Junkyard Planet: Travels in the Billion-Dollar Trash Trade

by Adam Minter

The differences are profound, but in many ways they come down to one simple factor: the peddlers sell locally, and the titans sell globally. Not that any of the mostly paunchy men in Function Room 12 were thinking in such esoteric terms in November 2008. Rather, most of them were either angry or frightened, having watched as global prices in some scrap metal, paper, and plastic declined by as much as 80 percent in the space of the previous few weeks. The decline devastated Chinese recyclers, in particular, many of whom had had built up large inventories of American and European scrap metal in anticipation of a perpetual, Chinese-driven run-up in the price of raw materials. China’s economic development had been viewed as inevitable, and as more and more of the country took part in that development, the price of metals could only go up. So they bought more and more scrap metal, often on the basis of a 20 percent down payment on 40,000-pound shipping containers that might contain scrap worth $100,000 or more. But when in the fall of 2008 the price of scrap metals went into a free fall, many of these traders made a cold and calculating decision: it’s better to hold losses at 20 percent than to pay for an even bigger loss—perhaps as much as 50 percent. And so, starting in September, hundreds of Chinese scrap buyers refused to pay the outstanding balance for the containers of scrap metal that had already sailed from ports in Europe and the United States. They broke their contrac...