Kelman said falling global coal prices over the last two to three weeks meant tyre recyclers who exported tyre crumb as a replacement for coal were now struggling to compete with both coal and alternative energy sources.
"A lot of kilns, including cement kilns that have used tyre crumb as a fuel are now simply loading up with more coal," Kelman told affiliated publication Inside Waste News.
The closure of Malaysian pyrolysis plants has further exacerbated the situation.
"A lot of tyres that had traditionally gone to these plants, not necessarily from Australia but from other markets, are now floating around on ships in Asia and are being made cheaply available. That's undercutting the market," he said.
What used to cost $10 a tonne to export tyre crumb is now costing the sector $30/t, Kelman said.
"So we've got a couple of problems,” he said. “One is that some of our members can't find markets at all and those who have been able to find markets, are having to pay for tyres to be disposed of. That's a pretty dire situation for an industry that doesn't have big margins."
And just what are the sector's margins?
According to Kelman, the markets for used tyre products "are not particularly lucrative" and most recyclers make between 5c and 10c per tyre by exporting them overseas.
"The economics of disposal has turned upside down. It has turned around to the point where instead of making 5c or 10c per unit, it's now costing them 30c or 40c to dispose of the waste tyres they've collected," Kelman said.
"It's a very bad situation and all of ATRA's members are saying they've never seen it this bad in a very long time. The market does fluctuate but it's pretty bad when an already marginal industry has turned around so dramatically ... from getting a little bit of money to having to pay a substantial amount to move material offshore.
"Nobody is very hopeful that there's going to be an upturn in the energy prices, which is also a big part of the challenge.”
Initial audit data estimates that ATRA's members process 15 to 17 million tyres a year, which Kelman said represent 60 to 70% of the market. Its members include TyreCycle, Chip Tyres, Ecoflex and Tyre Crumb Australia.
ATRA has been holding "emergency meetings" with its members over the last two weeks to come up with solutions, particularly for the short term.
One of these solutions is to speak to the various EPAs about a temporary stockpiling exemption, which ironically is an issue ATRA has been challenging for a long time.
"The NSW EPA said they'd be happy to hear from us if we wanted to make a petition around any sort of temporary stockpiling situation on an appropriate site or potentially a dispensation from the levy for a short period of time," Kelman said.
However, he acknowledged there wasn't a great precedent in NSW for such a stockpiling initiative, adding that ATRA would only look to this solution as a last resort
Kelman also noted that most of his members did not have large enough sites to hold material anyway.
"It's also a very short-term solution and you're possibly putting off the inevitable if the market doesn't rectify itself."
Kelman also discussed the possibility of Tyre Stewardship Australia leveraging open markets or making representation to overseas markets with the EPA but said if there was no resolution, increasing collection charges paid by tyre retailers to offset the increase in export costs may be the way to go.
Currently, retailers are paying between $1.50 and $1.80 per waste tyre sent to legitimate tyre recyclers, a price that is considerably lower than sending the material to landfill.
After factoring the landfill levy, shredding costs as whole tyres are not accepted at landfills, collection and transportation costs, Kelman estimates that retailers would likely pay $3.80 to send waste tyres to landfill.
Thus, increasing collection charges could be the short-term solution needed although Kelman clarified that a price increase has not been proposed but is simply an option on the table.
For now, ATRA is brainstorming ideas with its members and membership-wide solutions are being discussed.
"As a group, we could look at a membership-wide solution, for instance contracting a single ship to take a larger load. There are viable solutions that we can find and we need to determine what the economics are around those options," Kelman said.