Paper recycling firms scale down operations as waste material prices slide

SINGAPORE: Paper recycling firms are scaling down operations as prices for materials like waste paper and cardboard fall.

Local companies selling paper waste to overseas buyers also face rising costs for collection and export.

The Waste Management and Recycling Association of Singapore (WMRAS) told CNA that these pressures are driving the decline of paper recycling in the nation.

The trade association has called on businesses to review their processes to stay sustainable.

FALLING PAPER WASTE PRICES

“Because of the current market prices that the paper price is very low, it doesn't make economical sense for (such firms) to export. Shipping is expensive,” said Ms Melissa Tan, chairperson of the association.

“If the price is low, then that makes it hard for them to even make a decent margin,” she added. 

“Because operating costs have gone up, in order for them to maintain a certain healthy profit margin, they will tend to do less.”

One such waste management firm struggling with plummeting market prices is KL Enviro. 

The company processes paper and cardboard for recycling, handling about 6,000 tonnes of the material each month.

In 2020, a box of compressed cardboard for recycling was worth S$280 (US$210). Today, it fetches only S$140 – half the amount – due to a global oversupply.

The firm said this is pushing some paper companies out of business in an industry already fraught with various challenges. 

“It is a very depressing environment right now for the recycling market,” said Mr Spencer Soong, executive director of KL Enviro.

“Shipping cost has gone up, fuel cost has gone up as well, especially after the Russia-Ukraine war,” he added. 

“Collection is already a big challenge, and then on top of that, inflation and manpower costs have gone up. All these are big challenges to the market.”

Paper waste from Singapore is exported to buyers in countries such as Indonesia, Malaysia and Sri Lanka for recycling.

“We have no control over what the selling price is,” said WMRAS’ Ms Tan. “But what we can do is to manage our own internal costs that could potentially be incurred.”

The association said reduced collection of waste paper is one reason for the decline in Singapore’s paper recycling rate.

The recycling rate fell to 32 per cent last year, down from 52 per cent a decade ago. 

Firms hope that the government can offer assistance to help them sustain their businesses and recycling efforts.

“I hope that the government can look into the challenges that the industry is facing and provide more support to offset the operation costs for the whole industry,” said Mr Soong, adding that aid such as labour subsidies would be useful. 

The authorities have said they are reviewing ways to improve paper recycling in the country. 

HIGH OPERATING COSTS

Observers said another factor for the decrease in paper recycling rate is that paper placed in residential blue bins is often contaminated by food or drink waste, making it unrecyclable.

However, local sustainability tech company SG Recycle has found a way to tackle the problem.

Five years ago, it began placing paper-collection machines across Singapore.

Currently, residents receive three cents for every kilogramme of paper they deposit.

The firm recycled 220 tonnes of paper in the first half of this year.

“We are close to zero per cent contamination rate compared to any other bins across the island,” said its CEO and founder Mervin Ng. 

He explained that his company tracks recycling with real-time data, and residents can see how much they have deposited.

Mr Ng noted that installing these smart bins does not come cheap – each one costs about S$300. 

SG Recycle is also hit by the declining market value of paper waste, forcing it to dial back operations. 

It currently manages 84 machines, down from a peak of 140 in 2023.

“Although we are in sustainability, it’s not a sustainable business because of logistic costs, high costs in manpower,” said Mr Ng, who is hoping for grants to keep its recycling business going. 

“We are still open to do all these initiatives, burning our own money even for it, but we would appreciate it if there's help coming in.”