A previously-buoyant West Midland recycling industry is facing an uncertain future as it is squeezed hard by plummeting global demand.

Prices for recycled paper, glass and plastic have plummeted over recent weeks as manufacturers around the world, particularly in China and other developing economies, scale back their output.

Oldbury-based Recycle Plastics director Jaz Chohal said his firm had taken a big hit, seeing a 65-70 per cent drop in the value of its recycled plastic in the last few weeks.

“It’s been over the course of the last two to three weeks – that’s when the drastic cuts came in but prices have been on the slide for the past two to three months.”

Mr Chohal also pointed to the price of cardboard which has also plunged.

“Cardboard was up to £65 a tonne at one point but now mills won’t even take it at £10 a tonne.”

John Gerry, director of Smethwick-based Birmingham Plastic Recycling, also faces a similar bleak outlook.

“We have got drastically falling prices.

“Leading up to Christmas, orders have gone down at last 50 per cent for the finished product.

“Generally we would be doing 130 tonnes a week at this time of year, now we would be lucky to do 40 or 50.”

Mr Gerry was pessimistic about the outlook for the industry, saying he would almost certainly have to reduce staff from his current 18 employees and had already cut shifts to cope with the downturn. He believed prices were unlikely to return to previous levels as the recent drop in oil prices had bought with a corresponding fall in the price of virgin materials, which in turn affects the value of recycled plastics.

He believes falling prices will alter the dynamics of the supply chain, which until now has seen suppliers of unprocessed materials able to charge a premium.

“Whereas we had been paying good money for scrap, eventually we will get it for nothing and then we may even have to charge to take it away,” he said.

It’s a situation which is already happening elsewhere in the industry.

Mr Chohal, whose firm specialises in post-industrial waste, said many of the smaller collection players who had jumped on the market when prices where high were now disappearing, leaving businesses with a surplus of waste materials with no-one to collect them.

“A lot of shopkeepers and businesses now have lots of cardboard on their hands.

“Before, we were paying smaller firms for cardboard, it’s now reverted back to where we now charge them to collect.

“A lot of people were jumping on the bandwagon – they thought there was good money to be earned but they are now falling by the wayside.”

He believed prices over the past couple of years had been artificially inflated but would reach their true level in the next few months.

Earlier this year Recycle Plastics, which turns waste plastic into fine chips of raw plastic ready for reuse, added 15,000 sq ft to its base in Oldbury, bringing its operations up to a total of 35,000 sq ft.

But Mr Chohal believed those who had invested in their businesses would survive and that the downturn to weed out weaker firms.

The Environment Agency which regulates waste in England and Wales, has described the drop in demand for recyclable materials as “unprecedented”.

Last month it announced it would make it easier for recycling companies to store material for up to six months, or even longer in exceptional circumstances.