2019 Recycling Industry Yearbook

ISRI.ORG 9 The ISRI Index is a weighted index of ferrous scrap, copper The ISRI Index is a weighted index of ferrous scrap, copper scrap, aluminum scrap, and recovered paper and fiber prices. Scrap prices and supply are closely connected: For most segments of the industry, prices provide the incentive for suppliers to bring recycled materials to the marketplace. In November 2015, when the ISRI Index fell to its lowest level since the Great Recession, sup- plies were constrained, placing a floor under the market and setting the stage for a price recovery in the first half of 2016 and into 2017. Given the cyclical nature of commodity markets and industrial production, it should come as no surprise that the scrap industry faces similar business cycles. Residential recycling differs from industrial recycling because the supply does not change based on market conditions. Contracts between materials recovery facilities and municipal governments set the terms for what materials the MRF will collect and at what frequency. Because the supply has less elasticity, a sudden reduction in demand can wreak havoc with prices. This happened in 2018, when China stopped importing postconsumer plastics and mixed paper and set extremely low levels of contaminants it would allow in other scrap materials. With other markets around the world unable to absorb the volumes of these materials that Chinese companies had been purchasing, prices dropped precipitously. THE ROLE OF SPECIFICATIONS (ISRI SPECS) Specifications help facilitate trade by improving communication between buyers and sellers worldwide. Each word or phrase has a definition that serves as a global standard for consistency and quality, reflecting manufacturers’ tolerances for the product’s size, shape, color, composition, manufacturing process, source, or other characteristics. ISRI’s predecessor organizations established the first specifications for scrap commodities more than 100 years ago, selecting words—Zorba, Honey, Berry, Twitch—to describe categories of nonferrous metals. Over the decades, the specifications have expanded to address a wide range of recycled commodities, from ferrous and nonferrous metals to glass, paper, plastics, electronics, and tires. Most recently, ISRI established “inbound MRF” specifications for residential recyclables coming into materials recovery facilities. The process for requesting new or modified specifica- tions allows them to keep pace with changes in the supply of recyclable manufactured goods and with manufacturers’ demand for different, often more uniform, characteristics in the commodities they purchase. In recent years, the specifications have proven invaluable not just in business-to-business transactions, but also in clarifying to governments and international organizations the difference between scrap and waste when setting trade policy. ISRI has worked with these bodies to craft regulations that continue to give companies around the world access to desirable recycled commodities they can use as manufacturing inputs instead of relying on extraction of natural resources.