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 Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation 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
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Nov 10, 2022 - Falling Recyclables Prices Ding Waste Firms’ Revenue
                                • Many of the largest waste-hauling firms saw their recycling-related third-quarter revenues decline amid lower commodity prices for several types of recyclable materials. Republic Service’s recycling revenue declined 27% in Q3 2022 compared to the same period in 2021, and Waste Connections’ recycling segment saw a drop of 17%. Recycling revenue at GFL Environmental dropped 14%, and Waste Management’s recycling operations were down 9%. Weaker revenues were primarily due to lower prices for old corrugated containers (OCC), plastics, mixed paper, and aluminum. Some waste firm executives suggested recycling revenues were likely to worsen in the fourth quarter as the global economy shows signs of slowing.
                                • Recycled commodity markets are increasingly uncertain due to inflation and rising interest rates, according to the Institute of Scrap Recycling Industries. Reduced demand for recovered fiber exports has caused US mixed paper and OCC inventories to build, reducing prices. Demand for OCC has also fallen as the e-commerce boom of earlier in the pandemic has cooled. Industry watchers doubt that fiber demand will get much of a boost from the holiday season as more consumers continue the shift back to in-store shopping. According to Bloomberg, many shoppers are expected to dial back their spending this holiday season, which would reduce demand for packaging used in shipping goods.
                                • At the recent World Recycling Convention in Dubai, a trade group called the Bureau of International Recycling (BIR) issued a statement to call attention to how the industry is being affected by rising energy prices. The BIR suggested that while the pinch of higher energy prices is most acute in Europe, where the war in Ukraine has pushed up natural gas and electricity prices, higher energy prices are an issue for the industry globally. The BIR has called for governments to provide aid for the recycling industry to support the health of the circular economy.
                                • US collection and recycling of post-consumer aluminum will have to expand to meet the needs of an upcoming rise in aluminum sheet production capacity slated to come online by 2026, according to S&P Global Commodity Insights. Three new aluminum sheet mills will be large consumers of scrap aluminum, but current aluminum recovery levels likely would not be enough to meet the uptick in demand. According to Tri-Arrows Aluminum CEO Henry Gordinier, about half of aluminum cans in the US wind up in landfills, wasting a resource valued at about $800 million. Industry insiders suggest that aluminum can deposit programs are the only strategy shown to increase recycling rates.
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