Your Old Newspapers Now Worth a Bundle
ROLLER-COASTER PRICE TREND
HOT investment tip: Don't discard this newspaper.
In the past seven months, the value of this and other newsprint has surged sevenfold.
Indeed, by selling recycled newspapers, green activists can reap greenbacks as never before. Today, the chore of recycling is not only environmentally correct, but also remarkably profitable.
The price that mills pay for old newspapers has skyrocketed from less than $10 a ton to $78 a ton since last spring. Similarly, the price of used corrugated cardboard boxes has leapt from $25 a ton to $92 a ton in the same period. ``It's been a crazy market,'' says Kathleen Meade, spokeswoman for the National Recycling Coalition in Washington.
The high price is a fillip for conservationists' efforts to avert the felling of trees and other environmental harm from the papermaking industry, recycling anlaysts and executives say.
``It's actually brought a resurgence of the paper drive'' at the local level, Ms. Meade says. Some people are hawking newsprint to paper brokers directly.
``It seems like everyone in the world wants to be selling their papers,'' says Jane Erkenswick, a co-owner of Recycling Services Inc. in Chicago. She says individuals have called to hustle as little as 100 pounds of old newspapers. (Her company offers 1 cent per pound.)
The price surge could help erase concerns about the long-term profitability of newspaper recycling. ``For recycling to remain viable and sustainable over the long term, there's got to be some sound economic justification, and I think higher prices will help to provide that,'' says Dan Kemna, recycling manager at Waste Management Inc., a unit of WMX Technologies Inc. in Oak Brook, Ill.
Still, newspaper hoarders should pursue a sell, not a hold, strategy. Mammon and Mother Nature - profit and environmental activism - might not stay in step indefinitely. Short term, the price of old newspapers might rise slightly. But the market for used paper is notoriously volatile, and prices will likely decline, industry executives say.
Indeed, the price surge ``was an aberration - a lot of things had to line up for it to happen,'' Mr. Kemna says.
Early this year, for a number of reasons, United States paper mills were short of recycled cardboard and newspaper.
The harsh winter slowed rail and other transport, and a sudden surge in demand for used corrugated cardboard from a reviving Japanese economy, and East Asian countries, further reduced used cardboard supplies.
Many US mills had severely cut back on inventory in an effort to promote efficiency and cope with the slack demand during the recent recession. Unable to acquire enough cardboard, mills used old newspapers as a substitute.
Meanwhile, a rise in the price of wood chips - the raw material for paper and cardboard - nudged up the price of most recycled fiber. Also, the resurgent domestic economy spurred demand for all paper, a business closely tied to economic cycles.
Finally, the demand for recycled cardboard and newspaper has increased dramatically because of the construction of new mills designed to meet government mandates requiring that a high percentage of each mill's paper output include recycled fiber products. The number of recycled newsprint mills has jumped from six to more than 20 since 1988, Meade says.
Environmentalists do not want the price of recycled fiber to go too high. If current price trends continue, the cost of making paper from recycled fiber could exceed the cost of making it from wood chips. Consequently, the paper industry would look to forests rather than curbsides for its raw material.
In an effort to ease trading and smooth out the roller-coaster price trend, the National Recycling Coalition and the Chicago Board of Trade are considering opening a cash exchange in the material. The exchange would help reduce price uncertainties by centralizing the market, or bringing buyers and sellers together in one place, Meade says.