Facing falling recycled commodity prices, waste companies pivot in Q3

After rising value of recycled commodities in the first two quarters of 2022, the largest public companies in the waste and recycling industry suffered a significant drop in commodity prices in the third quarter. Most executives plan for fourth-quarter price declines to plateau or continue, and are making other business adjustments to offset further price volatility. Get the latest recycling statistics and commentary from our third quarter earnings report.

*Each company may categorize recycling revenue in slightly different ways, such as including organic recycling activities. GFL Environmental does not report specific recycling revenue.

WM

• Despite falling commodity prices this quarter, WM has moved about 85% of its third-party volume to a paid-for-service model, making its recycling business profitable and generating “solid profits in any economic environment.” said that Said John Morris, executive vice president and chief operating officer of the company, said:
• Commodity prices averaged about $94 per tonne in the third quarter, but Morris expects prices to fall to $50 per tonne in the fourth quarter. This compares to $132 per tonne in Q4 2021.
• WM is also controlling the cost of its recycling business by continuing to invest in MRF automation projects, said CEO Jim Fish. The company’s five fully automated his MRFs saw labor costs cut by about 30%, total operating costs he said were reduced by 13%, and “key safety metrics” he said improved by 40%. said Mr. WM plans to complete four automation projects and add one new MRF to him by the end of 2022.
• W.M. got A controlling interest in Avangard Innovative’s U.S. business, Fish said, would allow the company to grow its plastic recycling capacity for film and clear plastic wrap, but the return on investment from the acquisition “is expected to continue as the business is in the early stages of scaling.” Given that there is a longer-term view,” he said. Fish plans to provide more details on its fourth quarter earnings call once the transaction closes.

republic service

• The company’s average recycled commodity price in the third quarter was $162, down $56 per ton from the second quarter and $68 per ton compared to the second quarter. Previous year. Commodity prices are expected to be around $90 per ton in the fourth quarter.
• CFO Brian DelGhiaccio said the company sees an opportunity to work with BP to improve recycling at gas stations.The Republic also polymer center project And we’ve budgeted another $40 million this year to start work on future sites.

waste connection

• The value of recycled goods, excluding acquisitions, is down almost 35% year-over-year, said CEO Worthing Jackman. SaidThe company expects a further 60% drop in the fourth quarter, with OCC’s average price particularly low at around $50 per tonne.
• The company plans to process recycled goods in-house instead of paying a third-party processing fee, CFO Mary Ann Whitney said.
• As the company builds new processing facilities, it will also update technology to improve recycling quality at existing facilities. Investing in such technology is another way to improve commodity prices through cleaner materials and help “de-risk” during a time of turbulent recycling values, Whitney said.

GFL environment

• The GFL expects low recycling prices to create a headwind of C$50 million into 2023. The company plans to offset these conditions with higher prices and a fuel surcharge program.
• CFO Luke Pelosi said the company is “actively engaged” in talks to renegotiate and restructure its contracts, with the goal of moving from commodity price-driven returns to a fixed-fee model. This is a concept the company had in mind even before the recent OCC price crash.
• GFL sees an opportunity to be based around Toronto, where “the whole dynamics of recycling is changing.” GFL will also assess its current footprint for opportunities to build recycling facilities in areas where the company believes it can use more recycling capacity.

Casera disposal system

• The company’s Resource Solutions segment had revenues of $80.2 million, up significantly year-over-year due to acquisitions. However, the value of recycled goods fell by 37% year-over-year.
• Casella expects a further 20% decline in commodity prices from September to December, creating headwinds of about $2 million in the fourth quarter. CFO If the trend in Ned Colletta prices continues, the company could see the price of recycled commodities drop by $60 to $70 per ton next year.
• CEO John Casella Said The company has done a ‘great job’ of offsetting low commodity prices We shift most of our price exposure to our customers through the Sustainability Recycling Adjustment Fee. He also highlighted recent technology upgrades at some recycling facilities. He said this will improve safety and operational efficiency and generate solid profits.