Slow demand and falling prices of scrap aluminium leading to closure of recycling centers in California

In early August, rePlanet suddenly closed all 284 of its recycling centers and terminated 750 employees. The company blamed reduced payments, depressed pricing for scrap aluminium and PET plastic, and higher operating costs as the factors leading to their closure. Currently, about 19% of all California beverage container recycling centers are operating. According to the California Department of Resources Recycling and Recovery, the number stands at 1,225.

Aluminum cans and containers were once the most prominent type of container collected for recycling. Lately, both aluminium’s value and quantity are taking hits. Plastic has become more predominant, but it's worth less than aluminium and many manufacturers prefer virgin plastics.

"Even aluminium, which still retains value, is worth about 40% less than it was three years ago," said CalRecycle spokesperson Lance Klug.

Due to growing focus on lightweighting in last few decades, thinner aluminium sheets are used in making aluminium cans and containers. The average aluminium can weighs 40% less than it did in 1972. As a result, recyclers must collect more numbers of items to achieve the past scrap weight.

Plus, earlier this year Arconic Inc. transformed its Knoxville, Tenn. can aluminium sheet production facility to automotive and industrial sheet unit. This was done following the moves of other successful aluminium product makers like Novelis, as automotive products are more in demand.  

"[Arconic] had been taking 14% of the aluminium cans that were recycled in the U.S. When they stopped taking that, it threw the supply and demand relationship out of whack [and] aluminium can prices dropped pretty much overnight," Susan Collins, president of the Container Recycling Institute (CRI) said.

"The average redemption center is getting $3,000 a month less revenue ... just due to this one thing."

These changes, complemented by the recycling industry's macro-economic challenges are leading to the closure of more recycling centers in recent years, generating doubts on the success of recycling programs.