Recyclable Material Wholesalers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 6,600 recyclable material wholesalers in the US distribute metal scrap, glass scrap, paper scrap, plastic scrap, and other recyclable materials for reuse in manufacturing, construction, and other applications. The industry includes auto wreckers who dismantle motor vehicles to resell scrap materials, rather than selling used auto parts.
Dependence On Economy
Demand for recyclable materials is dependent on economic conditions, particularly the strength of the manufacturing and construction sectors.
Volatile Scrap Prices
Prices for recycled materials can vary widely from year to year, affecting revenues and inventory valuations for wholesalers.
Industry size & Structure
The average recyclable material wholesaler has a single location, employs about 15-16 employees and generates $11-12 million in annual revenue.
- The industry consists of about 6,600 companies that employ 104,400 workers and generate $78 billion in annual revenue. The industry consists primarily of small family-owned businesses - 82% of firms operate a single location.
- The industry is fragmented, as the top 50 companies account for only 47% of industry revenue.
- Large companies include America Chung Nam (paper and plastic recycling), David J. Joseph Company (scrap metal and a subsidiary of Nucor Corp.), OmniSource (scrap metal and a subsidiary of Steel Dynamics, Inc.), Sims Metal Management (scrap metal and U.S. subsidiary of Sims Group Ltd. of Australia) and Schnitzer Steel Industries (scrap metal).
- Some firms act as brokers, selling recycled materials for owners of material recovery facilities (MRFs), while others operate their own MRFs.
- Some large companies are vertically integrated and also process scrap material into finished products.
- The industry also competes with the recycling operations of large waste management companies, such as Waste Management, Inc. and Republic Services, Inc.
Industry Forecast
Recyclable Material Wholesalers Industry Growth
Coronavirus Update
May 5, 2022 - Post-Consumer Resin Prices to Remain Elevated
- Early in the pandemic, some curbside recycling collection was disrupted, which curtailed collection and propped up prices for some post-consumer recyclable materials. Now some industry insiders believe higher post-consumer resin prices may be the new normal amid continued strong demand and slow supply increases. Prices for post-consumer polyethylene terephthalate (PET) bottles and jars rose 17% in April compared to the prior month and were up more than 226% year-over-year, according to RecyclingMarkets.net. Curbside collected natural high-density polyethylene (HDPE) prices increased 13% in April but were down more than 35% compared to year-earlier levels. Prices for polypropylene (PP) were up 17% in April compared to the prior month but were down 0.8% from year-earlier levels. Sorted, baled aluminum can prices decreased 8% in April compared to the preceding month but were 114% from April 2021. Prices for old corrugated containers (OCC) fell 1.5% in April from March but were 46% higher than a year earlier.
- US manufacturing activity grew in April 2022, according to the Institute for Supply Management (ISM). However, the ISM’s monthly Purchasing Managers’ Index (PMI) fell 1.7 percentage points to 55.4% in April from the March reading of 57.1%, and the April reading was the lowest the PMI has been since July 2020. Any reading above 50% indicates expansion, while anything under 50% indicates contraction. Manufacturing activity grew for several industries that use recycled materials as feedstocks, including paper products, plastics and rubber products, fabricated metal products, transportation equipment, and primary metals. Pandemic-related supply chain issues are still a lingering problem for many manufacturers. Customer inventories are too low, raw-materials lead times and prices are too high, and transportation inefficiencies remain.
- The pandemic has shifted consumer behavior toward e-commerce, which has driven strong demand for old corrugated containers (OCC). The boom in e-commerce has challenged containerboard manufacturers’ ability to keep production in line with rising demand, which is driving corrugated box prices higher. US producer prices for paperboard were up 22% in March 2022 compared to year-earlier levels. While containerboard manufacturers plan to bring more production online, during the first quarter of 2022, the industry was operating at 94.3% capacity, according to the American Forest and Paper Association (AFPA).
- US steel shipments, a demand indicator for scrap steel used in electric-arc furnace mini-mills, fell 6.8% in February 2022 compared to the prior month and increased 7.4% from the same month a year earlier, according to the American Iron & Steel Institute. Global steel production fell about 0.2% in 2020, primarily due to the COVID-19 crisis and the resulting economic decline, according to Worldsteel. US steel production declined by more than 17%. Global steel production in 2021 increased 3.6% over 2020. Steel demand is projected to rise 2.2% in 2022.
- Major waste management firms are benefitting from higher commodities prices for recyclable materials. In the first quarter of 2022, Waste Connections’ recycling revenue increased 94% compared to Q1 2021. Waste Management (WM) saw its recycling revenue rise 32% year over year in Q1. Some waste management firms are increasing capital spending to improve efficiencies at their materials recovery facilities.
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