recyclable waste paper less attractive
  as input to producers

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• Questions?