October 12, 2022



Industry Leader Insights: Simon Ellin

Simon Ellin, CEO of The Recycling Association, sat down with TrueCircle to provide us with his expert insight on the industry’s current turbulent times, learnings from the past 30+ years and his outlook on the future of the industry.

In recent weeks, we’ve seen the price of fibre grade recyclable materials drop considerably. What do you feel are the biggest drivers of this change and what can be done to stabilise prices?

I think there are a multitude of factors, really. The three major drivers of this change have fuelled the perfect storm:

  1. Global recession
  2. Russia-Ukraine war
  3. Rising energy prices

There was monumental demand for packaging during COVID because everybody was shut down and globally, production systems weren’t able to keep up with this. Moving out of this period, we have seen demand for packaging drop slightly from COVID-levels. The cost of living crisis has seen a downturn in demand for products from countries such as China. These countries have settled huge stocks for finished products and they’re very slow to ship them. For example, China is now significantly supported by their own internal demand. Rising energy prices have forced some facilities to shut down.

Interestingly, October prices for cardboard have stabilised at a historically average price.

My recommendation for the industry would be to make sure your fibre is of some of the best quality and high fibre yield that you can possibly get. This is because mills have choice and they will buy the best material at the best price. Simple laws of economics.

What have you learnt from previous unpredictable trading periods and how can those learnings be applied to the current trading environment?

We have had these troughs before, with the last major one coming in the 2008 financial crash. In November and December, the whole world went into meltdown and prices plummeted. However, by January, prices had climbed.

In the past 20 years, global demand has meant that peaks and troughs have become less pronounced because different markets are able to take the lead through different cycles; which has led to stabilisation.

What can buyers learn? Well, the fact is, you don’t particularly gain anything longer term by crushing the market. You’re going to need material going forward, don’t go kill your supply chain.

You mentioned that in these times, it’s incredibly important for suppliers of recycled fibre to be on top of their quality to ensure they’re still attractive to mills as mills can now be selective. What have you seen the ‘best-in-class’ do to ensure they have the highest quality?

Significantly investing in infrastructure and using technology that ensures they’re able to produce the best quality material; innovations such as your TrueCircle AI to prove material is the highest quality.

Supporting this is the Waste Strategy that the government has led on and it’s something that I’ve talked at length about many times over the years. For this system to work, the whole supply chain has got to take responsibility and we need every level funded properly. EPR should be coming in anytime that will put the onus on producers to actually pay for the material from ‘cradle to grave’ which should free up funds for facilities to invest in the best technology.

If you get rubbish in, you get rubbish out. MRFs should be very conscious of achieving quality material by investing in the right technology to show they are running everything correctly. You also need to be able to prove the material coming out the other end is of commensurate quality for application in a multitude of markets. You also don’t want to fall foul of the regulators, which is another significant challenge we face. This is where I also see TrueCircle coming in and helping facilities solve this.

Yes, exactly and do you think these higher qualities are being recognised by higher prices by mills?

That’s a really good question and quite a difficult one to answer in this current turbulent market.

What I would say, going forward high quality material will find a home that will demand a certain price and lower quality material will have less chance of finding a home. If it does, it will be at a much lower price.

If one day everybody has your product (TrueCircle AI + Trade), then tangibly tracking higher qualities between the entire value chain then of course pricing will be determined by quality. What could be key with what you guys are doing is understanding the fibre yield of the material facilities are delivering.

Data is transforming the industry and we’re seeing the start of this now through our customers. Finally, how do you feel MRFs and mills can adjust to the global regulatory environment?

Well this is where your TrueCircle technology and our Traqa technology comes in. Waste tracking and application will be very important. Regulators in the UK are scrutinising the industry very closely and exports are being restricted. We have to own up as an industry, previously poor material has been exported around the world.

Therefore, there are big moves in trading and exporting going forward to prove the material is absolutely Pukka! This is evident in upcoming legislation and to me, that’s all about data. We are light-years behind other industries in terms of data.

At Traqa we are digitising the transport and Annex VII process and TrueCircle are able to come in and provide an exact breakdown of composition analysis. When regulators come by, if facilities are able to show this data, the potential is huge. We’ve got to move very quickly with the times on the regulatory framework and both of these innovations will be pivotal to that.

Thank you for your time Simon, really interesting insight!

Thank you and good luck with TrueCircle!

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