Demand for Commercial Incineration Services Increases

Strong Markets Allow Some Incinerators to Reach Full Practical Capacity

Contacts: Paul C. Evans 952/831-2473, ext. 12
Cary Perket 858/488-4760

August 24, 2000 — For Immediate Release

Edina, MN — The EI Digest: Hazardous Waste Marketplace, North America’s leading research service on hazardous waste management, announced the results of its annual survey of the commercial hazardous waste incineration sector. The results show that volumes of hazardous waste combusted at commercial incinerator facilities increased over 5 percent from 1998, climbing from 722 thousand tons to nearly 759 thousand tons.

According to the report, complimenting the increase in volumes were reductions in processing capacity, allowing incinerators to run more efficiently and profitably. "After years of excess supply magnified by scarce demand — ultimately resulting in a sharp decline in prices — the two are moving towards market equilibrium," comments EI Analyst Paul Evans. "1999 was the fourth year in a row for capacity reductions. Capacity reductions combined with a healthy economy producing steady streams from manufacturers as well as from remediation projects, gives incinerator operators a reason to be cautiously optimistic."

The report also points out that although total volume gains from 1998 to 1999 look modest at first glance, the numbers do not reflect volumes stockpiled at facilities during 1997 — nearly 30 thousand tons — which were incinerated during 1998, artificially ballooning 1998 volumes. Commercial incinerators are also exploring the opportunity to increase market share by targeting generators with captive/on-site facilities because of the recently finalized MACT standards. The new emission limits will induce some older, less profitable captive/on-site incinerators to shut down, as it may not be cost-effective to upgrade some incinerators to meet the MACT standards. As a result, some of these streams could potentially reach the commercial incineration marketplace.

"Between MACT and a tighter supply/demand relationship, [commercial] incinerators are seizing an opportunity to raise prices," says Evans. "During years of excess supply, prices bottomed out during an era of predatory pricing. As the market has matured, incinerators are able to make very strategic decisions about price increases, selectively targeting waste streams rather than across-the-board price increases."

"Assuming that the economy remains steady, the outlook for the incineration sector looks favorable," adds EI Senior Analyst Cary Perket. "It is expected that some captive incinerators will be closing, which will further add to the demand for commercial services. In addition, Canada is poised to create greater parity with U.S. environmental standards; the result of which would be more North American incineration demand."

"However, the key to the sector’s future success is increasing prices," adds Perket. "The pricing pendulum has to reach a middle ground where reasonable returns are being seen by investors. Simply accepting more waste at marginally profitable prices is not going to provide much improvement."

This report appeared in the EI Digest: Hazardous Waste Marketplace, a business research report published 10 times per year that covers hazardous waste management issues. Further information of the EI Digest can be found on ENVIROBIZ.COM (www.envirobiz.com), one of the Internet’s leading sites for proprietary and public environmental business information. Based in Edina, Minnesota, Environmental Information, Ltd. (EI) specializes in information and research on the environmental services and technology marketplace. EI provides original subscription-based research services. Among the services is the comprehensive compilation of the largest directory and database of environmental service firms, landfills and treatment, storage and disposal (TSD) facilities in North America. For further information, contact customer service at 952/831-2473.

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